After a strong showing in the first half of the year, U.S. stock markets seem to have lost their momentum, partly due to macroeconomic conditions such as persistent increases in dollar interest rates to combat inflation in the United States and the weakening of the Chinese economy, which is the world’s largest exporter.
This has led to beaten-down prices for stocks and exchange-traded funds (ETFs), offering investors the perfect opportunity to enter the market while it’s low and exit their positions once Wall Street recovers and is back pumping.
Top ETFs To Buy In September
Today I am going to introduce you to a few of my top ETF picks from various sectors that declined over the last quarter but have the potential to boom in the coming months. These products are the
Market experts have given these ETPs a “Strong Buy” or “Buy” ranking as they are poised to outperform the rest of the market once it resumes its uptrend.
1- First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ: QCLN)
This hidden gem of an ETF is the best way to gain exposure to companies involved in the clean energy sector, with the industry most certain to profit from the growing economic trend of aiming for sustainability.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund offers investments in companies involved in the power grid and electric energy infrastructure, with prices closely following the Nasdaq Clean Edge Smart Grid Infrastructure Index. The ETF is invested in 100 companies, with electric vehicle (EV) manufacturer Tesla being its largest holding, comprising 11.14%.
Other stocks in QCLN include semiconductor producers On Semiconductors (9.72%) and Allegro Microsystems (2.58%), lithium supplier Albemarle (7.99%), EV manufacturers Rivian Automotive (6.60%) and Lucid Group (3.13%), and alternate energy solutions company Brookfield Renewable Partners (2.69%), to name a few.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund has an accumulated asset base of $1 million with an average trading volume of 72,000 shares a day. The fund charges an annual fee of 0.58% and is ranked #2 (BUY) in the Zacks ETF Rank.
2- VanEck Semiconductor ETF (NASDAQ: SMH)
Semiconductors are an integral component of electronic devices like smartphones and computers, and also artificial intelligence (AI) systems. The VanEck Semiconductor ETF is a top-performing fund involving companies that are benefiting from the rise in demand for highly-efficient [performance chips.
The fund that mirrors the MVIS U.S. Listed Semiconductor 25 Index has holdings in leading semiconductor companies like Nvidia (Nasdaq: NVDA), Taiwan Semiconductor Manufacturing Company (Nasdaq: TSM), and Broadcom (Nasdaq: AVGO), which make up over 35% of the fund’s entire assets.
Most of its investments are in U.S.-based companies. The VanEck Semiconductor ETF is up by 58% year-to-date and has annualized returns of 25% over the past decade. SMH also has a distribution yield of 0.77%.
3- Invesco QQQ Trust Series 1 (NASDAQ: QQQ)
The popular stock index, mirroring the Nasdaq Composite 100, offers investors exposure to “The Magnificent Seven”: Nvidia (NVDA), Meta Platforms (META), Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), and Tesla (TSLA), tech stocks.
The top three holdings in the Invesco QQQ Trust Series 1 ETF are Apple, Microsoft, and Amazon, which together make up over 25% of the fund’s assets. The reason why the fund is one of the most highly recommended is because tech stocks tend to outperform other stocks when the economy is good.
Additionally, companies in the QQQ ETF often have higher valuations due to their consistent revenue and earnings growth. Tech giants like Microsoft and Amazon have so many assets under management (AUM) that investors can treat their stocks as funds.
With investments in 101 companies, the Invesco QQQ Trust Series 1 ETF has over $200 billion in AUM and is regarded as the second-most traded ETF in the U.S. with an expense ratio of 0.20%.
To put things into perspective, a $10,000 investment in the fund over a 10-year period would have turned into $54,833 today. Such is the scale at which the Invesco QQQ Trust Series 1 ETF trades.
4- Janus Henderson Small Cap Growth Alpha ETF (NASDAQ: JSML)
Investment in companies with smaller capital (small-cap) is considered to be a good bet at beaten-down prices. One major advantage that small-cap companies have over their larger counterparts is that they benefit from a resilient economy due to being domestically tied and are known to outperform most stocks when economic conditions improve.
The Janus Henderson Small Cap Growth Alpha ETF has investments in 181 companies with key holdings in industrial, healthcare, information technology, and financial stocks. The fund which tracks the Janus Henderson Small Cap Growth Alpha Index manages assets worth $141.8 million and trades an average of 16,000 shares a day.
The ETF with a #1 (Strong Buy) rank in Zacks ETF ranking metric charges a 30% annual fee on investments.
The U.S. Economy Is Slowly Recovering, Giving Hope To The Stock Market
The U.S. government’s latest economic data shows that industrial production in the country continued to expand, rising over expectations, yet was slow due to sluggish growth in the manufacturing sector.
However, things were not helped by last week’s events when the United Auto Workers union launched a nationwide strike at plants of the Big Three Automakers: Ford, GM, and Stellantis, after failing to agree on terms of a new contract. This has turned out to be the latest headwind in the stock market.
But the economic outlook is rather positive after near-term inflation dropped to its lowest level in a year at 3.2% last month.