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7 ETF Areas to Hog the Limelight in 2017

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As 2016 comes to a close, Brexit, Donald Trump's win as the U.S. president and the OPEC output cut deal are clearly the highlights of the year. However, there are plenty of other events that haven't been able to leave a mark but could prove to be game-changers next year.

In view of this, we intend to highlight a few areas (and their impact on the ETF world) that are likely to draw investors' attention in 2017.

Oil

The global investing world is expected to be busy analyzing the progress of the OPEC output cut deal since the start of 2017. On November 30, OPEC decided to slash production by about 1.2 million barrels a day from January for six months . Plus, on December 10, OPEC also cut their first deal with non-OPEC since 2001 to reduce output next year.

The pact will likely result in "an aggregate supply cut of 1.7 million barrels a day." Some analysts like Goldman now believe that oil can scale higher to about $60 early next year from the current $50 plus level.

However, there are people who expect the deal to be not as effective as it seems now. Even if OPEC manages to be true to the deal, U.S. shale oil production will likely gain traction, bringing back oversupply into the market and weighing on oil prices .

All these should keep oil ETFs like United States OilUSO , Brent crude ETF United States Brent OilBNO and energy ETFs like Energy Select Sector SPDR ETFXLE on investors radar (read: How Effective is the OPEC Deal for an Oil ETF Rally? )

Trump vs Fed

Trump has raised hopes of fiscal reflation and taken stocks to a new height. If he keeps all his promises after taking presidential office and inflationary expectations continue to surge, the Fed might be able to implement the three forecasted rate hikes in 2017 (read: Sole Fed Hike of 2016 Put These ETFs in Focus ).

And if the Fed opts for faster rate hikes next year, bond ETFs like iShares 20+ Year Treasury BondTLT and dividend ETFs like SPDR S&P Dividend ETFSDY may face pressure. Meanwhile, ProShares High Yield-Interest Rate Hedged ETFHYHG or inverse bond ETFs like Barclays Inverse US Treasury Aggregate ETNTAPR are poised to benefit (read: Hedged & Inverse Bond ETFs to the Rescue if Rates Rise ).

Global Inflation

Inflationary outlook is finally shoring up in developed economies, albeit slowly. Prolonged easy money policies by global central banks, the OPEC move and the Trump effect made it happen. Expectations of a spurt in global inflation are now at the highest level in over 12 years. Global TIPS ETF - PIMCO Global Advantage Inflation-Linked Bond Active ETF ILB- w ill thus be on the watch list of investors (read: Will 2017 Be a Year of Global Reflation & TIPS ETFs? ).

Commodity

Now that's tricky! If the greenback retains its strength, commodity investing should take a backseat as these are priced in the U.S. dollar. However, several industrial metals should do well on better demand-supply dynamics. This is especially possible given the recovery in the global manufacturing activities including the all-important China, which consumes a major portion of the global industrial metals. So, ETFs like iPath Pure Beta Aluminum ETNFOIL , iPath Pure Beta Copper ETNCUPM and iPath Bloomberg Tin SubTR ETNJJT will likely grab the spotlight.

Cyber Security

Cyber security breaches are on the rise of late. This has compelled companies to invest billions of dollars annually to counter such attacks. Most recently, the hack on Yahoo which revealed data from over 1 billion accounts once again stressed on the need for cybersecurity and has put First Trust NASDAQ Cybersecurity ETFCIBR and PureFunds ISE Cyber Security ETFHACK in focus.

India

India's pro-growth political changes in 2014 had shaped it into a hot investing zone. Most economic episodes also went in favor of Asia's third-largest economy, including a drastic fall in inflation arising from the oil price crash and an improvement in current account deficit. Moreover, due to cooling inflation, the Indian central bank (RBI) resorted to rate cuts several times in the last one and a half years.

However, most recently, in order to put a check on tax evasion and counterfeit notes, high-denomination bank notes were withdrawn in India. This resulted in cash crunch and growth forecast cuts by some analysts. Fitch rating reduced India's GDP forecast to 6.9% from the prior estimate of 7.4% for the current financial year.

But then, Moody's indicated that Indian companies will likely witness "the strongest profit growth over 18 months." Now it would be interesting to see if India ETFs like WisdomTree India Earnings ETFEPI can survive the threats from demonetization in 2017 (read: What Lies Ahead for India ETFs? ).

Bitcoin

Even if we are yet to have a bitcoin ETF, one is expected to hit the market in 2017. Winklevoss Bitcoin Trust has filed for one to make it easy for investors to bet on this soaring digital currency. As per CNBC , "bitcoin is a very volatile asset" but doesn't have a strong correlation with other classes. Bitcoin's value has beaten the $800 mark for the first time since February 2014.

India's demonetization also gave a boost to bitcoin trading volumes . Moreover, trading volumes in China have been solid with the government taking proactive measures against illegal money transfer. With this, investors expect to see an approval of the first bitcoin ETF in 2017.

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ISHARS-20+YTB (TLT): ETF Research Reports

US-OIL FUND LP (USO): ETF Research Reports

PURFDS-ISE CYBR (HACK): ETF Research Reports

US BRENT OIL FD (BNO): ETF Research Reports

SPDR-EGY SELS (XLE): ETF Research Reports

PIMCO-GA ILBETF (ILB): ETF Research Reports

IPATH-PB ALUMNM (FOIL): ETF Research Reports

SPDR-SP DIV ETF (SDY): ETF Research Reports

IPATH-BB TIN (JJT): ETF Research Reports

FT-NDQ CYBERSEC (CIBR): ETF Research Reports

BARCLY-INV USTC (TAPR): ETF Research Reports

WISDMTR-IN EARN (EPI): ETF Research Reports

IPATH-PB COPPER (CUPM): ETF Research Reports

PRO-HI YLD IRH (HYHG): ETF Research Reports

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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.

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