Historically, February is not a favorable month for stocks as the S&P 500 has offered negative 0.05% on average since 1950, per moneychimp.com. This year, January was the best in 30 years and the winning momentum is continuing in the second month of the year.
Positive signals from the Fed and developments on the trade front have been driving the rally. The Fed has dropped hints of taking a dovish stance on rate hikes this year. However, there is uncertainty related to the government shutdown. After more than a month-long impasse, the U.S. federal government reopened in January-end for three weeks.
The differences between Democrats and Republicans on passing the $5.6-billion funding for Mexico border wall is still in place. China and the United States are said to have progressed on trade relations, but probably meet at month-end for further discussions. So, many key economic factors are still in limbo and might cause some upheaval in the market in late February (read: 3 Dividend Growth ETFs & Stocks to Counter Looming Volatility).
Given this, investors must be interested in finding ETFs to win over the unseen or cash in on some inevitable euphoria. For them, we have highlighted a few ETFs.
ETFMG Alternative Harvest ETF ( (SNX:MJ) )
Marijuana stocks are on a tear since the start of the year on upbeat industry developments and growing mergers and acquisitions. Growing global legalization, for both medical and recreational purposes, has been supporting marijuana stocks. So, investors can tap this high-momentum trade and bet on a pure-play ETF.
SPDR S&P Dividend (NYSE:SDY) ETF ( (TO:SDY) )
With reasons for volatility to stay, investors can safely bet on dividend growth ETFs. Stocks with a history of raising dividends provide hedge against economic uncertainty and these are high-quality in nature.
The underlying S&P High Yield Dividend Aristocrats Index of SDY measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have consistently hiked dividends for at least 20 straight years.
GraniteShares US High Income ETF HIPS
With the Fed dropping hints of relatively accommodative policies in the near term, Treasury bond yields have been near moderate levels. So, many investors may like to tap multi-asset income ETF like HIPS that offer as sturdy as a 7.73% annual yield. The fund ensures high current income and is likely to give protection during market selloffs as these have exposure to several types of asst classes.
Invesco Dynamic Oil & Gas Services ETF (PXJ)
First of all, the sector enjoys seasonal strength in February, per equityclock.com. Fresh output cut decision by OPEC and Russia for the first six months of the year, U.S. sanctions against Venezuela on political grounds and U.S.-Sino trade deal hopes have kept oil and energy ETFs steady of late.
Health Care Select Sector SPDR ETF (NYSE:XLV) (XLV)
Overall, the healthcare sector appears strong. While the sector is non-cyclical in nature, it should benefit from rising merger and acquisitions as well as approvals for some novel drugs. However, the price gouging issue is still a concern (read: Best ETF Ideas for 2019).
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SPDR S&P Dividend ETF (SDY): ETF Research Reports
Health Care Select Sector SPDR Fund (XLV): ETF Research Reports
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Zacks Investment Research