However, some ETFs maintained their relative appeal throughout the first six months of 2017. One example is PowerShares QQQ Trust (QQQ). The Overweight ranking is aided by positive STARS and S&P Global Credit Ratings of its holdings, as well as bullish technical trends, a modest 0.20% expense ratio and a tight penny bid/ask spread. CFRA has Strong Buy or Buy recommendations on seven of its recent top-10 holdings including Apple (AAPL) and Amazon.com (AMZN); one such stock is not covered analytically.
Another ETF that has consistently been viewed as a top ETF in 2017 is iShares Edge MSCI USA Value Factor (VLUE). CFRA’s research agrees that the stocks inside this factor-focused ETF is undervalued, based on our qualitative STARS and quantitative Fair Value recommendations. In addition, from a quality perspective, favorable S&P Global Credit Ratings offers stronger risk considerations. While the holdings are different than QQQ, including Bank of America (BAC) and General Motors (GM), here too seven of its top-10 holdings are CFRA Strong Buy or Buy recommendations.
However, some ETFs maintained their bottom quartile ranking of Underweight throughout 2017. These include some sector focused iShares US Oil Equipment & Services (IEZ) and PowerShares S&P SmallCap Energy (PSCE). CFRA has valuation and risk concerns on many energy stocks, even as these ETFs sold off in the first half.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.