“The backdrop for financial stocks is very favorable: Rising interest rates can boost bank margins, and a strong economy can lead to increased borrowing,” Greg McBride, chief financial analyst at Bankrate.com, told the WSJ.
“The spread between what you charge on loans relative to what you pay on deposits will begin to widen as rates rise,” Jason Goldberg, a banking analyst at Barclays, told the WSJ, recommending that investors position themselves in banks in 2022.
Supporting this positive outlook, corporate America is expected to maintain its strong earnings growth, albeit at a slower rate when compared to last year’s recovery off the coronavirus pandemic lows, Reuters reports.
Citigroup analysts on Wednesday upgraded their S&P 500 price target for the end of 2022 to above the 5,000 level for the first time as the brokerage expects strong corporate earnings to continue this year, Reuters reports.
There’s a slew of traditional mid-cap exchange traded funds for investors, but potentially better outcomes and more income await with the WisdomTree U.S. MidCap Dividend Fund (NYSEARCA: DON).
Some may foresee lesser returns and greater volatility ahead for small-caps in this new inflationary period, for example, or seek to lower their exposure to large-caps dominated by tech titans,” according to BlackRock.
DTEC is off 2.44% over the past week, indicating that the fund, along with other disruptive growth strategies, is being hindered by speculation about what the Federal Reserve has in store in 2022.
Speaking of economic growth, assuming it moderates as many experts believe it will, investors could flock to growth stocks, perhaps providing some support to DTEC along the way.
Among small-cap exchange traded funds, the Invesco S&P SmallCap 600 Equal Weight ETF (EWSC) is a hidden gem, and it could exhibit leadership in 2022, assuming that bullish prognostications for smaller equities prove accurate.
In fact, value could be solid again next year, and that could put a spotlight on exchange traded funds such as the ALPS Sector Dividend Dogs ETF (SDOG). While this means that the fund is underweight on financial services — a quintessential value destination — relative to the S&P 500, it’s also underweight on growth havens such as technology.
“First, it is expected that the Federal Reserve will begin lifting interest rates, which will widen the spread banks earn between the interest they charge on loans and the interest they pay on in deposits,” reports Carleton English for Barron’s. “Analysts at Oppenheimer note that the Treasury yield curve is forecasting at least one or two rate hikes by 2023, adding that the first hikes are the most ‘consequential’ for banks.”
Investors looking for an alternative to traditional small-cap index funds and exchange traded funds may want to evaluate the Invesco S&P SmallCap 600 Equal Weight ETF (EWSC ). EWSC fits the bill as an easy-to-understand alternative to standard cap-weighted small-cap index funds because the Invesco ETF is simply the equal-weight answer to a basic S&P SmallCap 600 tracker.
Growth stocks and related exchange traded funds rebounded on Thursday as technology shares led gains. The record-setting rally in U.S. markets paused this week after updated data revealed that inflation spiked to a 31-year high, suggesting that consumer prices will remain elevated for a period of time amid the ongoing global supply chain hurdles and lower employment participation rate.
If you’re looking to invest in the healthcare industry, buying a healthcare exchange-traded fund (ETF) is an easy way to get started without having to do all the work of analyzing individual companies. With a healthcare ETF you can buy a broad cross-section of the industry or even chop it into finer segments. Either way, you can find the group of stocks that you want to own. An ETF also offers diversification, reducing your risks compared to buying individual stocks.
The S&P SmallCap 600 Index is higher by 6.63% over the past month and is flirting with all-time highs. However, that doesn’t mean that small-cap stocks are richly valued, as is often the case. Some market observers are arguing that smaller equities are attractively valued, and that situation could spell opportunity with the Invesco S&P SmallCap 600 Equal Weight ETF (EWSC) .
A State Street Global Advisors (SSGA) report noted the resiliency of mid-cap equities, particularly during market downturns, which defies conventional wisdom that large-cap equities can best mute the effects of a heavy sell-off.
Inflation is commanding plenty of attention, and rightfully so, with much of the conversation revolving around which assets will be vulnerable to an extended period of rising consumer prices and which ones could prove durable. Bank stocks and exchange traded funds, such as the Invesco KBW Bank ETF (NASDAQ: KBWB ) , belong in the durable camp.
As many investors know well by now, bank stocks and the related exchange traded funds are proving to be stellar trades this year. For example, the Invesco KBW Bank ETF (NASDAQ: KBWB ) is up nearly 42% year-to-date and hit near-record highs on Oct. 19.
