JPMorgan also argues that financials, the worst performing S&P 500 sector this year, have been oversold and look attractive on a long-term basis. However, the bank warned that long-term recovery depends on Federal Reserve interest rate hikes.
The iShares U.S. Financials ETF (NYSEArca: IYF), Financial Select Sector SPDR (NYSEArca: XLF) and Vanguard Financials ETF (NYSEArca: VFH) allow broad access to the financial space.
Meanwhile, in a prolonged low-interest rate environment, Rees believes dividend-paying stocks are also a good buy.
“Growth companies with 3 to 4 percent yields in the domestic sectors look very attractive,” Rees added. “A lot of people were negative on dividend yields this year because they thought rates were going to rise. That hasn’t happened.”
Investors also have a number of high-quality dividend-paying stock ETFs to choose from. The Vanguard Dividend Appreciation ETF (NYSEArca: VIG) tracks U.S. stocks that have increased dividends on a regular basis for at least 10 consecutive years and has a 2.39% 12-month yield. The Schwab US Dividend Equity ETF (NYSEArca: SCHD) includes 100 stocks based on strong fundamentals, dividend yields and consistent dividend payouts for at least 10 consecutive years, and it has a 3.04% 12-month yield. The SPDR S&P Dividend ETF (NYSEArca: SDY) holds firms that have a minimum dividend increase streak of 20 years for inclusion and shows a 2.61% 12-month yield. The ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) only includes companies that have increased their dividends for at least 25 consecutive years and offers a 2.06% 12-month yield.
Max Chen contributed to this article.