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CHICAGO, May 7, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Global X FTSE Norway 30 ETF (AMEX:NORW-Free Report), First Trust NASDAQ Clean Edge ETF (AMEX:QCLN-Free Report), Maxis Nikkei 225 Index Fund (AMEX:NKY-Free Report) and iShares MSCI Japan ETF (AMEX:EWJ-Free Report).
3 Incredible ETF Buys Under $20
Many investors have a strong preference for stocks that are below $20 a share. As a small investor myself, I can definitely relate. It can feel a little embarrassing almost to tell people that you only have two shares of this or four shares of that, even if you are putting a sizable portion of your portfolio into a particular security.
This preference also carries over to the ETF world, but unfortunately, many ETFs do trade at 'premium' prices, limiting the number of shares than a retail investor may be able to buy. In fact, there are less than 200 ETFs that currently trade below $20 out of over 1,500 total funds, suggesting that choices are pretty limited for investors who like to get a good number of shares from their investment.
This is particularly true when you only look for ETFs that are below $20 and also possessing a Zacks ETF Rank of at least a 2 (Buy). This list is below a dozen, but there are definitely some gems that investors who like buys that have a lower share price need to be aware of (see more on the Zacks ETF Rank Guide).
Below, we highlight three of our favorite from this subset, any of which might be interesting choices for investors who are looking for top ETF picks that are trading below $20:
A variety of issues have kept oil prices elevated as of late. A stronger developed market economy and concerns over Russia and their encroachment on Eastern Europe have helped to keep oil prices steady in recent months, greatly assisting the prospects of Norway in the process.
That is because Norway is a huge exporter of oil, and due to its location in Europe and friendly relations with many in the West, it could become even more important for Western Europe's energy needs. The country has also developed a huge sovereign wealth fund thanks to its oil, so it looks to be better positioned than most natural resource countries to weather a slump too (see all the European Equity ETFs here).
Given these factors, a look towards NORW could be an excellent idea in the near term. The fund has roughly half of its assets in energy stocks (and then close to 17% in energy and 10% in materials) and could definitely benefit directly from the current geopolitical realities in Europe. The ETF has also been outperforming the S&P 500 YTD, and has really taken off lately suggesting now could be the time to take a closer look at this product.
This European ETF has a Zacks ETF Rank #2 (Buy), while it is currently trading just below $17.50/share.
Although there has been a bit of a pullback in clean energy lately, QCLN is still handily beating out the S&P 500 on a year to date look. And given the incredible growth potential of the sector over the long term, there are plenty of reasons to still like a diversified play on the space, such as with QCLN (read A Comprehensive Guide to Alternative Energy ETFs).
It also helps that QCLN has such a broad focus on the space, as the fund holds companies engaged in a variety of industries from solar and biofuels, to batteries and electric transportation companies. In fact, roughly one-third of the portfolio goes to technology, while another 30% zeroes in on the energy space, suggesting a pretty wide net, and especially so when compared to more laser-focused funds like those that only hold technology firms in the alternative energy world.
In total, the ETF holds 50 stocks in its basket, allocating no more than 8.4% to any one stock. The fund definitely has a big holding in small and mid caps, and though volatility looks to be high in this product, it has shown a history of outperformance and it has plenty of potential to surge back in the months ahead as well.
QCLN has a Zacks ETF Rank #2 (Buy) and a 'High' risk rating. The fund currently trades at just under $19/share, a bit off of its 52 week of $21.62/share
While there are definitely some concerns over the Japanese economy as a result of some recent taxes and geopolitical muscle-flexing by Japan's rivals in the region, the foundation of the country's economy still appears solid. This is especially true given the continuation of 'Abenomics', strength in developed markets which should help exporters, and the development of tax incentives for investment accounts which should boost local demand for shares.
Currently, there are a number of ETFs that offer up exposure to Japan, including the ultra-popular iShares MSCI Japan ETF (AMEX:EWJ-Free Report), which is actually trading below $20/share as well. However, an overlooked play in this market is NKY, the only such fund to follow the benchmark Nikkei 225 Index (also see WisdomTree Debuts 5 Hedged Japan Sector ETFs).
This index, which is basically the DJIA of Japan, holds about 225 stocks in its basket and offers broad exposure to the Japanese economy. Industrials, consumer cyclical, and technology stocks take the top three spots, arguably giving this fund a big holding in securities that may benefit from more Abenomics this year.
NKY also currently has a Zacks ETF Rank #2 (Buy) while it is trading for just under $17/share.
If you are looking for ETF buys that have low share prices, the pickings are pretty slim. However, there are a handful of funds out there that could be interesting buys if you are seeking to accumulate a larger number of shares in a corner of the market that we believe is primed to outperform (see all the Top Ranked ETFs here).
Any of the above three funds certainly fit that bill, as they all have Zacks ETF Ranks firmly in 'buy' territory. Plus, with a share price below $20, they should all be low enough prices for even the smallest investor to accumulate a decent holding with a modestly sized investment.
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