Markets

5 ETFs to Buy in Defamed May

As the broader market steps into the fifth month of the year, the old adage - "sell in May and go away" - has taken center stage. The proverb is rooted in the S&P 500's rueful historical run for the May-to-October period. Some economic data for Q1 also came in moderate like the U.S. GDP growth rate, which beat estimates but was the lowest in a year (read: Q1 GDP Growth Beats Estimates: ETFs to Buy ).

But that doesn't mean everything will be stuck in May. Agreed, May has been a subdued month with average gain of 0.16% since 1950. The month saw positive returns in 40 years while returns were negative in 28 years.

But economists expect growth to pick up in the second quarter as the Trump administration's $1.5 trillion income tax reform will then be felt on the income of households. According to surveys, tax cuts, which was materialized in January, did not impact many workers' paychecks before late first quarter, quoted on CNBC. Atlanta Fed expects the U.S. economy to grow at a 4.1% annualized rate in the second quarter.

Against this backdrop, investors can bet on the broader market, but with significant caution thanks to the ill-famed seasonality.

PowerShares S&P SmallCap Consumer Staples PortfolioPSCC

According to equitylclock.com, consumer staples enjoys a seasonal tailwind in May. Moreover, the projections for the second quarter are upbeat. U.S. consumer spending grew in March, while the Fed's preferred inflation gauge touched the central bank's 2% goal for the first time in a year, strengthening the possibility of faster rate hikes . So, it is better to bet on a small-cap (more domestically focused) consumer staples ETF.

First Trust Nasdaq Oil & Gas ETF FTXN

Sentiments in the energy market are pretty solid. Oil prices have been on a tear this year. Chances of an extension in the Saudi-led OPEC output cut deal and geopolitical tensions have been powering the segment. This makes the fund a good pick.

SuperDividend Alternatives ETFALTY

The fund looks to track alternative income-generating categories, including real estate, MLPs and infrastructure, institutional managers, and fixed income and derivative strategies. The product yields about 7.85% annually. Such a high-yielding and alternative investment may prove to be a profitable bet in a market downturn (if at all happens in May).

iShares U.S. Preferred Stock ETFPFF

This is another good bet in a rising-rate environment. Preferred securities as an asset class are hybrid securities, having traits of both equity shares as well as fixed income securities. These are classified as shares having a fixed rate of dividend on their face value (par value). The fund yields 5.62% annually (read: Prepare for 2018 With These ETFs ).

Global X MSCI SuperDividend EAFE ETFEFAS

Investors can bank on the international value ETFs. While global economic growth makes it intriguing to have a look at abroad, a value focus should keep the product protected from any market downturn. The fund yields 5.54% annually, which is a positive. Britain, France and Australia are the top three geographic holdings of the fund (read: Earn 5% Plus Yield With These ETFs ).

Want key ETF info delivered straight to your inbox?

Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ISHARS-US PFD S (PFF): ETF Research Reports

PWRSH-SP SC C S (PSCC): ETF Research Reports

GLBL-X MS SPRDV (EFAS): ETF Research Reports

FT-NDQ OIL&GAS (FTXN): ETF Research Reports

GLBL-X SPRDV AL (ALTY): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

FTXN PSCC PFF ALTY EFAS

Other Topics

ETFs

Latest Markets Videos