Quality, Momentum ETFs to Play the Stock Markets Ahead

While the U.S. economy remains resilient and corporate America is generating steady earnings growth, short-term uncertainty weighs on the market. As investors try to navigate this time of mixed market, look to quality and momentum exchange traded funds to capture areas of strength.

“We expect the outlook to remain murky in the short-term. There are few indications that the U.S. and China are close to a reconciliation on trade disputes. We do not see either side willing to compromise. This warrants a focus on portfolio resilience. Bottom line: Strong earnings growth, particularly in the U.S., underpins our preference for equities over debt. We still like the momentum factor, along with a tilt toward quality for resilience,” BlackRock strategists, led by Richard Turnill, said in a research note.

BlackRock pointed to rising dissonance with macro uncertainty and gradually tightening financial conditions, coupled with strong economic and earnings growth.

U.S. equities remain the favored play. U.S. companies have pushed higher on another round of solid earnings results, with around 83% of U.S. companies beating second-quarter earnings estimates. Furthermore, the robust sales growth reveals the profit boost came from solid demand and not solely due to tax cuts. However, investors are looking for safety as many are steering toward global minimum volatility equities.