Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

13 Unstoppable “Megatrend” Funds You Can Buy Now

By Contrarian Outlook (Michael Foster)ETFsOct 29, 2018 06:40AM ET
www.investing.com/analysis/13-unstoppable-megatrend-funds-you-can-buy-now-200351483
13 Unstoppable “Megatrend” Funds You Can Buy Now
By Contrarian Outlook (Michael Foster)   |  Oct 29, 2018 06:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

If you’re like most people, you probably think it’s tough to find a fund that’s had a great 2018, especially since recent volatility has brought pessimism back in vogue.

But you’d be wrong.

Truth is, a lot of funds are doing well, with over 400 up nearly 5% or more so far on the year. The top performers share 3 common themes that could tell us a lot about which sectors are poised to take off next year.

Let’s dig in. Along the way, we’ll hone in on 13 funds cashing in as these breakthrough trends head higher.

Trend No. 1: A Return to Healthcare (5 Funds)

Investors tend to get scared of healthcare and biosciences stocks during times of broader market unease, but every once in a while they ignore the panic and focus on the lifesaving innovations this sector can provide.

Right now is clearly one of those times. Despite recent market panics in the broader sector, there is one clear trend: healthcare, after starting off 2018 on a shaky footing, is back with a vengeance, and these funds are crushing the competition.

That’s why the PowerShares S&P SmallCap Health Care (NASDAQ:PSCH) is the biggest fund winner of 2018 so far, though many other healthcare funds have clocked impressive returns, too:

Invesco S&P SmallCap Health Care ETF
Invesco S&P SmallCap Health Care ETF

If you missed the health care wave and want to jump in, PSCH, as well as the SPDR S&P Health Care Equipment ETF (NYSE:XHE), the iShares US Healthcare Providers (NYSE:IHF), the iShares US Medical Devices (NYSE:IHI) and the PowerShares DWA Healthcare Momentum Portfolio (NASDAQ:PTH) have all crushed the market, with 21.9% average returns for 2018, even before we hit Halloween!

These funds are strikingly similar, focusing on the healthcare sector broadly (which includes everything from medical equipment to drugs and hospitals), though XHE and IHI are the exceptions as a device-only pure plays. What they have in common is a belief that many innovations in pharmaceuticals and healthcare are starting now—and there are identifiable companies that will profit.

Trend No. 2: Tech Beyond FAANG (3 Funds)

It’s no secret that tech has been struggling this year—especially the big names. Google (NASDAQ:GOOGL) is up a measly 4% (less than the S&P 500), with a lot of its gains disappearing in the last few weeks. Even worse, controversy-plagued Facebook (NASDAQ:FB) is down a whopping 13.9%, which has put FAANG in a tight spot.

Not all of FAANG is suffering, of course. Netflix (NASDAQ:NFLX) is up an unbelievable 68.8% for 2018 and Apple (NASDAQ:AAPL) has clocked in an impressive 29.9%, becoming the world’s first trillion-dollar company and staying there. And, of course, Amazon (NASDAQ:AMZN) is close on Apple’s heels following a 49.6% run-up in 2018.

What does this divergence tell us? That tech is still a winner, but the “dumb” FAANG index (which never made much sense to begin with) is not a winner. Instead, we need to take a more strategic approach to tech.

That’s what we’ve seen with three ETFs, the SPDR S&P Internet (NYSE:XWEB), the PowerShares Dynamic Software (NYSE:PSJ) and the iShares North American Tech-Software (NYSE:IGV), which have given investors some of the top gains for the year (XWEB is the second-best unlevered ETF of 2018):

SPDR S&P Internet ETF
SPDR S&P Internet ETF

Considering XWEB’s name, its strong showing considering Facebook’s struggles is surprising. But XWEB is actually underweight Facebook relative to many smaller and strong-performing web-only names like Godaddy Inc (NYSE:GDDY), IAC/InterActiveCorp (NASDAQ:IAC) and Match Group (NASDAQ:MTCH), which have all been leading while Facebook has been trailing.

Similarly, PSJ and IGV, which focus on software companies that provide the backbone of the digital world, have been crushing it while the investors focus on Facebook’s woes. That “sleeper” return shows that investing in tech is still a winner, even when FAANG isn’t as strong as it once was.

Trend No. 3: Oil Is Back (5 Funds)

Oil has been a dud for years—since the 2014 crash, it’s struggled to get over $60 a barrel. That is, until this year.

A surge in demand has finally turned the tide, and crude is up 18.8% for 2018:

Oil Prices Finally Climb Higher

Oil Prices Finally Climb Higher
Oil Prices Finally Climb Higher

It’s a welcome change for commodities traders, and a lot of ETFs have also been on the winning end of this trade.

In fact, there are 5 oil ETFs that have done better than oil prices: the PowerShares DB Oil (NYSE:DBO), the United States 12 Month Oil (NYSE:USL), the United States Brent Oil (NYSE:BNO), the United States Oil ETF (NYSE:USO) and the ProShares K-1 Free Crude Oil Strategy (NYSE:OILK):

Invesco DB Oil ETF
Invesco DB Oil ETF

While each of these has a slightly different focus, with USO, BNO and USL being plays on futures directly, while OILK and DBO focus on oil producers, their returns are correlated enough to oil to make one thing clear: investing in energy in 2018 was the right move.

Still, investors need to be careful when they think about 2019. These winners are very different from 2017’s winners, and many of these funds were duds last year. So this year’s gains don’t necessarily translate into next year’s profits. But learning what won in 2018 tells us a lot about where this market is positioned for next year, and how a prudent investor can profit from market changes.

These Exploding 7.1% Yielders Crush ETFs

ETFs can work for your portfolio, but I’m not a huge fan of them right now, for one simple reason: most don’t pay meaningful dividends!

That goes double for funds in the high-flying tech world, which are focused on one thing at all costs: growth!

There’s nothing wrong with that, of course. But if you want to build a comfortable retirement, the cash you get from regular dividend payouts is too important to ignore.

Which is why I’m pounding the table on 4 other funds that are throwing off a fat 7.1% average dividend yield now!

That’s right: a payout 4 TIMES what the millions of folks sitting on the typical S&P 500 index fund are forced to settle for. And no, these 4 low-key picks aren’t ETFs: they’re a special kind of fund called a closed-end fund.

The upshot: these ignored funds give you the best of both worlds: fat yields—payouts of 7%, 9.5% and even 11% are common in the CEF space—and BIG upside potential.

Even better, all 4 of these winners are ridiculously CHEAP now. In fact, my team’s latest analysis points to massive 20%+ price upside in the next 12 months.

And that huge 20% spike comes on top of our gaudy 7.1% payout!

I’m ready to give you access to all of my research on these 4 powerhouse funds with no obligation whatsoever. Simply CLICK HERE to discover their names, tickers, buy-under prices and everything you need to know before you buy.

Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement."

13 Unstoppable “Megatrend” Funds You Can Buy Now
 

Related Articles

BlackBull Markets
Yellow Card For Sports ETF By BlackBull Markets - Sep 01, 2021

Cristiano Ronaldo announced that he would be leaving Juventus Football Club (MI:JUVE) and returning to play for the club where he started his professional career, Manchester United...

13 Unstoppable “Megatrend” Funds You Can Buy Now

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Green Mango
Green Mango Mar 20, 2019 5:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Just found this.  Great article Michael.  More like this would be nice.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email