The markets have been through a bumpier ride this year, with an uneven performance between sectors and related exchange traded funds.
Consequently, investors may now find bargains in some areas of the market after the recent selling pressure, but there are some growth-oriented stocks that also look more expensive.
Morningstar‘s director of global ETF search, Ben Johnson, points out that valuations look favorable in the energy sector, which make up 10 cheapest of the ETFs.
Many ETF investors may be familiar with some of the cheapest energy-related ETFs, including the Market Vectors Oil Service ETF (NYSEArca: OIH), Energy Select Sector SPDR (NYSEArca: XLE), Vanguard Energy ETF (NYSEArca: VDE), iShares U.S. Energy ETF (NYSEArca: IYE) and First Trust Energy AlphaDEX Fund (NYSEArca: FXN).
The energy sector has come under heavy selling pressure in response to the swift fall off in crude oil prices. Year-to-date, OIH fell 8.7%, XLE dropped 6.9%, VDE decreased 7.6%, IYE retreated 7.5% and FXN declined 9.8%. [Oil ETFs Slide Back Into Bear Market]
However, the Market Vectors Steel ETF (NYSEArca: SLX) is the most undervalued ETF, according to Morningstar metrics. SLX has plunged 21.0% year-to-date as a slowing Chinese economy weighed on metals demand.
On the other hand, stocks that exhibited greater momentum and growth characteristics have been steadily gaining and now appear expensive. For instance, the iShares MSCI USA Momentum Factor ETF (NYSEArca: MTUM), Powershares DWA Momentum Portfolio (NYSEArca: PDP) and First Trust Large Cap Growth AlphaDEX Fund (NYSEArca: FTC) are among the most expensive ETFs, according to Morningstar.
Additionally, looking at individual sectors, tech sector ETFs, including the iShares North American Tech-Software ETF (NYSEArca: IGV) and Market Vectors Semiconductor ETF (NYSEArca: SMH), topped the list, along with healthcare ETFs, including the Guggenheim S&P Equal Weight Healthcare ETF (NYSEArca: RYH) and First Trust Health Care AlphaDEX Fund (NYSEArca: FXH).
For more information on the market sectors, visit our sector 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. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.