ETFs
5 ETFs to Buy for June – June 5, 2024
The month of June can be vital for investors for a variety of reasons, ranging from uncertainty over Fed rate cuts to a non-seasonal stock investing pattern. A consensus run from 1950 to 2023 shows that June ended up delivering positive stock returns over 39 years and negative returns over 35 years, according to moneychimp.com, with an average return of negative 0.04%.
Will we soon have a rate cut from the Fed?
There is now a 55.3% chance of a 25 basis point Fed rate cut in September, according to the CME Fedwatch tool, up from 51.3% recorded on June 3, 2024. L Inflation, which resumed its rise in the first quarter of 2024, is finally showing signs of cooling.
The Commerce Department said personal consumption expenditures (PCE), the Fed’s preferred inflation gauge, rose just 0.3% sequentially in April, unchanged from March’s rise and consistent with the consensus estimate. Core PCE rose 0.2% sequentially, lower than March’s 0.3% rise and the consensus estimate of a 0.3% rise.
Furthermore, the manufacturing sector slowed further in May. The ISM manufacturing PMI fell to 48.7% in May from 49.2% in April, indicating a slowdown in the economy. This requires Fed policy to be accommodative. Signs of a slowing economy and falling inflation have raised hopes the Fed will cut rates in the near term.
AI innovation keeps the tech space hot
Innovation is essential for a company to stay relevant and increase its market share. NVIDIA (NVDA – Free report) indicates this positive trend, with its advances in artificial intelligence (AI) propelling its stock and putting it in the spotlight. NVIDIA’s decision was a cornerstone for the entire industry, as companies like Advanced Micro Devices (AMD – Free report) and Intel (INTC – Free report) have also introduced next-generation AI chips. Therefore, investors are less likely to take their eyes off AI and chips.
In this context, we highlight a few ETF options that may appear to be intriguing bets for the month.
Focus on ETFs
Strive US Semiconductor ETF (SHOCK – Free report)
The space is busy with activities. AMD has about 7.23% exposure to SHOC, while NVDA has about 31%. The underlying Solactive United States Semiconductors 30 Capped Index measures the performance of the 30 largest U.S. companies in the U.S. semiconductor industry. The Zacks Rank #2 (Buy) fund charges 40 basis points in fees (read: 4 ETF Zones Oscillating Around 52-Week Highs).
SPDR ETF for Selected Utility Sectors (XLU – Free report)
The space will likely benefit from both likely lower interest rates and high energy needs due to the AI boom. The Utilities Select Sector Index seeks to provide an effective representation of the utilities sector of the S&P 500 Index. The fund charges 9 basis points in fees (read: More S&P 500 rally in prospect? ETF to win).
ProShares S&P 500 Dividend Aristocrats ETF (NOBL – Free report)
Exposure to Dividend Aristocrats is important because these investments are less volatile. The underlying S&P 500 Dividend Aristocrats Index targets companies that are current members of the S&P 500, have increased their dividend payments every year for at least 25 years, and meet certain market capitalization and liquidity requirements. The fund charges 35 basis points in fees and earns 2.08% per year.
iShares Bitcoin Trust Registered (I BITE – Free report)
Bitcoin rose above the $71,000 level, reflecting greater confidence in global markets over the prospect of a Fed rate cut this year. The largest the streak of daily increases in digital assets has now become the longest in three months. The asset is now not far from its all-time high.
The Underlying CME CF Bitcoin Benchmark Rate, New York Variant, is a daily benchmark index for Bitcoin that aggregates trading data from multiple Bitcoin-USD markets operated by major cryptocurrency exchanges. The fund charges 25 basis points in fees.
Schwab US Large Cap Growth ETF (SCHG – Free report)
Investors should note that large-cap stocks have broad overseas exposure. Foreign economies have been improving lately, further strengthening the case for investing in large caps. Companies have strengthened themselves not only in the United States but also in Europe. As a result, large-cap growth ETFs like SCHG will likely enjoy particular advantages. The fund tracks the Dow Jones US Large-Cap Growth Total Stock Market Index. The fund charges 4 basis points in fees.
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