These ETFs Could Benefit From A December Rate Hike (MOAT)

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November 6, 2017 6:27am NYSE:MOAT

From Zacks: As expected, the U.S. Federal Reserve kept interest rates the same but remained upbeat on U.S. economic progress. The Fed is also satisfied with the strengthening of the labor market, giving signals of a December rate hike.


This is especially true given that the first reading of the U.S. GDP for the third quarter rose 3.0% year over year in the July-September period, after increasing at a 3.1% clip in the second. The reading beat 2.5% growth forecast. The stellar growth was attained despite two consecutive hurricanes in the third quarter.

Overall, the prevalent bet over the December Fed rate hike was intact. There is about a 92% chance that the Fed will act in December. Responding to the Fed meeting, PowerShares DB US Dollar Bullish ETF (UUP – Free Report) was up about 0.2% on Nov 1.

The fund gained about 0.04% after hours. SPDR Gold Shares (GLD – Free Report) , which tracks the gold bullion, gained about 0.4% on Nov 1 as there was no new hawkishness in Fed statements. Yields on 10-year benchmark treasury bonds declined to 2.37% on Nov 1 from 2.38% the day before.

The broader U.S. markets are steady with PowerShares QQQ ETF (QQQ – Free Report) losing just about 0.03%, SPDR S&P 500 ETF (SPY – Free Report) and SPDR Dow Jones Industrial Average ETF (DIA – Free Report) adding about 0.13% and 0.24% on Nov 1, respectively. Cooperate earnings regulated Wall Street more than the Fed.

Below we highlight a few ETFs that could be gainful ahead.

WisdomTree Japan Hedged Dividend Growth ETF(JHDG – Free Report)

The fund measures the performance of dividend-paying common stocks of Japan with growth characteristics while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar. It yields 2.13% annually (read: Japan ETFs in Focus as Shinzo Abe Wins).

FlexShares Quality Dividend Index ETF (QDF – Free Report)

One can also take a look at the ETF options that are relatively safe and can help investors in the upcoming trading sessions that are likely to be riddled with Fed, Trump, overvaluation and earnings risks. The fund looks to provide exposure to the growth potential of U.S. securities while offering dividends. The fund yields about 2.81% annually (read: Prepare for Uncertainty with These “Quality” ETFs).

VanEck Vectors Morningstar Wide Moat ETF (MOAT – Free Report)

The fund follows an index which tracks the overall performance of the “attractively priced companies with sustainable competitive advantages.” As a result, this fund also calls for quality exposure.

PowerShares S&P 500 ex-Rate Sensitive Low Volatility ETF (XRLV – Free Report)

If the Fed hike bets get stronger or the central bank actually acts in December, this equity ETF may come to your rescue. XRLV takes care of both interest rate issues and volatility factors. This fund focuses on at 100 of the S&P 500 components that exhibit both low volatility and low interest rate risk (read: ETF Tricks to Stave Off Rising Rate Risks This Halloween).

The VanEck Vectors Morningstar Wide Moat ETF (MOAT) was unchanged in premarket trading Monday. Year-to-date, MOAT has gained 15.88%, versus a 16.69% rise in the benchmark S&P 500 index during the same period.

MOAT currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #20 of 126 ETFs in the Large Cap Blend ETFs category.


This article is brought to you courtesy of Zacks Research.


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