Stocks closed their best week of 2023 after Friday’s soft jobs data as investors grew hopeful that the Fed is finally done with its rate hikes. Amid an improved macro backdrop, high-performing large-cap ETFs Monarch Blue Chips Core ETF (MBCC), Vanguard S&P 500 ETF (VOO), and Goldman Sachs Hedge Industry VIP ETF (GVIP) could be ideal investments for portfolio diversification and solid returns. Read more….
With cooler-than-expected jobs report fueling speculation that the Federal Reserve is done hiking interest rates and economic activity expanding at a solid pace in the third quarter, the stock market rallied, closing its best week of the year.
Given this backdrop, investing in top-performing large-cap ETFs Monarch Blue Chips Core ETF (MBCC), Vanguard S&P 500 ETF (VOO), and Goldman Sachs Hedge Industry VIP ETF (GVIP) could be wise for instant diversification and substantial gains.
Wall Street closed its best week of the year after Friday’s jobs report came in cooler than expected, sending the 10-year Treasury yield lower. The major average indexes registered sizable weekly gains as investors grew hopeful that the Fed’s rate-hiking campaign is over.
The S&P 500 index jumped 5.85%, and the tech-heavy Nasdaq Composite gained 6.61%, marking the best week for both indexes since November 2022. The Dow Jones climbed by 5.07% in its best week since October 2022.
The Labor Department reported that the U.S. economy in October added 150,000 jobs, against the Dow Jones consensus forecast for the 170,000 payrolls increase, and lower than September’s 297,000 jobs added. The unemployment rate grew to 3.9%, above expectations that it would hold steady at 3.8%.
Also, average hourly earnings missed estimates on a monthly basis, increasing 0.2% last month, lower than the expected 0.3% rise.
“From an equity market perspective, this reading takes some of the pressure off inflation and interest rate concerns, while still reflecting a robust labor market that is adding jobs faster than the neutral rate of approximately 100K,” said Michelle Cluver, portfolio strategist at Global X.
After Friday’s jobs data, markets reduced the probability of an interest rate hike in December to under 10%, according to the CME FedWatch Tool.
The Federal Open Market Committee (FOMC) kept the key federal funds rate steady at its 5.25%-5.5% range in its latest meeting on November 1. This marked the second consecutive meeting where the central bank has chosen to hold interest rates. Also, the Fed said the economy rose at a “strong’ pace in the third quarter.
The Commerce Department reported that Gross Domestic Product (GDP) increased at a 4.9% annual pace in the third quarter of 2023, above the 4.7% estimate. The U.S. economy grew faster than expected, buoyed by solid consumer spending despite higher interest rates, inflationary pressures, and other domestic and global headwinds.
Given an optimistic market backdrop, investing in large-cap blend ETFs seems prudent. Most of these ETFs tend to invest in U.S. industries (with market caps of above $10 billion), and depending on their broad exposure, the portfolios’ return is like that of the S&P 500 Index. These ETFs are ideal for conservative investors who only want exposure to the biggest U.S. companies.
In light of these favorable trends, let’s look at the fundamentals of these best-performing Large Cap Blend Bonds ETF picks, beginning with number 3.
ETF #3: Vanguard S&P 500 ETF (VOO)
VOO tracks the S&P 500 Index, one of the most famous benchmarks in the world and follows some of the U.S.’ largest companies. The securities this fund seeks to track are usually known as “Blue Chips’ and are some of the most famous and profitable companies in the country. Also, the fund is probably one of the safest in the equity world.
VOO has assets under management (AUM) of $323 billion. The fund currently has a total of 1000 holdings, with its top 15 assets comprising 47.85% of its AUM.
The fund’s top holdings include Apple Inc. (AAPL) with a 7.72% weighting, Microsoft Corporation (MSFT) at 6.82%, and followed by Amazon.com, Inc. (AMZN) and NVIDIA Corporation (NVDA) with 3.13% and 2.82% weightings, respectively.
The ETF has an expense ratio of 0.03%, lower than the category average of 0.37%. VOO fund flows came in at $1.31 billion over the past five days and $3.75 billion over the past month. In addition, it has a beta of 1.
The fund pays an annual dividend of $6.23, translating to a 1.56% yield at the prevailing price level. VOO’s dividend payouts have grown at a 5.2% CAGR over the past three years and a 6.1% CAGR over the past five years. The fund’s four-year average yield is 1.59%.
VOO has gained 6.6% over the past six months and 17.2% over the past year to close the last trading session at $399.44. Also, the fund has surged 14.1% year-to-date. It has a NAV of $399.43 as of November 3, 2023.
VOO’s POWR Ratings reflect this promising outlook. The fund has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The fund has an A grade for Buy & Hold and a B for Trade. Of the 280 ETFs in the A-rated Large Cap Blend Bonds ETFs group, VOO is ranked #46.
To access all VOO’s POWR Ratings, click here.
ETF #2: Monarch Blue Chips Core ETF (MBCC)
MBCC seeks to track the investment results of the Kingsview Blue Chips Core Index. The index comprises established, well-recognized companies listed on the S&P 500 from a broad range of industries demonstrating strength based on fundamental company data like revenue, revenue growth, net income, and net income growth.
With $48.40 million in AUM, MBCC’s top holdings are MSFT with a 4.59% weighting, Eli Lilly and Company (LLY) at 4.50% and Nike, Inc. Class B (NKE) and Starbucks Corporation (SBUX) at 4.44% and 4.42%, respectively. The fund has a total of 25 holdings, with its top 10 assets comprising 43.81% of its AUM.
The fund has an expense ratio of 1.25%. MBCC fund flows were $629,000 over the past five days and $7.75 million over the past month.
MBCC has gained 5.5% over the past six months and 20.4% over the past year to close the last trading session at $26.70. It has a beta of 1.02. The fund’s NAV was $26.67 as of November 3, 2023.
MBCC’s sound fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has an A grade for Peer and a B for Buy & Hold. Of the 280 ETFs in the A-rated Large Cap Blend ETFs group, MBCC is ranked #33.
Click here to see all the MBCC ratings.
ETF #1: Goldman Sachs Hedge Industry VIP ETF (GVIP)
GVIP tries to imitate the stock picks of top hedge fund managers. The fund screens publicly available data of fundamentally driven hedge fund managers and identifies the stocks that appear most often in their top 10 holdings. The universe of hedge funds is limited to those that hold $100 million or more in U.S.-listed stocks and 10 to 200 distinct equity positions.
The fund tracks the Goldman Sachs Hedge Fund VIP Index. GVIP has an AUM of $130.90 million. It has a total of 47 holdings. The fund’s holdings include Vertiv Holdings Co. Class A (VRT) with a 2.55% weighting, Vistra Corp. (VST) at 2.52%, and Palo Alto Networks, Inc. (PANW) with a 2.52% weighting.
The fund has an expense ratio of 0.45% compared to the category average of 0.37%. Over the past month, GVIP fund flows came in at negative $6.31 million. Also, it has a beta of 1.11.
GVIP has gained 15.72% over the past six months and 27.4% over the past year to close the last trading session at $87.45. Also, the fund has climbed 26.9% year-to-date. It has a NAV of $87.45 as of November 3, 2023.
GVIP’s POWR Ratings reflect this strong outlook. The ETF’s overall A rating translates to a Strong Buy in our proprietary rating system.
The fund has a grade of A for Buy & Hold and Peer. It has a B grade for Trade. GVIP is ranked #25 of 280 ETFs in the same group.
To access all the POWR Ratings for GVIP, click here.
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MBCC shares were unchanged in premarket trading Monday. Year-to-date, MBCC has gained 12.68%, versus a 14.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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