ETF Trends
ETF Trends

After closing out a dismal August, the markets seem to have stabilized in September. Make no mistake: the economy is still working out its kinks, which means you need to stay on your guard and know which exchange traded funds (ETFs) are best when the going gets rough.

Income. Not a lot will change in the next couple of weeks, remarks Gary Gordon for ETF Expert, so income-oriented investments may be the smart move. [5 Things to Know When You’re Hunting for ETF Yields.]

  • S&P SPDR Dividend Fund (NYSEArca: SDY) holds S&P 500 companies that have increased payouts for 25 consecutive years. The fund yields 3.41%, which is still better than the 10-year Treasury bond.
  • iShares High Yield Corporate Bond (NYSEArca: HYG) holds companies rated “junk” and yields 8.46%.

Global ETFs. Mid-term elections will throw in another dose of political volatility around mid-October, and Gordon recommends growth type investments or emerging market ETFs. However, be aware that these investments do come with their own set of risks. The broader a fund is, the lower the risk; take your pick – single country or total region? [ETFs That Yield More Than Your Savings Account.]

  • WisdomTree Emerging Market Small Cap (NYSEArca: DGS) holds the stock of small-cap companies in countries such as Taiwan, South Korea, South Africa, Thailand, Turkey and Brazil. Small-cap stocks are a way to play domestic economies in these countries.
  • Global X/InterBolsa FTSE Colombia (NYSEArca: GXG) is the top-performing ETF year-to-date, up 47.3%. Here’s why.

Pick Your Spots. Finally, use a strategy to find areas that are in potential long-term uptrends while avoiding those that aren’t performing. The strategy we follow is the 200-day moving average. When an ETF falls below its 200-day EMA, it’s a sell signal. When it rises above its 200-day EMA, it’s a buy. Having a pre-determined sell point will make selling a little easier when it’s time to do so; waiting until you “feel” it’s time to sell could lead to trouble. [An ETF Trend Following Plan for All Seasons.]

For more information on fixed-income ETFs, visit our dividend ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.