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The Best Growth ETFs for 2016
12/04/2015 9:00 am EST
It's never too early to start thinking about what is on the horizon for next year; below, I want to present to you the best ETF ideas for 2016 if your primary goal is growth investing, explains Doug Fabian, editor of Successful ETF Investing.
First, let me say that I think 2016 will be a relatively tough equity market, with US stocks likely to move modestly higher in the low-to-mid single-digit-percentage gains.
We do have the fact that this is an election year in our favor, as election years do tend to be good for the equity markets historically.
One of the factors we need to watch closely next year that will determine how markets perform is the price action in commodities.
Another key will be the performance of emerging markets and China. If these areas stabilize, that will do a lot to prop up markets worldwide.
Given the conditions as we approach 2016, I think next year will be all about looking for the best sector ideas going forward. Here's my personal list of five best growth ETF ideas for 2016.
1) Health Care Select Sector SPDR Fund (XLV)
Healthcare is an industry that continues to benefit from demographics, innovation, mergers and acquisitions deals, and insurance mandates. XLV is the ETF that holds the biggest and best healthcare stocks around.
2) First Trust Dorsey Wright Focus 5 ETF (FV)
This is a fund of funds that simultaneously holds other funds that have allocations to top performing sectors. Biotech, internet, consumer staples, consumer discretionary, and healthcare are all part of this fund.
3) PureFunds ISE Cyber Security ETF (HACK)
This is a cyber-security stock ETF.
4) iShares India 50 ETF (INDY)
India is a country that has a pro-capitalist political climate, a huge amount of human capital, and citizens hungry for economic growth and an enhanced living standard. INDY is a way to get exposure to the companies benefitting most from these trends.
5) WisdomTree Japan Hedged Equity Fund (DXJ)
Japan continues to put the pedal to the metal on Abenomics, which means more quantitative easing from the Bank of Japan and likely more upside for Japanese stocks.
And, with DXJ's hedge component, you get that performance without the negative influence of any currency disparities.
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