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10 Best Stocks to Buy According to Billionaire Paul Tudor Jones

10 Best Stocks to Buy According to Billionaire Paul Tudor Jones
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Sector ETFs to Consider as Inflation Ticks Higher

Many investors have already shifted into cyclical sectors, expecting to capitalize on the “reflationary” trade. For example, financials stocks rallied this year as longer-dated Treasury yields increased. However, investors should note that if the Federal Reserve hikes short-term rates to dampen inflation, the yield curve would flatten, so “the spread between borrowing and lending narrows for the banking sector and results in a net interest margins squeeze,” according to BCA Research. “Depending on how far up the inflation expectations you want to move, financials benefit and then at some point they don’t,” Jack Janasiewicz, portfolio manager at Natixis Investment Managers, told Reuters.

Value-Oriented Sector ETFs Driving Flows in 2021

Value-Oriented Sector ETFs Driving Flows in 2021 U.S. sector and industry ETFs gained in popularity in 2021 as investors sought targeted exposure to the Energy, Financials, and Materials. U.S. sector/industry-focused equity ETFs pulled in $35 billion this year. While the U.S. broad market equity ETFs such as Vanguard S&P 500 ETF (VOO) and Vanguard Total Stock Market ETF (VTI) continue to gather significant assets in 2021, investors have also increasingly used ETFs to tactically target certain sectors or industries. Indeed, while all but two GICS sectors were represented in the 20 ETFs with the largest net inflows year-to-date through May 5 as shown in Figure 1, nine of the 20 most popular sector ETFs were either in the value-oriented Energy or Financials sectors. Meanwhile, Industrials and Materials sectors each had three. Only the defensive Consumer Staples and Utilities sectors were not represented.

Is Now a Good Time to Buy Cyclical Stocks?

Author Bio Daniel has been writing for Fool.com since 2019. A fan of value and dividend stocks, he covers the industrial sector, oil and gas, and renewable energy. He graduated summa cum laude from the University of Houston with a BBA in finance and marketing and a certificate in personal financial planning. The U.S. economy is booming. After decreasing by 3.5% in 2020, the Bureau of Economic Analysis estimates that real GDP rose by an annualized 6.4% in the first quarter of 2021.  Contractions and expansions affect every sector, but the impact is amplified for cyclical stocks. Cyclical companies tend to ebb and flow with the broader economy. After paying their dues during the peak of the COVID-19 downturn in the second quarter of last year, many of these companies are now entering what could be a multi-year upswing.

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