The U.S. market has completed its five-year bull run trumping all the difficulties from the U.S. government shutdown to the Euro zone debt crisis to emerging market turmoil. The current rally is neither the strongest nor the longest in history, but is considered the fourth longest rally since 1945, as per the S&P Capital IQ.
The S&P 500 index has shown an enormous run, gaining close to 180% from the bear-market bottom reached in March 9, 2009. The strong rally was mainly fueled by the Fed stimulus program, which kept the interest rate at lower levels, and improving global economic conditions.
The trend is likely to continue as the current bull market enters into its sixth year. The outlook for this year also seems bright as the U.S. economy is improving modestly, corporate profits are at record levels, the job market is healing and consumer confidence is rising. The jobless rate, which climbed to a high of 10% in 2009, plunged to a five-year low of 6.6% in January.
Though the Fed has started to curtail its stimulus program, it has promised to keep interest rates at lower levels until the unemployment rate falls below 6.5%. Inflation level is also low, while a falling budget deficit and recovering housing market are fueling growth in the economy.
The White House expects the U.S. economic growth to pick up speed from 1.7% in 2013 to 3.1% in 2014 and 3.4% in 2015. Given the strong fundamentals, investors still seeking to ride out the continued bull run could consider the following five ETFs.
These ETFs have been the biggest winners as the bull market turns five. These have clearly outpaced the S&P 500 over the past five years and are considered excellent choices to play the broad rally. This is especially true as all five funds have a top Zacks ETF Rank of ‘1’ or ‘2’, suggesting their outperformance may continue in the coming months as well:
Guggenheim S&P SmallCap 600 Pure Value ETF (NYSEARCA:RZV)
This fund provides pure exposure to the small cap value segment of the U.S. equity market by tracking the S&P SmallCap 600 Pure Value Index. Holding 147 securities in its basket, the product is widely spread across a number of securities as each firm holds less than 2% share in the fund (read: How ‘Pure’ ETF Strategies Crushed the Market).
Industrials, consumer discretionary and information technology are the top three sectors that collectively make up for nearly 55% of total assets. The fund has amassed $177.8 million in its asset base while average daily volume is low at nearly 25,000 shares.
The ETF charges 35 bps in annual fees and gained nearly 550% over the past five years. RZV currently has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with High risk outlook.
Guggenheim S&P 500 Pure Value ETF (NYSEARCA:RPV)
This ETF tracks the S&P 500 Pure Value Index, which offers pure exposure to the large cap value segment of the U.S. equity market. The fund is widely diversified across 119 securities as none of these make up for more than 2.3% of total assets. From a sector look, the ETF is heavily concentrated toward financials at 26%, while energy (16.14%), and utilities (15.5%) round off the top three spots.
The product has accumulated around $594.5 million in AUM and trades in volume of more than 139,000 shares per day on average. The expense ratio for this fund comes in at 0.35%, while RPV added nearly 535% over the past five years and has a Zacks ETF Rank of 2 or ‘Buy’ with a ‘High’ risk outlook.