Market Overview

Second-Half ETF Ideas

Second-Half ETF Ideas

Past performance is never a guarantee of future returns, but some of the exchange-traded funds that delivered for investors in the first half of the year could continue doing so in the second half.

What worked for investors in the first half of 2016 includes, most notably, fixed income and gold ETFs. That much is confirmed by this year's top 10 asset-gathering ETFs, which is led by the SPDR Gold Trust (ETF) (NYSE: GLD) and four bond funds.

Earlier this week, iShares, the world's largest ETF issuer, said bond ETFs around the world now have $600 billion in assets under management. Of the nearly $23 billion added to global bond ETFs during the second quarter, iShares captured $11.9 billion of that total, including $4.7 billion in the United States. Year-to-date, bond ETFs around the world have added $66.7 billion in new assets with $39.3 billion allocated to iShares funds, including $24.3 billion to the issuer's U.S.-listed bond ETFs.

Related Link: The U.S. Economy Is Stronger Than Investors Anticipated, Which Could Be Very Bad

The Role Volatility Plays In Investor Sentiment

Volatility has prompted investors to act defensively, providing boosts to safe-havens such as gold and U.S. Treasury ETFs.

“In late June, the S&P Global Market Intelligence's Investment Policy Committee (IPC) raised its 12-month price target for the S&P 500 to 2250 from 2175; the S&P 500 was recently at 2,152. At the time Sam Stovall, US equity strategist and chairman of the IPC, cited the Capital IQ consensus forecast of 12-month EPS growth for the S&P 500 to $125.84, and S&P Global Economics' projection of an average 2.4 percent growth in real GDP over the coming four quarters. Stovall also thinks that volatility should rise in the coming year as the number of days in which the S&P 500 rose or fell by 1 percent or more averaged 85 in year eight of bull markets since World War II versus 65 in year seven,” said S&P Capital IQ in a note out Wednesday.

With the Federal Reserve refusing to raise interest rates and investors still hunting for yield, corporate bond ETFs have also been embraced by investors this year.

The Vanguard Intermediate Tm Cpte Bd ETF (NYSE: VCIT) is another idea for the second half for investors looking for some income with a middle duration. VCIT, which holds 1,755 bonds with an average duration of 6.5 years, has added $2.5 billion in new assets year-to-date.

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