2 New, Under-The-Radar ETFs With Solid Growth Potential
Investing.com | Apr 01, 2022 09:47
Exchange-traded funds (ETFs), especially thematic ETFs, have been among the most popular investment vehicles over the past few years. There are now more than that 2021 was a banner year for global ETFs, with more than $10 trillion in assets under management and over $1 trillion in new inflows.
Furthermore, projections are that 2022 will surpass last year’s historic boom, with already launched within the first two months.
Today’s article introduces two new and under-the-radar ETFs that deserve closer attention. Yet we should remind readers that these funds are small and offer relatively little performance history. Therefore, before allocating capital to such new ETFs, further due diligence is necessary. Finally, niche funds typically have high annual expense ratios.
h2 1. First Trust Expanded Technology ETF /h2- Current Price: $20.18
- 52-week range: $17.88 - $23.51
- Dividend yield: 0.13%
- Expense ratio: 0.65% per year
Our first fund, the First Trust Expanded Technology ETF (NYSE:XPND), invests in US-based names or companies that rely on technology at the core of operations. The fund started trading in June 2021.
Technology has played a significant role in personal and professional lives during the pandemic. The close to 7% in 2022.
Wall Street pays close attention to leading and emerging tech names and ETFs that focus on the tech sector. Deloitte suggests several prominent themes will dominate the technology sector in the near future. They :
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XPND currently has 50 holdings, where the top 10 comprise around 43% of net assets of $18.7 million. Regarding sectoral allocations, we see semiconductors & semiconductor equipment (30.74%), followed by software (25.93%), IT Services (16.44%), Interactive Media & Services (9.54%), and Communications Equipment (5.76%).
Leading holdings in the fund include NVIDIA (NASDAQ:NVDA), Meta Platforms (NASDAQ:FB), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Visa (NYSE:V), Mastercard (NYSE:MA), and Broadcom (NASDAQ:AVGO). Fund managers expect these holdings to offer the potential for capital appreciation.
XPDN started trading in June 2021 at an opening price shy of $20. Then in late November, it hit a record price of $23.51. However, it is now changing hands at around $20.18, down over 12.1% year-to-date.
The ETF is trading at 28.85 times trailing earnings and 10.39x book value. Buy-and-hold investors may want to research the fund further before buying the dip.
h2 2. Fairlead Tactical Sector Fund /h2- Current Price: $25.30
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52-week range: $24.93 - $26.98
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Expense ratio: 0.70% per year
Our second fund for today is the Fairlead Tactical Sector Fund (NYSE:TACK). This actively managed ETF aims to leverage the momentum in the US equity market. Fund managers seek capital appreciation while mitigating drawdowns.
The diversified fund essentially seeks to outperform the long-term returns of the S&P 500 index. It uses a tactical rotation between the (including communications, consumer staples, energy, financials, industrials, and utilities).
To better protect capital during downtrends, TACK provides exposure to other asset classes, including ETFs investing in gold, US Treasuries, and cash equivalents. Readers who pay attention to technical analysis may be interested in knowing that the fund relies on technical studies to analyze sectors and broader markets.
TACK, which started trading on Mar. 28 2022, currently has 10 holdings but rebalances its portfolio monthly. The top 5 names account for roughly 64% of net assets, close to $46 million.
Currently, the Utilities Select Sector SPDR Fund (NYSE:XLU) leads with 12.98%. Next up are the Materials Select Sector SPDR Fund (NYSE:XLB), the Technology Select Sector SPDR Fund (NYSE:XLK), the Energy Select Sector SPDR Fund (NYSE:XLE), and the Financial Select Sector SPDR Fund (NYSE:XLF).
We believe TACK deserves investors’ attention. The ETF started trading at an opening price of $25.03. On Mar. 28, it hit a high of $26.98. Now, it is changing hands for around $25.30.
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