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5 High Beta ETFs That Are in High Momentum

By Zacks Investment ResearchStock MarketsMay 27, 2020 02:30AM ET
www.investing.com/analysis/5-high-beta-etfs-that-are-in-high-momentum-200525908
5 High Beta ETFs That Are in High Momentum
By Zacks Investment Research   |  May 27, 2020 02:30AM ET
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Coronavirus vaccine hopes and recovery in travel pattern during the Memorial Day weekend led to a rally in the U.S. market. The small-cap index Russell 2000 is leading the gains, and crude oil is also advancing amid reopening of economies. The S&P 500 traded above 3,000 for the first time since March 5.

Efforts in formulating a coronavirus vaccine are ramping up. The World Health Organization has recognised some 10 prime candidates for these potential vaccines as these have entered clinical trials. Plus, 114 candidate vaccines are in preclinical evaluation stage.

Per WHO, these prime candidates for potential vaccine include mRNA-1273 vaccine by Moderna (NASDAQ:MRNA) Inc. MRNA, potential vaccine ‘ChAdOx1 nCoV-19’ from Oxford University, RNA vaccine candidate from the collaboration between U.S.-based Pfizer (NYSE:PFE) and German pharmaceutical company BioNtech, and DNA-based vaccine from INOVIO Pharmaceuticals INO. Novavax (NASDAQ:NVAX) NVAX said lately that it began human testing of its coronavirus vaccine candidate, and expects preliminary results for the trial in July.

Consumer spending is very important for U.S. economic wellbeing as it contributes 70% of the U.S. GDP.A measure of consumer confidence jumped to 86.6 this month from 85.7 in April, according to the Conference Board. Economists polled by Dow Jones expected consumer confidence of 82.3 in May.

Along with some analysts, we too believe that the CARES relief checks and widespread price discounting boosted their buying attitudes and probably led to the optimism. According to a new survey from Piper Sandler (NYSE:PIPR), about 47% of the respondents said recently they will head to restaurants as soon as they reopen.

We all know that the leisure industry is the most-hurt by the pandemic. Data from hospitality firm STR showed hotel occupancy up 32.4% for the most recently reported week ended May 16, from 21.0% the period ended Apr 11. However, the latest data is still down 54% year over year. While these developments are upbeat for the markets, mammoth Fed and government stimuli are the other tailwinds.

Why High-Beta & Momentum Investing Is Intriguing Now

High Beta ETFs

Beta is directly related to market movement. Notably, high-beta funds tend to rise or fall more than the stock market and are thus more volatile. When markets soar, high-beta funds experience larger gains than the broader market counterparts and thus, outpace their rivals. Momentum investing might also be an intriguing idea for those seeking higher returns in a short spell. It looks to reflect profits from buying stocks that are sizzling on the market.

Against this backdrop, investors may choose to bet on the below-mentioned ETFs that have a beta greater than one and that have gained more than the S&P (NYSE:SPY) 500 past month.

ETF Picks

Invesco (NYSE:IVZ) S&P SmallCap Consumer Discretionary ETF (PSCD) – Up 4.9% on May 26

Beta: 1.02x

One-Month Gain: Up 40.31%

Zacks Rank: #3 (Hold)

Invesco KBW High Dividend Yield Financial ETF (KBWD) – Up 4.6% on May 26

Beta: 1.13x

One-Month Gain: Up 32.2%

Zacks Rank: #3

SPDR S&P Internet ETF (XWEB) – Up 0.3% on May 26

Beta: 1.05x

One-Month Gain: Up 34.8%

Zacks Rank: #2 (Buy)

First Trust Small Cap Value AlphaDEX Fund (FYT) – Up 6.0% on May 26

Beta: 1.10x

One-Month Gain: Up 30.6%

Zacks Rank: #3

SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) – Up 1.4% on May 26

Beta: 1.09x

One-Month Gain: Up 14.6%

Zacks Rank: #1 (Strong Buy)

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Moderna, Inc. (MRNA): Free Stock Analysis Report

Novavax, Inc. (NVAX): Free Stock Analysis Report

Inovio Pharmaceuticals, Inc. (NASDAQ:INO): Free Stock Analysis Report

First Trust Small Cap Value AlphaDEX ETF (FYT): ETF Research Reports

SPDR SP Internet ETF (XWEB): ETF Research Reports

Invesco SP SmallCap Consumer Discretionary ETF (PSCD): ETF Research Reports

Invesco KBW High Dividend Yield Financial ETF (KBWD): ETF Research Reports

SPDR Portfolio SP 1500 Composite Stock Market ETF (SPTM): ETF Research Reports

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5 High Beta ETFs That Are in High Momentum
 

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5 High Beta ETFs That Are in High Momentum

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