Markets

Potentially Volatile Market, ETF Outlook for Rest of 2016

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While market momentum has somewhat stalled, with growing pessimism over an uncertain outlook, exchange traded fund investors may still find some opportunities.

On an upcoming webcast this Wednesday, Expert Mid-Year Outlook & Strategy: Bernstein, RiverFront, and Deutsche Asset Management , Peter Hooper, Managing Director & Chief Economist at Deutsche Bank Securities, Richard Bernstein, Chief Executive Officer of Richard Bernstein Advisors, Michael Jones, Chairman & Chief Investment Officer of RiverFront Investment Group, and Theresa Brennan, ETF Investment Specialist at Deutsche Asset Management, will reflect on the first half o the year and outline a path for the remainder of 2016.

Year-to-date, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA ) gained 3.5%, SPDR S&P 500 ETF (NYSEArca: SPY ) rose 3.0% and PowerShares QQQ (NasdaqGM: QQQ ) dropped 3.7%.

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The equities market largely moved higher after a sell-off over the past week. U.S. stocks bounced Tuesday as investors brushed off Federal Reserve Chairwoman Janet Yellen's remarks before Congress and focused on the upcoming United Kingdom referendum vote on European Union membership.

In Congress, Yellen said that while the Fed expects gradual rate increases later, "considerable uncertainty about the economic outlook" has been a more pressing issue, the Wall Street Journal reports.

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Yellen's prepared remarks were largely in line with expectations, especially given the backdrop of a pending so-called Brexit vote, and the equities held up in late Tuesday trading.

Meanwhile, the equities market has exhibited high correlation to sentiment over the U.K.'s June 23 referendum, falling and rising on survey polls ahead of the vote. For instance, over the past week, stocks plunged when polls revealed more Britons were leaning toward an exit vote and the recent rebound came off recent polls showing a "remain" majority.

While economists expect the short-term impact of a "Brexit" to be negative for U.K. growth, investors' focus on the referendum "shows the fragility of global markets and the general low appetite for risk, with so many question marks out there in the global economy," Carl Hammer, chief currency strategist at SEB, told the WSJ.

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With lingering concerns over the global economic outlook, investors may look to ETF strategies to diminish the risks when investing internationally. For example, the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (NYSEArca: DEEF) tracks an enhanced beta FTSE Russell indices that target quality, momentum, value, size and volatility - five key factors many financial institutions have looked at to help gain an edge over traditional beta indexing methodologies.

Financial advisors who are interested in learning more about market headwinds and opportunities ahead can register for the Wednesday, June 22 webcast here .

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

This article was provided by our partner Tom Lydon of etftrends.com.


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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