ETFs you should know about: 12 analysts' picks from August-September 2024

Still, OMFL isn't destined to fail. September marks the second straight month where its underlying portfolio is on solid footing, and if you've managed to hold on for this long, I ask for just a little more patience. OMFL currently ranks well on most factors, and although I can't make any promises, I'm cautiously optimistic its model has settled on either the "slowdown" or "contraction" phase, meaning its high-quality selections should remain for the near term. I look forward to providing an update on OMFL's fundamentals below and comparing it with four alternatives you might find more appropriate.

SPYD is a passively managed fund launched in 2015. The selection process isn't very complex. According to the prospectus, the only real filter is a company must have "unadjusted market capitalizations of at least $14.5 billion and float-adjusted market capitalizations of at least $7.25 billion at the time of inclusion." The fund then selects the 80 remaining stocks with the highest dividends and equally weights them. The portfolio is rebalanced semi-annually, in January and July.

After the impressive surge in the ETF price, this analysis will explore drivers that will try to explain the recent up-movements in the Brazilian market, coupled with its valuation and outlook, to finally decide on a buy rating of the iShares MSCI Brazil ETF.

Before we dive into the fund's new strategy and its implications (both positive and negative), first let us look at the fund's recent performances. The fund has only been around for a few months and so far, it delivered 8.2% in total returns while it saw a NAV decay of -7.8% in terms of price action. All in all, investors made money at an annualized rate of 20% since the fund's inception, which is not bad at all.

This could be the result of a recent strategic shift in the fund. This is a newly created actively managed fund, and it's typical for these types of funds to have a strategic shift over time as they tweak their plays and see what works and what doesn't. As a result of recent changes, there are 2 things this fund does differently from other daily covered call funds. First, it started writing calls on the day of expiration, not the day before. Second, it started buying deeply in the money calls instead of buying actual shares or doing synthetics like how YieldMax funds do.

The Capital Group Dividend Growers ETF (CGDG) is my next pick in the top American Funds ETFs that I've been covering recently. While the first one on (CGBL) presents a balanced investment in stocks and bonds with a very compelling case, the second one covering international investments (CGIE) represents a sensible geographic diversification into large-cap European securities focused on growth. For this next analysis, I've chosen one that might appeal to dividend growth investors because I believe it comprises a considerable portion of the community of long-term investors.

CGDG is only about a year old, having been incepted on 9/26/2023. It was launched alongside several other ETFs in the American Funds family under the Capital Group brand, which is nearly a century old. In 2022, the group started launching the first of its "transparent ETFs", which essentially means a tighter bid/ask spread because holdings are disclosed on a daily basis. Another feature of these funds is that they take direct ownership of overseas stocks, eliminating the need to buy ADRs. The reason that's better is that ADRs come with additional risks such as currency risks, lack of voting rights, higher costs, and trading hours being restricted to U.S. market hours (as opposed to having live trading data when directly investing in overseas-domiciled securities.)

This $1.2 billion ETF comes with a dividend yield of 1.5% (forward basis; 30-day SEC yield is ~3%), which might seem low for a dividend-focused ETF, but only until you see the impressive 25% return since inception and put it in that context.

Recent market conditions have sparked a renewed interest in long-term Treasury bonds. Last week, Jerome Powell, Chair of the Federal Reserve, gave a speech where he indicated that the time has come to begin cutting interest rates, largely due to lower levels of inflation and higher rates of unemployment. Given this confirmation, it appears increasingly likely that Treasuries shall perform well in the coming months and quarters. If this is the case, it is likely a good time to allocate to the Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF).

Long-term Treasury bonds provide a steady stream of income through their interest payments, and they cannot be called back like most bonds and CDs. Treasuries are also among the safest and highest-rated securities any market offers, as they are guaranteed by the U.S. government, and backed by its ability to tax and print dollars. Alternatively, most investments from non-government entities are legally prohibited from making such express guarantees.

Bonds also serve an important function as a hedge that can balance the risk from equity investments in a portfolio. Usually, when the stock market drops, Treasuries benefit from a flight to safety. While this capacity to hedge has not been exceedingly evident over the last few years, as interest rates climbed and bonds lost value, that was likely due to prior rock bottom interest rates and the significant level of risk that was associated with long-term fixed income at rates below two percent. Now, bonds offer a more compelling interest rate, plus the potential to increase in value if rates should decline.