Despite the doom and gloom in the market, investors still continue to flock toward the hottest ETFs to buy. exchange-traded funds comprised a third of total U.S. exchange volume during the Q1, a record percentage.
Meanwhile, equity ETFs saw $154 billion in net flows during the first quarter, down from a record $209 billion in the previous year. U.S. stock ETFs accounted for over $110 billion of these net flows.
Moreover, the last week of May saw the first weekly inflow of global equity funds in seven weeks. Investors purchased a net $6.16 billion worth of global equity funds, marking their first weekly net buying since April 6.
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With that information, here are seven hot ETFs to buy that have significant potential to gain traction during the second half of the year.
Financials Alphadex Fund | $42.97 | |
InfraCap MLP ETF | $33.52 | |
Invesco S&P 500 GARP ETF | $85.48 | |
iShares Semiconductor ETF | $416.06 | |
SPDR S&P Global Infrastructure ETF | $57.70 | |
VanEck Morningstar Wide Moat ETF | $68.94 | |
Vanguard Consumer Discretionary Index Fund ETF | $255.53 |
First Trust Financials Alphadex Fund (FXO)
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52-week range:$39.81- $48.99
Dividend yield:2.05%
Expense ratio: 0.61% per year
The Financials Alphadex Fund (NYSEARCA:FXO) aims to outperform the U.S. financials market by applying a quant-based model to the Russell 1000 financials universe. The fund started trading in May 2007.
FXO tracks the StrataQuant Financials Index and has 103 holdings. With regards to sectoral exposure, we see investment banking and brokerage services (30.72%), followed by non-life insurance (29.32%) and banks (22.00%), among others.
The top 10 stocks in the portfolio account for roughly 17% of the $1.30 billion in net assets. Among them are thebroker-dealer companyLPL Financial (NASDAQ:LPLA); mortgage insurance and services provider MGIC Investment (NYSE:MTG); investment banking advisory company Evercore (NYSE:EVR); and investment banking groupJefferies Financial (NYSE:JEF).
FXO is down 7.5% year to date. P/E and P/B ratios stand at 9.22x and 1.32x, respectively. The fund could appeal to readers who expect financials to do better in the second half of the year.
InfraCap MLP ETF (AMZA)
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52-week range:$23.27 – $33.33
Dividend yield:7.97%
Expense ratio: 1.40% per year
The InfraCap MLP ETF (NYSEARCA:AMZA) offers exposure to midstream master limited partnerships (MLPs) that collect, process, store or transport energy products. With energy prices on the move, AMZA is one of the more attractive ETFs to buy.This actively managed fund has an emphasis on high current income.The fund started trading in October 2014.
AMZA, which tracks the Alerian MLP Infrastructure Index, has 25 holdings. We should note that the top three names in the portfolio account for roughly half of $327 million in net assets.
They are Western Midstream (NYSE:WES), Enterprise Products (NYSE:EPD), and Magellan Midstream (NYSE:MMP), MPLX (NYSE:MPLX).
The ETF is up 26% so far in 2022. P/E and P/B ratios currently stand at 16.61x and 2.44x, respectively. AMZA could appeal to investors looking for monthly distributions in their ETFs.
Invesco S&P 500 GARP ETF (SPGP)
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52-week range:$80.44 – $97.90
Dividend yield:0.77%
Expense ratio: 0.36% per year
The Invesco S&P 500 GARP ETF (NYSEARCA:SPGP) invests in growth stocks that fund managers regard as having quality and value traits. The fund includes a wide range of S&P 500 stocks. SPGP is rebalanced and reconstituted semi-annually.
The fund started trading in June 2011. Ittracks the S&P 500 Growth at a Reasonable Price Index and currently has 77 holdings.
In terms of sectoral breakdown, we see health care with 31.22%, followed by information technology (18.87%), financials (18.17%), and industrials (13.31%). The leading 10 stocks in the portfolio account for roughly a fifth of the $893.5 million in net assets.
They include biotech namesVertex Pharmaceuticals (NASDAQ:VRTX) and Amgen (NASDAQ:AMGN); insurance companies Cigna (NYSE:CI) and Progressive (NYSE:PGR); and cybersecurity solutions provider Fortinet (NASDAQ:FTNT).
SPGP has lost 11.5% YTD. The fund is trading at 15.84 times trailing earnings and 3.71 times book value. The recent decline in many growth plays has improved the risk-return potential of SPGP.
iShares Semiconductor ETF (SOXX)
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52-week range:$377.33–$559.02
Dividend yield:0.85%
Expense ratio: 0.43% per year
The iShares Semiconductor ETF (NASDAQ:SOXX) offers concentrated exposure to U.S. businesses that design or manufacture semiconductors. These companies typically include manufacturers of materials with semiconductors used in electronic applications. They may also provide services or equipment related to chips.
SOXX has 30 holdings and tracks ICE Semiconductor Index. The fund started trading in July 2001 and net assets stand at around $7.7 billion. The top 10 holdings account for roughly 57% of net assets.
In terms of the sub-sectors, we see semiconductor with 78.92%, followed by semiconductor equipment with 20.85%. Among the top semiconductor companies on the roster are Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ.AMD), Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC) and Qualcomm (NASDAQ.QCOM).
So far in 2022, SOXX is down nearly 25%, a discount that makes it one of the more attractive ETFs to buy on the dip. The fund has a P/E ratio of 22.99 and a P/B ratio of 5.54. Given the importance of chips in our daily lives, we can expect many of these leading semiconductor plays to recover soon.
SPDR S&P Global Infrastructure ETF (GII)
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52-week range: $51.21–$59.67
Dividend Yield: 2.69%
Expense ratio: 0.40% per year
The SPDR S&P Global Infrastructure ETF (NYSEARCA:GII) provides exposure to the 75 largest global infrastructure-related stocks based on float-adjusted market cap. The fund was launched in January 2007. GII, which tracks S&P Global Infrastructure Index, has 76 holdings.
With regards to sub-sectors, we see industrials with 39.94%, followed by utilities (39.55%) and energy (20.52%). The top 10 stocks in the portfolio account for close to 40% of $533.6 million in net assets.
The leading holdings in the portfolio include toll-road operator Transurban (OTCMKTS:TRAUF), Canadian midstream energy name Enbridge (NYSE:ENBA), toll road and airport management company Atlantia (OTCMKTS:ATASF), and energy infrastructure heavyweight Nextera Energy (NYSE:NEE).
Since January, GII is up 5.8%. P/E and P/B ratios stand at 20.85 and 2.13, respectively, making it one of the better infrastructure ETFs to buy. Many of these infrastructure names are likely to create shareholder value in the future months as well.
VanEck Morningstar Wide Moat ETF (MOAT)
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52-week range:$64.64–$78.43
Dividend yield:1.20%
Expense ratio: 0.46% per year
The VanEck Morningstar Wide Moat ETF (CBOE:MOAT) invests in companies that have sustainable competitive advantages, or “wide moats.” The fund started trading in April 2012.
MOAT, which tracks the Morningstar Wide Moat Focus Index, has 52 holdings. With regards to sector weightings, we see information technology with 25.30%, followed by health care with 17.20%, consumer staples with 14.6% and industrials with 12.3%.
The top 10 stocks in the ETF account for almost 28% of $6.7 billion in net assets. Global healthcare giant Merck (NYSE:MRK); food heavyweights Campbell Soup (NYSE:CPB) andKellogg (NYSE:K); and beverage groupConstellation Brands (NYSE:STZ) are among the leading holdings in the fund.
MOAT is down 10% year to date. The fund is trading at 22.28 times trailing earnings and 4.43 times book value. Those readers who expect these companies to weather a potential economic story should research the fund further.
Vanguard Consumer Discretionary Index Fund ETF (VCR)
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52-week range:$226.28–$360.54
Dividend yield: 1.20%
Expense ratio: 0.1% per year
The Vanguard Consumer Discretionary Index Fund ETF (NYSEARCA:VCR) offers exposure to the consumer discretionary sector. The fund has significant breadth, holding a large basket of stocks that it selects and weights by market cap.The fund was first listed in January 2004.
VCR tracks the MSCI U.S. Investable Market Consumer Discretionary Index and currently holds 303 stocks. The top 10 stocks comprise 58.5% of roughly $6 billion in net assets.
In terms of sectoral allocations, we see internet and direct marketing retail (21.60%), followed by automobile manufacturers (17.80%), home improvement retail (9.50%) and restaurants (9.20%), among others.
The leading holdings on the roster include well-known consumer discretionary names such as Amazon.com (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), Home Depot (NYSE:HD), McDonald’s (NYSE:MCD) and Nike(NYSE:NKE).
So far in 2022, VCR is down more than 26%, making it another of the promising ETFs to buy on the dip. Trailing P/E and P/B ratios stand at 21.7x and 5.1x, respectively.
On the date of publication, Tezcan Gecgil is both long and short NVDA stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
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