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These ETFs Will See The Most Investor Attention In 2017
From Zacks: As 2016 comes to a close, Brexit, Donald Trump’s win as the U.S. president and the OPEC output cut deal are clearly the highlights of the year. However, there are plenty of other events that haven’t been able to leave a mark but could prove to be game-changers next year.
In view of this, we intend to highlight a few areas (and their impact on the ETF world) that are likely to draw investors’ attention in 2017.
The global investing world is expected to be busy analyzing the progress of the OPEC output cut deal since the start of 2017. On November 30, OPEC decided to slash production by about 1.2 million barrels a day from January for six months. Plus, on December 10, OPEC also cut their first deal with non-OPEC since 2001 to reduce output next year.
The pact will likely result in “an aggregate supply cut of 1.7 million barrels a day.” Some analysts like Goldman now believe that oil can scale higher to about $60 early next year from the current $50 plus level.
However, there are people who expect the deal to be not as effective as it seems now. Even if OPEC manages to be true to the deal, U.S. shale oil production will likely gain traction, bringing back oversupply into the market and weighing on oil prices.
All these should keep oil ETFs like United States Oil (USO – Free Report) , Brent crude ETF United States Brent Oil (BNO – Free Report) and energy ETFs like Energy Select Sector SPDR ETF (XLE – Free Report) on investors radar (read: How Effective is the OPEC Deal for an Oil ETF Rally?)
Trump vs Fed
Trump has raised hopes of fiscal reflation and taken stocks to a new height. If he keeps all his promises after taking presidential office and inflationary expectations continue to surge, the Fed might be able to implement the three forecasted rate hikes in 2017 (read: Sole Fed Hike of 2016 Put These ETFs in Focus).
And if the Fed opts for faster rate hikes next year, bond ETFs like iShares 20+ Year Treasury Bond (TLT – Free Report) and dividend ETFs like SPDR S&P Dividend ETF (SDY – Free Report) may face pressure. Meanwhile, ProShares High Yield—Interest Rate Hedged ETF HYHG or inverse bond ETFs like Barclays Inverse US Treasury Aggregate ETN (TAPR – Free Report) are poised to benefit (read: Hedged & Inverse Bond ETFs to the Rescue if Rates Rise).
Inflationary outlook is finally shoring up in developed economies, albeit slowly. Prolonged easy money policies by global central banks, the OPEC move and the Trump effect made it happen. Expectations of a spurt in global inflation are now at the highest level in over 12 years. Global TIPS ETF – PIMCO Global Advantage Inflation-Linked Bond Active ETF (ILB – Free Report) – will thus be on the watch list of investors (read: Will 2017 Be a Year of Global Reflation & TIPS ETFs?).
Now that’s tricky! If the greenback retains its strength, commodity investing should take a backseat as these are priced in the U.S. dollar. However, several industrial metals should do well on better demand-supply dynamics. This is especially possible given the recovery in the global manufacturing activities including the all-important China, which consumes a major portion of the global industrial metals. So, ETFs like iPath Pure Beta Aluminum ETN (FOIL – Free Report) , iPath Pure Beta Copper ETN CUPM and iPath Bloomberg Tin SubTR ETN (JJT – Free Report) will likely grab the spotlight.
Cyber security breaches are on the rise of late. This has compelled companies to invest billions of dollars annually to counter such attacks. Most recently, the hack on Yahoo which revealed data from over 1 billion accounts once again stressed on the need for cybersecurity and has put First Trust NASDAQ Cybersecurity ETF (CIBR – Free Report) and PureFunds ISE Cyber Security ETF (HACK – Free Report) in focus.
India’s pro-growth political changes in 2014 had shaped it into a hot investing zone. Most economic episodes also went in favor of Asia’s third-largest economy, including a drastic fall in inflation arising from the oil price crash and an improvement in current account deficit. Moreover, due to cooling inflation, the Indian central bank (RBI) resorted to rate cuts several times in the last one and a half years.
However, most recently, in order to put a check on tax evasion and counterfeit notes, high-denomination bank notes were withdrawn in India. This resulted in cash crunch and growth forecast cuts by some analysts. Fitch rating reduced India’s GDP forecast to 6.9% from the prior estimate of 7.4% for the current financial year.
But then, Moody’s indicated that Indian companies will likely witness “the strongest profit growth over 18 months.” Now it would be interesting to see if India ETFs like WisdomTree India Earnings ETF (EPI – Free Report) can survive the threats from demonetization in 2017 (read: What Lies Ahead for India ETFs?).
Even if we are yet to have a bitcoin ETF, one is expected to hit the market in 2017. Winklevoss Bitcoin Trust has filed for one to make it easy for investors to bet on this soaring digital currency. As per CNBC, “bitcoin is a very volatile asset” but doesn’t have a strong correlation with other classes. Bitcoin’s value has beaten the $800 mark for the first time since February 2014.
India’s demonetization also gave a boost to bitcoin trading volumes. Moreover, trading volumes in China have been solid with the government taking proactive measures against illegal money transfer. With this, investors expect to see an approval of the first bitcoin ETF in 2017.
The iShares Barclays 20+ Yr Treas.Bond (ETF) (NASDAQ:TLT) was unchanged in premarket trading Wednesday. Year-to-date, TLT has declined -1.65%, versus a 12.14% rise in the benchmark S&P 500 index during the same period.
TLT currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #20 of 27 ETFs in the Government Bonds ETFs category.
This article is brought to you courtesy of Zacks Research.
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