5 ETF Areas Hitting Highs On Market Dip

Wall Street stepped back on Nov 14, after the industrial conglomerate giant, General Electric (NYSE:GE) maintained its steep southward journey. The stock has been suffering due to a dividend cut and issuance of downbeat profit guidance.

Investors were concerned whether an extensive overhaul of the company by the new Chief Executive John Flannery will be successful and adequate to boost its profits, as per Reuters (read: Steer Clear of GE, Bet on These Industrial ETFs Instead).

To make matters worse, gloom overshadowed the otherwise-recovering oil patch. Oil prices plunged on Nov 14, after the International Energy Agency (IEA) expressed doubts over the prevailing ideas of tightening fuel markets. WTI ETF United States Oil (NYSE:USO) USO lost about 2.2% and United States Brent Oil (AX:BNO) was off about 1.9%.

The agency lowered its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018, as per an article published on Reuters.

Added to these, concerns over the seamless passing of the republican’s tax reform are making investors nervous. The apparently ebbing popularity of Trump is contributing to such threats. Plus, there is the Fed with its reverse QE measure and policy tightening cycle. Per the CME Federal Reserve watch tool, there is a 97% probability of a rate hike in December. And, overvaluation concerns have been rife for quite some time now. There are political tensions in the global market as well.

Against such a scenario, it would be intriguing to see which ETF or investing areas were winners in a phase of stock market downturn. Below we highlight some ETFs which hit a 52-week high on Nov 14.

Low Volatility & Beta

Thanks to the afore-mentioned issues, market complacency appears to have wavered in recent trading. This sense of instability made low-volatility and low beta investments highly coveted and led some ETFs to 52-week highs on Nov 14, 2017. These are PowerShares S&P 500 Low Volatility ETF SPLV, PowerShares S&P 500 ex-Rate Sensitive Low Volatility ETF XRLV, iShares Edge MSCI Min Vol USA ETF USMV, SPDR SSGA US Large Cap Low Volatility ETF (V:LG) and PowerShares Russell 1000 Low Beta Equity Weight Portfolio USLB (read: Time to Buy Global Low Volatility ETFs?).

Utility

As equity indexes retreated, safe-haven appeal gained precedence. As a result, bond yields dropped a little. Low bond yields boosted the rate-sensitive and safe sectors like utility. The utility sector is non-cyclical in nature and performs better in a falling rate environment.

JHancock Multifactor Utilities ETF JHMU, Fidelity MSCI Utilities ETF FUTY, Vanguard Utilities ETF VPU and Utilities Select Sector SPDR ETF (NYSE:XLU) XLU are some of the sectors that hit a one-year high on Nov 14.

Homebuilding

Home sales in the United States is in a stabilized state currently. Homebuilder confidence ticked up to a six-month high in October. Need for reconstruction post hurricanes have probably given a boost to home sales. This along with slightly lower rates gave ETFs like iShares US Home Construction ETF (WA:ITB) and Direxion Daily Hmbldrs&Supls Bull 3X ETF NAIL a boost (read: 3 ETFs to Buy as New Home Sales Surge).

High Dividend

Against the afore-mentioned backdrop, what could be a better bet than PowerShares S&P 500 High Dividend Low Volatility Portfolio SPHD. The fund yields about 3.48% annually.

Real Estate

This is yet another rate-sensitive sector. REITs’ requirement of debt for their business makes investors cautious about their performance in a rising rate environment. Naturally, in a subdued yield environment and growing economy, iShares US Real Estate ETF IYR hit a high (read: Forget Rate Tantrums, Bet on REIT ETFs).

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