Where ETF Investors May Find 'Pockets of Value' | ETF Trends

Despite the recent correction in the equities , markets and exchange traded funds have more room to rise, with improving growth and loose monetary policies to fuel the economy.

“Although it’s still entirely possible to have a bear market despite a decent economy, given solid growth and a timid Fed, we don’t believe the current correction marks the end of the bull market,” writes Russ Koesterich, managing director and BlackRock‘s global chief investment strategist.

In the U.S., Koesterich pointed to potential “pockets of value,” such as mega-capitalization stocks and high-yield bonds, that look more attractive after the selling pressure.

For instance, the Dow Jones Industrials were trading at slightly above 13 times forward earnings.

“While many of these companies are facing pressure from a stronger dollar and sluggish global growth, current prices appear to discount those risks,” Koesterich said. “Plus, as we have discussed in the past, high-quality companies, rather than stocks that are driven by market momentum, are likely to offer some insulation given our expectation for more equity market volatility.”

The SDPR Dow Jones Industrial Average ETF (NYSEArca: DIA), which tracks the Dow Jones Industrial Average of 30 blue-chip stocks, shows a 16.5 price-to-earnings, according to Morningstar data. DIA includes 87.8% mega-caps and 12.2% large-caps.

The Guggenheim Russell Top 50 Mega Cap ETF (NYSEArca: XLG) singles out the biggest U.S. company stocks taken from the the Russell 1000 large-cap index. Additionally, ETF investors can choose from other options, including the Vanguard Mega Cap ETF (NYSEArca: MGC), which may include more large-cap exposure; iShares S&P 100 ETF (NYSEArca: OEF), which follows 100 of the largest stocks with a liquid options market.