Best ETFs To Buy In 2022

Key Insights

• QQQ will gain strong upside momentum in case the broader market starts to rebound. 
• XLE has a good chance to continue its strong move as demand for energy increases during the summer season. 
• GDX could serve as a defensive asset if markets find themselves under pressure in the second half of the year and demand for gold increases. 

Global markets remain volatile, and many investors are searching for safer options to protect their funds. ETFs offer an easy way to get exposure to indexes or market segments without picking individual stocks. In this article, we’ll take a look at several ETFs which could provide interesting opportunities this year.

Invesco QQQ Trust

Invesco QQQ Trust has been under significant pressure since the start of this year as traders moved away from higher-PE stocks. As a result, QQQ is down by more than 20% year-to-date.

QQQ dynamics are driven by the dynamics of leading tech stocks like Apple, Microsoft, Amazon, and Tesla, which are trading at a discount to their recent price levels.

In case the general market mood improves in the second half of the year, money would flow back into these stocks, which will be bullish for QQQ.

Energy Select Sector SPDR Fund

Energy Select Sector SPDR Fund enjoyed strong upside momentum this year as energy prices increased.

XLE is heavily focused on Exxon Mobil and Chevron, although it also has services stocks like Schlumberger and refiners like Marathon Petroleum among its holdings.

While Exxon Mobil and Chevron are trading at all-time highs, they are valued at roughly 12 forward P/E and have a good chance to gain additional upside momentum in case WTI oil spends this summer above the $120 level.

VanEck Gold Miners ETF

Gold has lost a lot of ground after touching highs near $2070 in March, so it’s not surprising to see that VanEck Gold Miners ETF has been under pressure in recent months.

GDX is a good bet on the gold price rebound which would be useful in case gold starts to move back towards its yearly highs due to increased uncertainty.

It should be noted that gold prices have moved lower due to rising Treasury yields, but it remains to be seen whether rates will continue to rise at a fast pace as the economy would face material problems if the 10-year Treasury yield settles above the 3.50% level. If Treasury yields settle in the 3.00% – 3.50% level, gold will have a good chance to gain upside momentum.

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