- Fidelity MSCI Financials Index ETF (FNCL): Provides a convenient way to benefit from the anticipated interest rate hikes this year
- First Trust Natural Gas ETF (FCG): Geopolitical concerns have put the focus on energy stocks, including natural gas shares in FCG
- Teucrium Agricultural Fund (TAGS): Offers exposure to moves in the price of corn, wheat, soybean and sugar futures
Exchange-traded funds (ETFs) are versatile investment tools that offer a rich range of exposures at relatively low costs. They comprise a collection of securities like bonds, equities, currencies, commodities, derivative products and, more recently, even Bitcoin futures.
In fact, an increasing number of investors nowadays prefer ETFs to buy over mutual funds due to their intraday liquidity, higher level of transparency and potential tax benefits.
Recent research suggests net growth in the ETF count almost doubled to a new record of 1,239 in 2021. According to ETFGI research, exchange-traded funds attracted more than $1 trillion in cash in 2021, taking total assets managed by ETFs to about $10 trillion.
Moreover, BlackRock (NYSE:BLK), the largest ETF issuer in the U.S., predicts that global ETF assets could hit $14 trillion by the end of 2024. Therefore, we’re likely to see more funds come to the market in the coming quarters.
With that information, here are three hot ETFs to buy that could gain traction in 2022 amidst rising inflation and geopolitical turmoil.
|FNCL||Fidelity MSCI Financials Index ETF||$53.75|
|FCG||First Trust Natural Gas ETF||$24.78|
|TAGS||Teucrium Agricultural Fund||$32.79|
Fidelity MSCI Financials Index ETF (FNCL)
52-week range: $49.40 – $59.39
Dividend yield: 1.7%
Expense ratio: 0.08% per year
Our first fund, the Fidelity MSCI Financials Index ETF (NYSEARCA:FNCL) offers exposure to a wide range of U.S. financial shares. It is heavily skewed toward large-cap stocks, but also includes some mid- and small-cap exposure. The fund started trading in October 2013.
FNCL tracks the MSCI USA IMI Financials Index, which represents the performance of the financial sector in the U.S. equity market. This ETF currently has 390 holdings.
With respect to subsectors, we see banks with the highest portion at 38.01%, followed by capital markets at 25.77%, insurance at 18.36%, diversified financial services at 8.99% and consumer finance at 6.17%.
The top ten holdings account for roughly 41% of its net assets of $1.9 billion. Among them are Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), JPMorgan Chase(NYSE:JPM) and Bank of America (NYSE:BAC).
FNCL is down 4.5% year-to-date (YTD), but still returned 7.3% over the past 12 months. The fund hit a record high in mid-January. But since then, many of the names in FNCL have come under pressure. Rising interest rates are likely to help financial stocks improve their profits, so keep this on your list of ETFs to buy.
First Trust Natural Gas ETF (FCG)
52-Week Range: $11.75 – $25.50
Dividend Yield: 1.8%
Expense Ratio: 0.6% per year
The First Trust Natural Gas ETF (NYSEARCA:FCG) provides investors with exposure to energy names that include explorers and producers of natural gas. Supply constraints, especially due to Russia’s invasion of Ukraine, mean increased volatility. Yet the fund can be a powerful tool for benefiting from soaring natural gas prices.
FCG, which tracks the ISE-Revere Natural Gas Index, has 44 holdings. It started trading in May 2007. The top ten stocks in the portfolio account for more than a third of its net assets of $678 million. Occidental Petroleum (NYSE:OXY), DCP Midstream (NYSE:DCP) and ConocoPhillips (NYSE:COP) are among the most prominent holdings.
The ETF returned 85% over the past 12 months and almost 45% year-to-date (YTD). FCG hit a multi-year high in recent days. Interested readers could consider buying the dip in this energy fund.
Teucrium Agricultural Fund (TAGS)
52-week range: $21.36 – $37.91
Expense ratio: 0.18% per year
Our final choice in our list of ETFs to buy is the Teucrium Agricultural Fund (NYSEARCA:TAGS). It offers market participants a convenient way to gain exposure to moves in the prices of wheat, sugar, corn and soybean futures.
Agricultural commodities are currently in the limelight, as Russia and Ukraine are among the most important wheat exporters. The current war means supply disruptions and price increases worldwide.
In addition, these crucial agricultural commodities are widely used as feed, fuel, starch, sweeteners and plastic throughout the global economy. The historically low correlation of these commodities with U.S. equities makes TAGS an attractive tool for portfolio diversification.
The fund started trading in March 2012. TAGS currently has net assets of almost $29 million. TAGS invests in four other funds in equal amounts. They are:
- Teucrium Sugar (NYSEARCA:CANE) – up 5% YTD;
- Teucrium Corn Fund (NYSEARCA:CORN) – up 27% YTD;
- Teucrium Soybean (NYSEARCA:SOYB) – up 17% YTD;
- Teucrium Wheat (NYSEARCA:WEAT) – up 35% YTD.
TAGS has gained 46% over the past year and 22% YTD. It could still find a place in long-term portfolios.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.