At a macro level, I’m looking for value to retake the lead from growth in 2018. All of the stars aligned for both growth and momentum to do very well this year — low interest rates, strong earnings growth and a favorable tax reform impact, asserts David Dierking, editor of ETF Focus.
As the Fed continues raising interest rates in 2018, however, investors should be less inclined to pay rich multiples for stocks and begin seeking out bargains instead.
Following that theme, my top pick for 2018 is the WisdomTree Emerging Markets High Dividend ETF (DEM). Emerging markets had a great year in 2017, but valuations still look attractive and I think there’s more upside left.
Large-cap dividend payers, such as the ones held in this ETF, have underperformed relative to their more growth-oriented counterparts and currently present some of the more appealing opportunities in 2018.
The fund — whose top names include Gazprom (OGZPY), China Mobile (CHL) and China Construction Bank (CICHY) — offers a nearly 4% dividend yield and trades at just 9 times forward earnings.
