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Valentine’s Day is here, so let’s do something different this year. While accessories, dresses, gadgets, flowers, etc., are popular gifts on this day, gifting an ETF could be a great idea. This is because U.S. stocks are hovering near record highs, fueled by Trump’s growth policies and ongoing AI adoption.
However, geopolitics, fears of a trade war, inflationary pressure and uncertain Fed moves continued to weigh on investors’ sentiment.
Here are five ETFs where investors could stash their cash in the season of love.
Let’s dig into the heart and soul of these ETFs that could bring market-beating returns this year.
iShares Bitcoin Trust (IBIT)
Bitcoin has been hot since Donald Trump’s election win, and its ETFs are gaining the love of investors. A flurry of policy announcements from the Trump administration has reignited interest in cryptocurrencies. The Trump administration continues to promote cryptocurrencies, reinforcing their role as hedges against inflation.
Additionally, continued institutional adoption and broader market acceptance are providing strength. Bitcoin ETFs are emerging as the preferred choice for investors navigating policy uncertainty and inflation concerns (read: Bitcoin ETFs Brimming With Inflows Amid Tariff Turmoil).
iShares Bitcoin Trust seeks to reflect the performance of Bitcoin's price. It enables investors to get exposure to Bitcoin through the convenience of an exchange-traded product, helping remove the operational, tax and custody complexities of holding Bitcoin directly. IBIT charges 25 bps in annual fees from investors. IBIT has AUM of $57.1 billion and trades in an average daily volume of $42 million shares.
SPDR Gold Trust ETF (GLD)
Gold has been on a fantastic rally this year, driven by a rush to safe-haven demand. Rising trade war fears and inflation concerns are driving the yellow metal higher, with many analysts expecting more upside this year. Additionally, strong gold buying from the world’s central banks and lower rates are supporting gold price.
Notably, banks are dominant buyers of gold as they seek to diversify their reserves away from the U.S. dollar. Strong demand from individual investors in emerging markets, such as India and China, is also acting as a tailwind for the precious metal.
SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with an AUM of $80.6 billion and a heavy volume of about 7 million shares a day. SPDR Gold Trust ETF charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold) (read: Gold Rally to Continue: Leveraged ETFs to Make Profits).
Utilities Select Sector SPDR (XLU)
While the tech sector has become overvalued, utility is still undervalued and could be worth investing in to tap the AI boom. This is because AI is bolstering the demand for electricity, as data centers require tons of energy for computing and cooling power. The increased adoption of electric vehicles will also boost electricity demand for companies within the utilities sector.
Added to the sector’s strength is the stock market volatility and uncertainty. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or safe haven amid economic or political turmoil (read: 4 Safe ETFs to Play as Tariff Tensions Heat Up).
With an AUM of $17.7 billion, Utilities Select Sector SPDR seeks to provide exposure to companies from the electric utility, water utility, multi-utility, independent power and renewable electricity producers, and gas utility industries. It follows the Utilities Select Sector Index, holding 31 stocks in its basket. Utilities Select Sector SPDR charges 8 bps of annual fees and sees a heavy volume of 10 million shares, on average. It has a Zacks ETF Rank #1 (Strong Buy).
SPDR S&P Bank ETF (KBE)
Bank stocks have seen a surge in investor interest lately. After an aggressive regulatory agenda under the Biden administration, banks are now poised to benefit from lighter regulatory scrutiny under the new administration. Relaxed capital rules have also provided a boost to bank stocks. Additionally, analysts expect a revival in M&A and IPO activity, which would benefit large banks.
SPDR S&P Bank ETF offers equal-weight exposure to 95 banking stocks by tracking the S&P Banks Select Industry Index. Regional banks dominate the portfolio with a 71% share, while diversified banks, commercial & residential mortgage finance, diversified financial services and asset management & custody banks take the remainder. SPDR S&P Bank ETF has amassed $2.7 billion in its asset base while trading in a heavy volume of 2 million shares a day, on average. The product charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy).
Vanguard Dividend Appreciation ETF (VIG)
Bouts of volatility and uncertainty make dividend ETFs excellent picks. Dividend-focused products offer safety in the form of payouts and stability, as mature companies are less volatile to large swings in stock prices. Companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis. Investors should note that dividend-paying securities are the major sources of consistent income when returns from the equity market are at risk.
Vanguard Dividend Appreciation ETF is the largest and the most popular ETF in the dividend space, with an AUM of $90.4 billion and an average daily volume of 1.3 million shares. The fund follows the S&P U.S. Dividend Growers Index, which is composed of stocks of companies that have a record of increasing dividends over time. Vanguard Dividend Appreciation ETF holds 337 stocks in its basket and charges 5 bps in annual fees. It has a Zacks ETF Rank #1.