5 U.S. Equity ETFs Beginning 2017 With A Bang
The 2016 stellar run for the U.S. stock market continued with the start of 2017. In particular, the S&P 500 and Nasdaq set a new record high in the first week of New Year while Dow Jones fell shy of the major threshold 20,000.
The U.S. economy is clearly on a solid footing buoyed by an impressive labor market, rising wages, slowly rising inflation and increasing consumer spending. Americans have an optimistic view about the economy with confidence hitting the highest level since 2001. Additionally, the combination of other factors like return to the earnings growth era, the jump in oil price, Trump’s pro-growth policies and the rise in interest rates added to the strength.
As a result, the flight to ETFs continued in the first week of 2017 after a record-breaking year in terms of ETF asset gathering. This is especially true as investors’ poured in more than $13 billion into U.S.-listed ETFs last week ending January 5 as per ETF.com. Notably, U.S. equity ETFs saw inflows of nearly $8.7 billion, followed by nearly $2.8 billion in U.S. fixed income. International equity and fixed income saw inflows of $1.6 billion and over $500 million, respectively.
Below we have highlighted the five U.S. ETFs that gained maximum investor attention in the first week.
Vanguard S&P 500 (VOO - Free Report)
VOO was the top asset gainer, having accumulated nearly $999.7 million in its asset base. This took the fund’s total AUM to $56.5 billion. The ETF tracks the S&P 500 index, and holds 510 stocks in its basket with none accounting for more than 3.1% of assets. The fund is also widely spread across a number of sectors with information technology, financials, health care, and consumer discretionary making up for a double-digit allocation each. It is a low cost choice in the space charging only 5 bps in fees per year and trades in solid volume of 2.1 million shares a day. It has added 1.3% in the first week of 2017 and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook.
Financial Select Sector SPDR Fund (XLF - Free Report)
This is the most popular financial ETF that follows the Financial Select Sector Index. It gathered about $739.9 million in capital last week, bringing the total AUM to $22.5 billion. The fund charges 14 bps in fees per year from investors and trades in heavy volume of more than 59.6 million shares a day. In total, the fund holds about 65 securities in its basket with high concentration on the top two firms at over 10% share each. Other firms hold no more than 8.6% share. From a sector look, banks takes the top spot at 45.1% while capital markets, insurance and diversified financial services account for a double-digit allocation each. XLF added 0.6% last week and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.
SPDR S&P 500 (SPY - Free Report)
This ultra-popular ETF with a total asset base of around $212 billion accumulated over $732 million last week. It also tracks the S&P 500 index, and holds 507 stocks in its basket with each holding less than 3.3% of assets. The fund is widely spread across a number of sectors with information technology, financials, health care, consumer discretionary and industrials each accounting for s double-digit exposure. The product charges 11 bps in fees per year and trades in average daily volume of more than 86.7 million shares. The fund has gained 1.3% so far this year and carries a Zacks ETF Rank of 3 with a Medium risk outlook.
iShares Russell 2000 (IWM - Free Report)
The fourth top asset gainer was from the small cap segment that pulled in about $709 million in capital last week, taking the total asset base to $38.7 billion. The product provides exposure to a broad basket of 1,982 stocks by tracking the Russell 2000 Index. It is well spread out across components as none of these holds more than 0.45% of assets. Sector wise, financials takes the top spot with 19.6% share, followed by information technology (16.9%), industrials (14.5%), health care (12.5%) and consumer discretionary (12.4%). The product is extremely liquid, trading in average volumes of around 28.1 million shares a day and charges 20 bps in annual fees. It lost 0.04% last week and has a Zacks ETF Rank of 3 with a Medium risk outlook.
Vanguard REIT Index ETF (VNQ - Free Report)
This fund targets the real estate segment of the broader U.S. market. It follows the MSCI US REIT Index and holds 157 stocks in its basket with none accounting for more than 7.3%. Retail REITs, specialized REITs, residential REITs, office REITs and healthcare REITs make up for the top five industries with double-digit exposure each. Expense ratio comes in at 0.12%. VNQ gathered $693.1 million last week, propelling its AUM to $32.6 billion. It trades in volume of 4.7 million in shares a day on average. The ETF was up 1.2% and has a Zacks ETF Rank of 3 with a Medium risk outlook.