- (0:30) - Long Term Investing: Top 5 ETFs
- (2:00) - Global X IoT ETF: SNSR
- (3:50) - China Continues To Rise: ASHR
- (6:00) - WisdomTree U.S. SmallCap Earnings Fund: EES
- (7:30) - iShares MSCI Eurozone ETF: EZU
- (9:20) - SPDR S&P Regional Banking (MX:KRE) ETF: KRE
- (11:30) - Episode Roundup: Podcast@Zacks.com
In some bittersweet news, this will actually be the final Dutram Report!
I hope you enjoyed the series, but it is time for me to move on from Zacks so I will have to end the podcast here.
However, before I leave, I wanted to make sure I shared with you some of my top picks for the next five years. These picks should stand the test of time and look to be playing off of some trends that I believe have true staying power as well.
So, listen to the podcast for additional information regarding the trends and picks, but take a look at which funds and areas of the global ETF market I like for the next few years in the paragraphs below!
Technology
How can any list targeting investments for the next half decade not include a technology ETF? The tech sector has been extremely hot and there is plenty of reason to think this is an area that can keep up the momentum in the near future.
However, not just any segment will do here. I especially like the world of the Internet of Things as this is still in its infancy and is going to be experiencing incredible growth in the years ahead. And as we have seen in recent months, growth is at a premium in today’s market so why not focus where it is most likely to be in the tech world?
Fortunately for investors, there is an ETF to play this market, the Global X Internet of Things ETF (SNSR). This fund gives us broad exposure to companies engaged in the Internet of Things industry, focusing on semiconductor and electrical component companies for exposure. If you believe this is an important area for tech investors in the future, definitely give this fund a closer look.
China
China continues to assert itself on the world stage and it is making tons of investments around the globe. Their economy has survived bubble talk and appears to be increasingly balanced and poised for continued growth in the years ahead too.
One area that may be especially promising for this market is with the A-Shares. This share class- which only trades in Shenzhen and Shanghai—was once closed off but is now opening up and was recently included by MSCI in key emerging market benchmarks too.
A great way to play this is with the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (ASHR). It focuses in on A-shares securities and does so with a partnership with Harvest Global. This partnership allows Deutsche Bank (DE:DBKGn) to give U.S. investors direct access to these Chinese securities via the ETF, something that many other funds cannot do (as others use swaps and various derivative instruments to obtain exposure). So, if you are a believer in China’s long-term potential, this is definitely one to put on your watch list.
U.S. Small Caps
It is no secret that large caps have been dominating their small cap peers, but there are some cracks beginning to appear in this run of outperformance for the bigger companies. Recent trading has been favorable for small caps, and these types of securities do generally outperform anyway, at least over long time frames. Plus, with recent U.S. economic strength, smaller companies could stand to benefit if these trends continue.
And while there are a ton of ETFs in this market, one that I like in particular is the WisdomTree US SmallCap Earnings ETF (EES). This fund only focuses on companies that are small and producing positive earnings, giving it a slightly different focus than others out there. The ETF also should benefit more than most in the small cap world if tax reform actually happens thanks to this earnings focus, so definitely keep it in mind as an often overlooked but potentially strong small cap choice in the years ahead.
Europe
Looking abroad, things are finally clearing for Europe. The worst of their crisis is in the past, political risks are nowhere near what they used to be, and European markets are intriguing choices when compared to many of their surging American counterparts, particularly if the trend of euro strength continues.
One ETF in particular that could be interesting if these trends continue is the iShares MSCI EMU Index Fund (EZU). This ETF only focuses on euro zone economies, so no need to worry about Brexit-related British firms here. Additionally, with a lack of currency hedging, positive trends in the euro should definitely benefit this fund relative to its currency-hedged peers out there.
Financials
It pains me to say it, but it does appear as though more rate hikes are coming. I don’t really agree with this line of thinking, but it does appear somewhat inevitable at this point that rates will rise eventually.
This looks to be good news for the entire financial sector, but some of the big banks have seen trouble with trading volumes in recent weeks and it could be a secular trend for lower revenues in this area. That is why I am looking to smaller banks for the years ahead as a better selection.
In particular, I think the SPDR S&P Regional Bank ETF (KRE) is an intriguing choice. It uses an equal weight methodology and is quite spread out among regional banking securities. This represents a nice happy medium between community banks and multinationals, potentially making it a good way to benefit from a positive trend on the interest rate front in the years ahead.
Hopefully you enjoy these picks and have the best of luck investing with ETFs in the future!
Bottom Line
But what do you think about these ETF picks? Make sure to write us in at podcast @ zacks.com or find me on Twitter @EricDutram to give us your thoughts on this, or anything else in the fund market.
But for more news and discussion regarding the world of investing, make sure to check out the many other great Zacks podcasts, as well as our articles and videos, for all of your investing needs!
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ISHARS-EMU IDX (EZU): ETF Research Reports
DEUTS-XT HV CS3 (ASHR): ETF Research Reports
WISTR-US SC ERN (EES): ETF Research Reports
SPDR-KBW REG BK (KRE): ETF Research Reports
GLBL-X IOT ETF (SNSR): ETF Research Reports
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