The Federal Reserve’s aggressive rate hikes this year are finally yielding results, as inflation eased for the second consecutive month in November. The consumer price index in November rose 7.1% year-over-year and 0.1% sequentially, coming below analyst estimates.
The Fed also kept its word of slowing down the pace of rate hikes by announcing a 50-basis point hike earlier this month after four consecutive three-quarters of a percentage point rate hikes. However, the central bank intends to keep raising interest rates through next year, with the terminal rate expected to reach about 5.1%.
The potential continuation of rate hikes has renewed recession concerns. With the macroeconomic environment expected to remain uncertain in the near term, it could be wise to invest in ETFs with exposure to industries or asset classes that usually remain relatively unaffected by economic weakness.
To that end, JPMorgan Ultra-Short Income ETF (JPST), VanEck Pharmaceutical ETF (PPH), and Invesco Dynamic Food & Beverage ETF (PBJ) could be wise additions to your portfolio for stable returns.
JPMorgan Ultra-Short Income ETF (JPST)
JPST is an actively managed, ultra-short-term, broad-market bond fund that aims to maximize income and preserve capital. The fund makes investments in fixed-rate, variable-rate, and floating-rate debt, including corporate issues, asset-backed securities, and debt pertaining to mortgages, as well as U.S. government and agency debt, including treasury securities.
JPST has $23.59 billion in assets under management. The fund has a total of 460 holdings. Its holdings include the U.S. Dollar with a 50.55% weighting, fixed income (unclassified) at 1%, BNP Paribas S.A. at 3.5%, 01-MAR-2023 at 0.91%, and Nordea Bank AB (New York) FRN 23-DEC-2022 at 0.79%.
JPST has an expense ratio of 0.18%, lower than the category average of 0.60%. JPST’s fund inflows came in at $4.08 billion over the past six months and $5.24 billion over the past year. It currently has a NAV of $50.18. Also, it has a beta of 0.08, indicating extremely low volatility compared to the broader market.
The ETF pays an annual dividend of $1.19, which yields 2.36% on the current price. Its dividend payouts have increased at a CAGR of 20% over the past five years. Over the past six months, JPST has gained 0.3% to close the last trading session at $50.22.
JPST’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
JPST has an A for Trade, Buy & Hold, and Peer grade. Of the 32 ETFs in the A-rated Ultra-Short Term Bonds group, it is ranked #3. Click here to access all of JPST’s POWR Ratings.
VanEck Pharmaceutical ETF (PPH)
Launched and managed by Van Eck Associates Corporation, PPH invests in stocks of companies operating across health care, pharmaceuticals, biotechnology, and life sciences sectors. It seeks to track the performance of the MVIS US Listed Pharmaceutical 25 Index.
The fund has $583.20 million in assets under management. Its top holdings are Johnson & Johnson (JNJ) with an 8.27% weighting, AbbVie Inc. (ABBV) at 5.55%, and Eli Lilly and Company (LLY) at 5.48%. The fund has a total of 25 holdings.
PPH has an expense ratio of 0.35%, lower than the category average of 0.53%. Its fund inflows came in at $60.36 million over the past six months and $247.35 million over the past year. It currently has a NAV of $78.19. Also, it has a beta of 0.71, indicating extremely low volatility compared to the broader market.
The ETF pays an annual dividend of $1.23, which yields 1.57% on the current price. Its dividend payouts have increased at a CAGR of 1.8% over the past three years. Over the past three months, PPH has gained 15.5% to close the last trading session at $78.27.
PPH’s POWR Ratings are consistent with its promising outlook. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It also has an A grade for Trade, Buy & Hold, and Peer. It is ranked #7 out of 41 ETFs within the A-rated Health & Biotech ETFs group. To access all of PPH’s POWR Ratings, click here.
Invesco Dynamic Food & Beverage ETF (PBJ)
Launched and managed by Invesco Capital Management LLC, PBJ invests in stocks of companies operating across consumer staples, food, tobacco, beverages, and food products sectors. The fund seeks to track the performance of the Dynamic Food & Beverage Intellidex Index.
PBJ has $364.40 million in assets under management. It has an expense ratio of 0.63%. Its fund inflows came in at $80.20 million over the past six months and $261.88 million over the past year. It currently has a NAV of $46.67.
Its top holdings include The Kraft Heinz Company (KHC) with a 5.37% weighting, General Mills, Inc. (GIS) at 5.32%, and The Hershey Company (HSY) at 5.28%. It currently has 31 holdings in total.
PBJ’s annual dividend of $0.83 yields $1.78 at prevailing prices. Its dividend payouts have increased at 25.8% and 28.5% CAGR over the past three and five years, respectively. Its four-year average yield was 1.11%. PBJ gained 9.1% over the past six months to close the last trading session at $46.66.
It is no surprise that PBJ has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Trade, Buy & Hold, and Peer. PBJ is ranked #8 out of 48 ETFs in the B-rated Consumer-Focused ETFs group. Click here to see all PBJ ratings.
JPST shares were trading at $50.23 per share on Tuesday morning, up $0.01 (+0.02%). Year-to-date, JPST has gained 1.05%, versus a -18.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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