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Best ETF Ideas for the Second Half of 2024

  • (1:30) - Did Investors Miss The Fed's Soft Landing?

  • (6:00) - What Should We Expect From Interest Rates The Remaining of The Year?

  • (9:20) - Will The Stock Market Rally Continue?

  • (14:55) - Could We See Small Cap Stocks Outperform Later In The Year?

  • (17:35) - How Can Investors Optimize Their Income Portfolio?

  • (23:15) - Episode Roundup: XNTK, QQQE, SBSM, IJR, GLD, GLDM, SRLN

  • Podcast@Zacks.com

 

In this episode of ETF Spotlight, I speak with Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors. We discuss the market outlook and investing strategies for the second half of 2024.

For the past year or so, market participants have been obsessed with whether a soft landing or recession will occur. Many investors have remained on the sidelines, waiting to deploy capital due to recession worries.

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According to SSGA, the long-anticipated US economic soft landing has already transpired, and most investors likely missed it. Following a robust first-half performance, stocks have the potential to deliver impressive results this year, particularly if the usual post-US election rally occurs.

Today's market concentration, driven by mega-cap AI-related stocks, has raised concerns of a potential valuation bubble. However, while Mag 7 valuations look stretched compared to the rest of the S&P 500, they remain below their pandemic peak and pre-rate hike levels as their rally is attributed more to strong growth than multiple expansions.

As AI growth momentum is expected to persist, investors could consider equal-weighted exposure to Tech leaders to diversify beyond a handful of stocks.

The SPDR NYSE Technology ETF XNTK holds 35 leading technology-related companies, like NVIDIA NVDA and Apple AAPL, which are equal-weighted at rebalance.

Small-cap stocks have underperformed their larger-cap counterparts for many years, and the trend continues this year as well. Companies in the S&P 600 Small Cap Index are currently trading at 14.4 times forward earnings, whereas the large-cap S&P 500 Index’s multiple is 22.9.

With an expense ratio of just 0.03%, the SPDR Portfolio S&P 600 Small Cap SPSM is one of the cheapest ETFs that offers comprehensive exposure to small-cap US equities.

Bonds are not providing the same diversification benefit to equities as in prior decades. Long-term government bonds, previously seen as a safe haven, have lost value. Matt recommends some allocation to real assets, including gold.

The SPDR Gold Trust GLD is the most popular gold ETF, but the SPDR Gold MiniShares Trust GLDM is more suitable for long-term investors due to its 0.10% expense ratio.

For the fixed income sleeve of the portfolio, investors could look at short-term active core strategies and high-quality intermediate investment-grade bonds.

Tune in to the podcast to learn more.

Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email podcast@zacks.com.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Apple Inc. (AAPL) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

SPDR Gold Shares (GLD): ETF Research Reports

SPDR NYSE Technology ETF (XNTK): ETF Research Reports

SPDR Portfolio S&P 600 Small Cap ETF (SPSM): ETF Research Reports

SPDR Gold MiniShares Trust (GLDM): ETF Research Reports

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Zacks Investment Research