Today, we introduce seven ETFs to buy in June. Wall Street has seen rocky days so far in 2022. Benchmark indices, the S&P 500, Dow Jones Industrial Average, and Nasdaq 100, declined over 13%, 9% and 22% year-to-date (YTD).
As the year unfolds, concerns about 40-year high inflation, ongoing geopolitical tensions, monetary tightening, and a potential recession continue to stalk the markets. Yet, a handful of sectors could still offer the potential for gains in the second quarter.
For example, commodity and energy stocks, which led the markets in first quarter, may still seem attractive. In addition, metal and mining stocks, and the exchange-traded funds (ETFs) that give exposure to them, would stand to benefit from higher metal prices and increasing global demand.
Meanwhile, a few defensive sectors, such as health care, utilities or consumer staples, could deserve further research. Finally, for contrarian readers, sectors that have seen significant declines, especially technology shares, could offer opportune entry points.
With that said, here are seven ETFs to buy now for positive momentum in the summer months:
| YPS | Arrow Reverse Cap 500 ETF | $21.27 |
| BITQ | Bitwise Crypto Industry Innovators ETF | $7.38 |
| FMET | Fidelity Metaverse ETF | $23.10 |
| QQMG | Invesco ESG NASDAQ 100 ETF | $19.35 |
| DVY | iShares Select Dividend ETF | $123.46 |
| XSD | SPDR S&P Semiconductors | $169.84 |
| VHT | Vanguard Health Care Index Fund ETF | $229.76 |
ETFs to Buy: Arrow Reverse Cap 500 ETF (YPS)
52-week range: $20.71 – $24.89
Dividend yield: 1.09%
Expense ratio: 0.29% per year
Most InvestorPlace.com readers know that the S&P 500 is a free-float market-capitalization (cap) weighted index. In other words, “The largest companies (based on market capitalization) in the S&P 500 account for a substantial portion of its total market capitalization.”
Among the names with the largest slice on the roster are Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), and Tesla (NASDAQ:TSLA). For instance, the leading ten companies in the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), the most important ETF that gives access to the S&P 500 index, comprise around 30% of the portfolio.
The first fund on today’s list, the Arrow Reverse Cap 500 ETF (NYSEARCA:YPS). It may appeal to investors looking to shy away from those S&P 500 index members that have the greatest influence on the index’s performance due to their large-caps. In other words, YPS puts the emphasis on the smaller-end of the large-cap market. The fund was first listed in October 2017.
YPS tracks the Reverse Cap Weighted U.S Large Cap Index. In terms of sectoral allocations, we see consumer discretionary (17.1%), industrials (15.7%), information technology, IT, (12.8%), financials (11.9%), health care (10.3%), and communication services (7.1%), among others.
The top 10 stocks comprise close to 10% of $17.840 million in net assets. In other words it is still a small fund. Among the leading holdings are Warner Bros Discovery (NASDAQ:WBD), which started trading in April; apparel groups Under Armour (NYSE:UA) (NYSE:UAA) and PVH (NYSE:PVH); global audience measurement and data analytics company Nielsen Holdings (NYSE:NLSN); and media name News (NASDAQ:NWS).
YPS, which saw a record high in November 2021, is down to 12% YTD. Investors who want lower the average market-cap exposure of portfolios could put the fund on their radar screen.
Bitwise Crypto Industry Innovators ETF (BITQ)
52-week range: $6.85 – $35.68
Dividend yield: 8.06%
Expense ratio: 0.85% per year
Our next ETF to buy may strike a cord with contrarian investors looking for names in the digital asset and decentralized finance (DeFi) space. The Bitwise Crypto Industry Innovators ETF (NYSEARCA:BITQ) offers focused exposure to the digital economy without holding crypto assets directly.
This fund invests in names, such as bitcoin miners or brokerages, that generate revenue in the crypto space. It started trading in May 2021, and has $65.7 million in net assets.
BITQ, which tracks the Bitwise Crypto Innovators 30 Index, has 30 holdings. With regards to sub-sectors, we see Mining (34.35%), followed by Trading & Custody (25.67%), Treasury Holding (11.54%), and Asset Management (11.49%).
As the top 10 stocks account for roughly 60% of the portfolio, it is a top heavy fund. Among them are the enterprise analytics software and services provider MicroStrategy (NASDAQ:MSTR); asset management firm Galaxy Digital (OTCMKTS:BRPHF); crypto exchange Coinbase Global (NASDAQ:COIN); and bank holding company Silvergate Capital (NYSE:SI).
So far in 2022, BITQ is down 61%. By comparison, Bitcoin (BTC-USD) and Ethereum (ETH-USD) have lost around 32% and 48%, respectively. Crypto enthusiasts with a long-term horizon could consider allocating a small portion of their portfolio to BITQ.
Fidelity Metaverse ETF (FMET)
52-week range: $21.32 – $25.10
Expense ratio: 0.39% per year
Next up on our list of ETFs to buy is the Fidelity Metaverse ETF (NASDAQ:FMET). It could appeal to readers looking to get exposure to the metaverse, which “is expected to expand at a compound annual growth rate (CAGR) of 39.4% from 2022 to 2030.”
This fund invests in names that may develop, manufacture, or market products and services that are part of the metaverse space. Examples include computing software and hardware, digital infrastructure, gaming technology, or wearable technology.
FMET currently holds 60 stocks. It trading in April 2022 and net assets stand at $4.7 million. Thus, it is a small fund with little trading history.
In terms of sector exposure, we see communication services (60.80%), followed by IT (32.21%), industrials (1.34%) and consumer discretionary (0.79%). The top 10 stocks account for around 41% of the fund. Among them are Meta Platforms (NASDAQ:FB), Apple, Tencent (OTCMKTS:TCEHY), Adobe (NASDAQ:ADBE), Alphabet, and Nvidia (NASDAQ:NVDA).
FMET hit a record high of $25.10 on April 21. Yet, it’s currently down about 6% from that peak value. Trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 21.77x and 3.07x. If you want to invest in a thematic fund that focuses on the metaverse, then you need to research FMET further.
Invesco ESG NASDAQ 100 ETF (QQMG)
52-week range: $18.71 – $27.24
Dividend yield: 0.65%
Expense ratio: 0.20% per year
For most retail investors, the Invesco QQQ Trust (NASDAQ:QQQ), which gives exposure to the companies in the Nasdaq-100 index, is one of the cornerstones in a long-term portfolio. Our next fund adds environmental, social and governance (ESG) criteria into the company selection process.
Thus, the Invesco ESG NASDAQ 100 ETF (NASDAQ:QQMG), may appeal to those readers in search of companies with higher ESG scores. The fund, which started trading in October 2021, currently has 95 holdings.
Over 60% of the portfolio is in IT companies. Next come communication services (14.47%), consumer discretionary (10.61%) and consumer staples (6.22%).
The top 10 stocks comprise close to 51% of $10.2 million in net assets. Among the leading holdings are Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL), Adobe (NASDAQ:ADBE), PepsiCo (NASDAQ:PEP), Cisco Systems (NASDAQ:CSCO) and Tesla(NASDAQ:TSLA).
QQMG is down over 26% YTD. If ESG criteria affect your investing decisions, then the fund needs your attention.
ETFs to Buy: iShares Select Dividend ETF (DVY)
52-week range: $111.53 – $133.33
Dividend Yield: 2.90%
Expense ratio: 0.38% per year
Seasoned investors realize the importance of dividend income for long-term portfolio growth. Research highlights that over the past century, dividends have accounted for almost a third of total returns in the S&P 500 index.
Therefore, our next ETF to buy is the iShares Select Dividend ETF (NASDAQ:DVY), which invests in stocks with stable dividends. The fund was first listed in November 2003, and oversees $23.3 billion in net assets.
DVY tracks the Dow Jones U.S. Select Dividend IndexSM and currently holds 99 stocks. Over a quarter of the names are utilities. Next come financials, consumer staples, energy and materials.
Meanwhile, about a fifth of the portfolio is held in the leading 10 names. Tobacco conglomerates Altria (NYSE:MO) and Philip Morris International (NYSE:PM); independent refiner Valero Energy (NYSE:VLO); tech giant International Business Machines (NYSE:IBM), midstream energy company ONEOK (NYSE:OKE), and biotech heavyweight Gilead Sciences (NASDAQ:GILD) lead the names on the roster.
DVY has returned close to 6% since January. Trailing P/E and P/B ratios stand at 13.00x and 2.05x. This fund could continue to see positive returns in the rest of the year, and thus belongs in the portfolios of passive income seekers.
SPDR S&P Semiconductors (XSD)
52-week range: $156.58 – $250.82
Dividend yield: 0.18%
Expense ratio: 0.35 % per year
Tech names, including chip shares, have lost considerable value in the first half of the year. For instance, the PHLX Semiconductor Sector Index declined over 21.5% YTD, which, by technical definition, means the industry is in a bear market.
Yet, research by Deloitte points out the global semiconductor industry will likely grow “10% in 2022 to over US$600 billion for the first time ever. Chips will be even more important across all industries, driven by increasing semiconductor content in everything…”
Therefore, our next ETF, the SPDR S&P Semiconductors (NYSEARCA:XSD), could appeal to chip bulls. The fund was first listed in January 2006 and net assets have reached $1.2 billion.
XSD, which tracks S&P Semiconductor Select Industry Index, currently holds 40 stocks. A third of the portfolio is held in the leading 10 stocks.
Among them are SiTime Corp (NASDAQ:SITM), Monolithic Power Systems (NASDAQ:MPWR), Meta Materials (NASDAQ:MMAT), Analog Devices (NASDAQ:ADI), ON Semiconductor (NASDAQ:ON), Advanced Micro Devices (NASDAQ:AMD) and Navitas Semiconductor (NASDAQ:NVTS).
XSD is down around 29% YTD and hit a 52-week low in recent days. As a result of this decline, trailing P/E and P/B ratios have fallen to 17.28x and 3.81x. We believe an ETF, such as XSD, that gives access to semiconductor stocks deserve to be in long-term portfolios.
ETFs to Buy: Vanguard Health Care Index Fund ETF (VHT)
52-week range: $228.00 – $268.72
Dividend yield: 1.32%
Expense ratio: 0.10% per year
Our last ETF to buy is the Vanguard Health Care Index Fund ETF (NYSEARCA:VHT). It invests in U.S. health care businesses, which offer medical products, services, or technology. This fund started trading in January 2004.
VHT, which tracks the MSCI US Investable Market Health Care 25/50 Index, has 443 holdings. The top 10 holdings comprise almost half of $19.4 billion in net assets.
With regards to sub-sectors, we see pharmaceuticals (27.7%), followed by health care equipment (18.5%), biotechnology (16.7%), managed health care (12.9%), and life sciences tools & services (12.2%).
UnitedHealth (NYSE:UNH), Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE), AbbVie (NYSE:ABBV), Eli Lilly (NYSE:LLY), Merck (NYSE:MRK) and Thermo Fisher Scientific (NYSE:TMO) are among the top stocks on the roster.
VHT saw an all time high in late December 2021. Yet, since then, it has lost close to 10%. Trailing P/E and P/B ratios are 22.8x and 4.6X. Long-term health care investors could find value in XSD around these levels.
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.com Publishing Guidelines.