ETFs
4 ETFs that are safe bets in July
Owning individual stocks can certainly be exciting. However, if you’ve been an investor for a while, you also know that picking and keeping tabs on companies can be a very complicated job. There may be other things you’d rather spend your time and energy on.
If that’s the case, there’s a simple solution: buy and hold baskets of thematic stocks. You know them better as exchange-traded funds (ETFs). These investments allow you to refine your allocation strategy without forcing you to pick individual stocks. That’s why they’re also low-cost investments.
These four ETFs each follow different strategies, but all appear to be particularly attractive prospects this month.
Value stocks
For most of the 21st century, growth stocks like Nvidia And Amazon dominated the headlines. And understandably so: they consistently led the market higher during this period.
One of the key factors underlying their strength, however, has recently changed dramatically: interest rates. After years of abnormally low rates—a situation that favors growth stocks—interest rates have finally returned to near their long-term norms. This change in trend works against debt-dependent countries. growing companiesbut works in favor of companies that are generally classified as value stocks.
Enter the Vanguard Value ETF (NYSEMKT: VTV). As its name suggests, this Vanguard fund holds familiar value stocks like JP Morgan, United HealthAnd Procter & GambleThese stocks have performed well recently, but their gains have barely matched those of growth stocks. However, as the macro environment shifts toward a slower pace of growth and rewards reliable cash flow, expect these names and this ETF to enter a period of pronounced outperformance.
Just keep in mind that this is a philosophical trade that could take several quarters – or even years – to demonstrate its value.
Basic materials
It’s not just higher interest rates that make the environment more favorable for some types of stocks than others. The economic backdrop that has been in place since the second half of 2022 has also raised many concerns about the possibility of a recession in the United States. This would obviously have been a problem for all companies, but economic downturns present a particular challenge for companies in the basic materials sector.
That is why SPDR Fund for Selected Materials Sector (NYSEMKT: XLB) has been a laggard of late. However, given the ever-improving outlook that the country will remain on track for a soft economic landing — a landing that may well have already happened — the recent period of weakness in the materials sector may have created a prime buying opportunity for this particular SPDR fund.
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This is what the brokerage firm says Charles Schwab, Regardless. Materials are one of only three sectors that Schwab expects to outperform the broader market in the foreseeable future.
And it’s not just Schwab. The Morning Star is also bullish on several of the biggest names in the sector. Mutual fund giant Fidelity and investment bank Morgan Stanley Both countries also see opportunity, both citing an unexpected upturn in economic growth as a key factor in any immediate gains. The stronger the economy, the greater the demand for materials — from copper to cement to lumber to chemicals — will be.
Energy
The oil and gas sector is now one of Charles Schwab’s favorite sectors. And again, the broker isn’t alone in being bullish. Fidelity, among others, is also buying into the idea.
“We may be at the beginning of a significant investment cycle in international and offshore production that has yet to be fully appreciated by investors,” said Fidelity analyst Maurice FitzMaurice. “Energy equipment and services companies, which provide the critical equipment and services needed to produce oil and gas, could be potential beneficiaries of this investment cycle.”
In the meantime, crude oil prices are likely to hold up better than many observers had anticipated. A recent Reuters poll predicts Brent crude prices will end the year near $84 a barrel (near their current level) as demand keeps up with supply. Goldman Sachs forecasts that global crude oil consumption will continue to grow through 2034.
Given these circumstances, Select Energy Sector SPDR Fund (NYSEMKT:XLE) is a smart and simple way to add some energy exposure to your portfolio.
Artificial intelligence
Last but not least, add the ETF Global X Artificial Intelligence and Technology (NASDAQ:AIQ) to your list of exchange-traded funds to buy in July.
The upcoming economic environment may favor yield stocks over growth stocks. However, there are always exceptions to these general themes. The advent of artificial intelligence is one of them. Precedence Research predicts that the global AI market will grow at a 19% annualized rate through 2032.
There aren’t any ETFs that are highly focused on artificial intelligence, not even this one (despite its name). However, this exchange-traded fund holds most of the tech stocks that have the most to gain from the growth of the AI sector. Nvidia, MicrosoftAnd Apple are among its major titles, and each brings something unique – and important – to the artificial intelligence movement.
There is no better way to get started in the AI revolution without becoming an expert on the subject and then taking risks on stocks that are sure to remain volatile.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool board of directors. Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Charles Schwab, Goldman Sachs Group, JPMorgan Chase, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Value ETF. The Motley Fool recommends UnitedHealth Group and recommends the following options: long January 2026 $395 call on Microsoft, short January 2026 $405 call on Microsoft, and short June 2024 $65 call on Charles Schwab. The Motley Fool has a position in Amazon, Apple, Charles Schwab, Goldman Sachs Group, JPMorgan Chase, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Value ETF. The Motley Fool recommends UnitedHealth Group and recommends the following options: long January 2026 $395 call on Microsoft, short January 2026 $405 call on Microsoft and short June 2024 $65 call on Charles Schwab. disclosure policy.
4 ETFs that are safe bets in July was originally published by The Motley Fool