ETFs To Watch In 2025 -

ETFs To Watch In 2025

Jan 24, 2025Jeremy ParkinsonFinance, No picture0

Following on last week’s top 10 list, this week’s blog focuses on ETFs related to the stocks in the list. Here is the list as it appeared last week of the Top Ten ValuEngine Stocks to Watch in 2025. Top 10 List for 2025

Rank

Ticker

Company Name

Market Cap ($Bil)

Price

VE Rating

Forecast Ranking

Valuation Ranking

CVNA

CARVANA CO

36.8

203.40

100

TWLO

TWILIO* INC-A

17.3

108.10

100

PYPL

PAYPAL HOLDINGS

87.8

85.35

100

CRDO

CREDO TECH GRP

12.1

67.21

THC

TENET HEALTH

11.7

126.20

CHWY

CHEWY INC

14.7

33.49

XYZ

BLOCK INC*

56.8

84.99

ISRG

INTUITIVE SURG

190.7

522.00

DOCU

DOCUSIGN INC

18.2

89.94

GENERAL MOTORS

56.9

53.27

Next we screened for ETFs that contained each stock that were also rated 5 (Strong Buy), focusing on the ETF that held the stock in the greatest percentage, then traveling down the lists of ETFs that held it until we found one rated 5. Here are the strong-buy-rated ETFs matched up to each stock.

Ticker

Company Name

ETF Ticker

ETF Name

Objective

Active?

CVNA

CARVANA CO

PEZ

Invesco Dorsey Wright Consumer Cyclicals Momentum ETF

Buys Cyclicals with Strong Price Momentum and Good Fundamentals

TWLO

TWILIO INC-A

BOUT

Innovator IBD Breakout Opportunities ETF

Technical Analysis-Driven Breakout Opportunities

PYPL

PAYPAL HOLDINGS

FDN

First Trust Dow Jones Internet Index Fund

Invest in firms deriving at least half their revenues from internet

CRDO

CREDO TECH GRP

IPO

Renaissance IPO ETF

Tracks Index of Significant IPOs added 5th Trading Day

THC

TENET HEALTH

RJMG

Raymond James Multicap Growth Equity Multi-Cap Growth Equity ETF

Buy growth stocks rated as outperform by RJ research department

Yes

CHWY

CHEWY INC

PINK

Simplify Health Care ETF

PINK is an actively managed fund of US healthcare stocks and/or ETFs. The fund seeks long-term capital growth

Yes

XYZ

BLOCK INC

EBIZ

Global X e-Commerce ETF“

Invest in firms likely to profit from e-Commerce Boom

ISRG

INTUITIVE SURG

EKG

First Trust Nasdaq Lux Digital Health Solutions ETF

EKG tracks a cap-weighted index of companies engaged in digital health technologies.

DOCU

DOCUSIGN INC

DVOL

First Trust Dorsey Wright Momentum & Low Volatility ETF

DVOL tracks an index of 50 large- and mid-cap, low volatility stocks exhibiting relative strength.

DGM

GENERAL MOTORS

SIXA

ETC 6 Meridian Mega Cap Equity ETF

SIXA is an actively managed fund that invests in large cap US equities selected from the Russell 3000 Index.

Yes

Since this column features ten ETFs and space is limited, we present two tables with five ETFs apiece followed by two benchmark index ETFs, IVV from iShares by Blackrock and replicates the S&P 500 Index and RSP from Invesco,

ETF Ticker

PEZ

BOUT

FDN

IPO

RJMG

Category

iShares Core S&P 500 ETF

Invesco S&P 500 Equal Weight ETF

ValuEngine Rating

Current Price

605.23

182.12

Forecast 3-mo. Price Return

1.28%

0.94%

Forecast 6-Mo. Price Return

2.81%

2.67%

Forecast 1-yr. Price Return

1.67%

0.89%

Historic 1 mo. Price Return

-0.79%

-0.05%

Historic 3 mo. Price Return

2.56%

-0.71%

Historic 6 mo. Price Return

7.18%

5.28%

Historic 1-Year Price Return

26.47%

17.03%

Historic 3-Yr Ann. Price Return

30.92%

13.23%

Historic 5-Yr Ann. Price Return

11.99%

8.30%

Volatility

18.4%

20.9%

Sharpe Ratio

0.65

0.40

Beta

1.00

1.08

# of Stocks

500

Div. Yield

1.3%

0.7%

Assets (AUM) ($M)

490475.62

71840.00

Expense Ratio

0.03%

0.20%

Largest Holding Pct.

APPLE INC (7.12%)

CONSTELLATN EGY (0.27%)

ETF Issuer

iShares

Invesco

Analysis All 10 ETFs are rated 5 (Strong Buy). Within the 5 category, the next differentiation are the forecast price returns. In this case, the same ETF racnks highest for 3-month, 6-month and 12-month forecast price gains. That ETF is the Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ). Its indexed methodology employs quarterly rebalancing to buy cyclical sector stocks with strong price momentum and Fundamentals. Its current second-largest position is Carvana (CVNA). In terms of recent history, it posted negative returns for the past six months but a robust 20% return for the 12 months. Its five-year annualized return is superior to that of equally-weighted (RSP) and competitive with that of (SPY). On the negative side for conservative investors, its volatility is 40% higher than the benchmark while paying close to zero yield. The Innovator Breakout Opportunities ETF (BOUT) is a rare “traditional” 100% long ETF by Innovator ETFs. The firm is best known for its highly successful suite of defined protection ETFs. Its on our list because of its large position in Twilio Corpl (TWLO), the second highest ranked of our top 10 stocks from the prior blog. BOUT tracks an index of stocks that are likely to break out, as determined by technical analysis. Holdings are weighted by a mix of fundamental and technical factors. While its periodic price gain/loss history is quite similar to that of PEZ, BOUT has much lower volatility. Its beta of 0.98 puts it in line with the S&P. Unlike most equity ETFs, the fund may hold up to 50% T-bills based on technical market signals. One note of caution, its meager $14 million in AUM may make it difficult to trade on some platforms and wide bid-ask spreads may become an issue. First Trust Dow Jones Internet Index Fund (FDN) which holds Paypal (PYPL) is one of four First Trust ETFs in this list. FDN cap-weights US companies that derive at least 50% of total revenues from the internet. FDN has the best 3-month and 6-month historical returns among our 10 ETFs. Its longer period returns are at least third best in each period. Renaissance IPO Fund (IPO) is designed to profit off initial public offerings (IPOs) of newly issued stocks. The relevant stock for this article is Credo Holdings (CRDO). IPO’s index methodology selects what it considers “significant” IPOs and adds them every fifth business day. This contributed to its unusually high portfolio turnover rate. IPO has performed quite well during the past 12 months but is the worst performer in terms of returns for the 3-year and 5-year periods. Its feast-or-famine strategy also gives it high volatility but gets investors in “on the ground floor’ of what will be the most successful companies of the future. FT Raymond James Multi-Cap Equity ETF (RJMG) holds a portfolio of US growth stocks rated as strong buy or outperform by Raymond James’ proprietary equity research model. The actively managed fund seeks long-term capital appreciation. RJMG’s position in Tenet (THC) landed it on this list. This ETF has just completed its one-year anniversary. Thus far, its performance has been in the middle of the pack. This is the venerable Wealth Manager and broker’s first foray into sub-managing an ETF but rather than become the issuer, it partnered with First Trust for the launch. Partially due to its short tenure, its only raised $12 million in AUM thus far. Again, that may cause wide bid-ask spreads. Another negative, its 85 basis point (0.85%) expense ratio ties with BOUT for the most expensive ETF on this list. It reflects that the fund is actively managed and uses RJ wealth management resources. Simplify Health Care ETF (PINK) is an actively managed fund of US healthcare stocks and/or ETFs. The fund seeks long-term capital growth. It holds Chewy (CHWY) to qualify for this list even though that seems like an interesting stretch for a health-care ETF. I suppose the health of canine’s canines and incisors counts as health care. This ETF’s largest position, Arcutis Biotheraputics (ARQT), a biopharma company with a promising pipeline, is also rates 5 (Strong Buy). PINK’s top 10 holdings also include 3 other stocks rated 5: Purecycle Technologies, Inc. (PCT), Intuitive Surgical (ISRG) and Resmed Inc. (RMD). Its management fee of 50 basis points (0.50%) is generally considered very reasonable for an actively managed ETF and its volatility is lower than that of IVV (iShares S&P 500 ETF). AUM of more than $135 million gives it substantial gravitas relative to the majority of thematic ETFs. On the other hand, its recent performance history has been a bit below average. It remains to be seen whether that spells added value opportunity for PINK investors or a warning sign from the market. Global X e-Commerce ETF (EBIZ) is a market-cap-weighted indexed ETF holding 40 stocks expected to profit from the e-Commerce boom. In addition to Block Inc. (XYZ), EBIZ has 5-rated Strong Buy companies Shopify (SHOP), Sea Ltd. ADR (SE), Carvana (CVNA) and JD Com ADR (JD) as major holdings. On the perspective of the ValuEngine Valuation model, EBIZ is the only ETF in this list that has 60% of the companies it holds ranked as Undervalued. On the other hand, its volatility is very high, and 50 basis points is very high for a market-cap weighted index funds with no proprietary data or analytics involved. First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) is a modified market-cap index fund designed to measure the performance of a selection of companies that are primarily engaged in and involved at the intersection of healthcare and technology, as classified and selected by Lux Capital based on analysis of the products and services offered by those companies. In addition to Intuitive Surgical, the top ten holdings includes 5-rated (Strong Buy) Resmed (RMD) along with four 4-rated (Buy) stocks: Veeva Systems (VEEV); Insulet Corp. (PODD); Globus Medical (GMED); and Illumina (ILMA). A bit more than half the companies held by EKG are rated undervalued by our valuation model. That said, there are many factors that may offset these positive points. A large one for me is that 65-basis points (0.65%) is on the very high end of a rules based and cap-weighted index fund, especially one that is using the index’s stock selector merely to define whether the businesses the companies are in qualify for the index rather than evaluating the stock’s investment criteria. The fact that the stock selector is an active manager with experience in the space seems offset by the de minimus role that Lux is playing in security selection. Another is that the fund is very volatile with the highest standard deviation of any ETF here. The fund only has one year of history and has just $2 million in assets under management which is unsustainable. EKG has a great ticker symbol and at the time this was written held a great portfolio of stocks as ranked by ValuEngine. It is included because of the way I defined the methodology for this article and it certainly has huge price appreciation potential. However, given the other factors just mentioned, I’d consider this issue more of a highly speculative trading tool than an investment until it garners at least another $20 million under management. First Trust Dorsey Wright Momentum & Low Volatility ETF (DVOL) – tracks an index of 50 large- and mid-cap, low volatility stocks exhibiting relative strength. The relative strength methodology was developed for the index by Dorsey Wright, a highly respected research provider and asset management firm. The Index is designed to track the performance of 50 stocks comprising the NASDAQ US Large Mid Index that exhibit lowest levels of volatility while still maintaining high levels of relative strength. The $55 million dollars under management is Satisfactory but not a strength. Unlike many of the ETFs just discussed, the only 5-rated major holding in DVOL is the stock that triggered its inclusion, DocuSign (DOCU). Its one-year performance ranks it in the middle of the pack and its 5-year return number is weaker. The expense ratio of 60 basis points (0.60%) is too high for an indexed fund. ETC 6 Meridian Mega Cap Equity ETF (SIXA) is an actively managed fund that invests in mega-cap US equities as defined by the 300 largest stocks in the FTSE-Russell 3000 Index. The manager’s focus list is determined by quantitative research driven by the 5 factors its research shows has outperformed other stocks over time. General Motors (GM) is the reason this ETF was selected. Its top position, Altria Group (MO) is also ranked 5 (Strong Buy). This ETF has considerably lower volatility and a lower beta than the S&P 500. It also has the lowest expense ratio, 0.48% or 48 basis points, of any of the stocks in this article. Considering this is one of only three actively managed funds with seven indexed funds, that is saying something. Its historic returns rank in the middle of the pack but its historic Sharpe Ratio of 0.82 places it near the top on that metric. It also has the second-highest Assets Under Management in the study. This is noteworthy given that neither ETC, better known as a “white label” issuer, nor 6 Meridian are well-known names to most ETF investors. Most of these ten ETFs target specific market niches and thus are not mainstream and have nowhere near the trillions of dollars following S&P 500-indexed ETF in AUM. Two, EKG and RJMG have short histories and paltry amounts of AUM thus far. This makes them unsuitable for most conservative investors looking for buy-and-hold ETFs in my opinion even though the model predicts them to strongly outperform in 2025 – if they are not liquidated before then. (investors in ETFs that issuers choose to liquidate come out relatively unharmed other than needing to redeem – the ETF is backed by its underlying stocks). BOUT also has a relatively modest amount of AUM but is otherwise a low-beta ETF backed by a strong methodology. Beyond these three, the other ETFs in the study have a healthy enough amount of assets-under-management (in my opinion, still lower than some trading platforms accept). The group is dominated by two of the leading niche ETF providers, First Trust and Global X. One of the other providers, Invesco, is a leading provider of both mainstream and niche ETFs in addition to still being a major manager of traditional ETFs. The other ETFs here have rather singular providers. Innovator, as mentioned, is a relatively new firm that now dominates the market in defined outcome ETFs built to protect principal beyond a set limit of losses but has few long-only and “unprotected” ETFs besides BOUT. Renaissance Capital focuses exclusively on Initial Purchase Offerings, IPOs. Exchange Traded Concepts (ETC) is an issuer that partners with independent asset managers to launch singular ETFs. Finally, Simplify specializes in what it calls innovative portfolio building blocks, designed to directly solve pressing portfolio challenges. Simplify Asset Management is a relative newcomer in the niche provider market and its products tend to be highly quantitative. Although all ten ETFs are strong buys according to the ValuEngine model, I would regard FDN, PINK and SIXA as most appropriate as long-term holdings for moderate-to-aggressive investors that are focused on capital gains. However, the longer the holding period, the more that fees detrimentally impact annualized rates of return. There are a number of other tactical ETFs ranked as 5 (Strong Buy) by ValuEngine that have fees of 20 basis points or less. This includes a few ETFs encompassing some of the themes we just explored. I will highlight just three of these briefly:

SPDR S&P Kensho New Economies Composite ETF (KOMP) tracks a tier-weighted index of US-listed companies with products or services that disrupt traditional industries. Its expense ratio is just 20 basis points (0.20%). The ETF has more than $2 billion in assets under management and has highly competitive historical rates of return.

The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks aa cap-weighted index of Consumer Discretionary Sector companies. The fee is just 9 basis points and it has more than $23 billion in AUM.

Fidelity Momentum Factor ETF (FDMO) is designed to reflect the performance of stocks of large and mid-capitalization U.S. companies that exhibit positive momentum signals. The fee is 16 basis points (0.16%) and the Assets Under Management is just under $400 Million.

Altogether, there are 13 top-rated ETFs in this column that I will monitor performance for during the year. However, that does not necessarily mean that these ETFs will continue to be ranked highly throughout the year. Unlike the individual stocks we rate, ETFs change composition throughout the year and the ValuEngine rating system may have higher ratings on the stocks being sold than on the stocks being bought. Add to that the fact that ValuEngine’s predictive stock model is very dynamic to begin with and stock ratings vary weekly. Finally, this list is for informational and measurement purposes only. As always, please consult the summary prospectus, the ETFs website and do your own research before contemplating buying any ETFs. The stock market is a very dynamic place where the only constant is change. More By This Author:Top Ten Stocks To Watch In 2025
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