After yesterday’s post regarding 2014’s Best and Worst ETFs, NASDAQ has release a list of the 5 best ETFs to buy for 2015. Below are excerpts from the article.
With the clock about to roll past 2014 and into the New Year, it’s time for investors to be looking ahead with regards to their portfolios. That can be a daunting task, however, as it’s difficult to predict exactly what will happen over the progression of a year.
ETFs are intraday tradable baskets of stocks or other assets that make playing various global trends — both short and long-term — easy. And as some trends are already beginning to emerge, we can use them to tweak our portfolios accordingly to maximize profits.
The iShares MSCI USA Minimum Volatility ETF
With regards to the United States, all signs point to sunny with a slight chance of recession.
For the most part, things are going pretty good. Job growth seems to be picking up, while lower gas prices have consumers dancing in the streets. The unfortunate thing is that falling oil prices have the potential to cripple one of the main drivers of the recent U.S. growth.
Add in the fact that the Fed’s loose monetary policy has pushed investors into riskier assets in order to find returns/yield and you have a recipe for increased volatility.
Which is why the iShares MSCI USA Minimum Volatility ETF (USMV) maybe a good bet.
USMV uses screens to kick out high-volatility stocks and capture the upside of the market. That also limits the downside as well as the “bounciness” associated with market movements. Currently, the $34 billion ETF holds 159 different stocks, including Becton, Dickinson and Co. (BDX) and Wal-Mart Stores, Inc. (WMT).
USMV’s underlying index has done a good job of fighting volatility and downside risk. Back in 2008, the broader MSCI USA index was down 37% while USMV was only down 26%.
While the chance of recession is small, it is building. At just 0.15% in expenses, USMV is a cheap way to fight that potential and is a one of the best ETFs to buy for 2015.
Vanguard FTSE Europe ETF
Despite the headwinds, both the Dow Jones Industrial Average and the S&P 500 are sitting at all-time highs. That doesn’t make them screaming buys at the current moment. But European equities just might be.
Currently, European stocks can be had for a 40% discount to their American counterparts. That in of itself is tantalizing. However, the real boost may come from various QE programs being enacted on the continent. That should boost asset prices in the near term.
The Vanguard FTSE Europe ETF (VGK) tracks the FTSE Developed Europe Index and includes both large and mid-cap stocks in Europe. Top country weights include the U.K., Switzerland and France.
All in all, VGK holds 528 different stocks. That makes VGK a prime play on Europe’s cheapness and potential growth in 2015.
Add in Vanguard’s commitment to running cheap funds — VGK only charges 0.12% in expenses — as well as the ETF’s 3.81% dividend yield and you have a great ETF pick for 2015.
For the rest of the list from NASDAQ, click here.