Stock Exchange ETFs and Corporate Bond ETFs Rally As Homebuilding ETFs Falter

New York Stock Exchange Sees Improvement Second Day in a Row
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Stock Exchange-Traded Funds continue to edge higher, having received a bid on the U.S President Donald Trump signing to law the $900 billion coronavirus relief package. The signing of the bill all but alleviated the risk of the government shutdown, conversely fuelling hopes of continued economic recovery.

Stock Exchange ETFs Rally

The passage of the stimulus bill helped avert fear in the markets as investors turned to exchange-traded funds to gain exposure to the ever bullish stock market. The market is likely to be in a constructive mood heading into 2021.

Likewise, ETFs tracking some of the biggest stock exchanges raced to record highs amid growing hopes of a new $2,000 stimulus checks. The Invesco QQQ Trust (NASDA: QQQ) was up 0.3%, and the iShares Core S&P 500 ETF (NYSEArca: IVV) gaining 0.2%.

Focus On Corporate Bonds

Stock exchange-traded funds are not the only ones eliciting bids in the market. Corporate bonds ETFs are also in the spotlight thanks to their higher than average yields. Investors are increasingly adding corporate bonds to their debt portfolio in the aftermath of the FED, affirming a corporate bond-buying program.

For investors looking for safer haven investment-grade bonds, VanEck has continues to offer plenty of options. VanEck Vectors Fallen Angel High Yield Bond ETF (BATS: ANGL) would be a perfect fit for investors looking to gain exposure to investment-grade corporate bonds denominated in U.S dollars rated as investment-grade at the time of issuance.

Likewise, VanEck Vectors Investment Grade Floating Rate ETF (FLTR) would fit any portfolio seeking to replicate the performance of the MVISA US Investment Grade Floating Rate Index comprised of U.S dollar floating rate notes.

The VanEck Vectors Moody’s Analytics IG Corporate Bond ETF (MIG) offers exposure to the Moody’s Analytics US Investment Grade Corporate Bond Index. The index includes investment-grade corporate bonds with attractive valuations.

Tanking New Homes Sales

Even as Stock Exchange-traded funds and corporate bond ETFs remain upbeat, there is growing concern about whether housing ETFs will suffer as new home sales continue to disappoint. New home sales continue to reel from the effects of the low interest rate environment.

New home sales tanked 11% to a seasonally adjusted rate of 841,000 units lagging behind economist forecasts of a 0.3% decline in November. Home sales are often considered a leading housing market indicator and a key driver of sentiments around housing ETFs.

The major tailwinds facing the housing market include limited inventory due to land shortages and skilled labor deficiencies. The factors are increasingly affecting the affordability as prices of both existing and new homes continue to soar. Low employment levels aggravated by the COVID-19 situation all but continue to exacerbate the situation.

Amid the tailwinds, a number of homebuilder ETFs looks set to keep on gaining. IShares U.S Home Construction ETF is one of the ETFs for investors eyeing exposure on U.S companies that manufacture residential homes. The ETF tracks the Dow Jones U.S Select Home Construction Index.

The SPDR S&P Homebuilders ETF XHB tracks the S&P Homebuilders Select Industry Index. The homebuilding space’s popular choice holds about 35 securities with $1.32 billion in assets under management.


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