ETF Ideas for the Fourth Quarter

The fourth quarter starts next week, so now is a good time for investors to start considering exchange traded funds that have reputations for performing well in the last three months of the year. Some predictable sectors and industries are part of that equation.

Of course, that includes consumer discretionary and retail offerings such as the SPDR S&P Retail ETF (NYSEArca: XRT), the largest dedicated retail exchange traded fund, and the VanEck Vectors Retail ETF (NYSEArca: RTH). There are fundamental factors that should buoy consumer discretionary and retail ETFs. For example, the U.S. has been adding about 200,000 new jobs each month for the past two years, a rapid pace not seen since the boom days of late 1990s, and we are now at an unemployment rate of just 5%.

SEE MORE: Amazon in Focus for Retail ETFs

The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is usually a stout performer in the fourth quarter.

“Over the past 15 years’ worth of fourth quarters, the Consumer Discretionary Select Sector SPDR Fund (XLY) has averaged a total return of 6.12 percent, easily besting the 4.6 percent return for the Standard & Poor’s 500 index over those 15 fourth quarters, but the index’s total average return from 2001 through the end of 2015,” according to US News and World Report.

On the other hand, economists and investors waiting on wage growth to catch up to the boom. When the economy is at full employment, wages grow about 3% to 3.5% per year, but wages are only rising 2.5% so far.