The U.S. market is in decent shape as 2024 comes to a close thanks mainly to the Fed’s policy easing and Trump’s win in the Presidential election. The S&P 500, the Nasdaq and the Dow Jones are hovering around their all-time highs ahead of the Santa rally.
A month has passed after the Trump-bump on Wall Street and the rally has cooled a bit. The S&P 500 was off 0.3% past week, the Nasdaq gained 1.1% and the Dow Jones lost 1%. This indicates that volatility could be the name of the game as we embrace several new Government policies in the New Year.
President-elect Trump is likely to instigate a tariff war and push inflation in 2025. If he keeps his campaign promises, America could face an inflation shock even more severely than the one experienced in 2021, per some strategists (read: Is Cash King? Money-Market ETFs in Focus).
To weather potential market shocks, investors poured $136.4 billion into cash in the week through Dec. 4, 2024, the biggest weekly inflow since March 2023, when markets were rattled by a regional banking crisis, according to a report from Bank of America on Friday, per Reuters.
Against this backdrop, we highlight a few exchange-traded funds (ETFs) under $20 that can be good bets in 2025. At the present sky-high pricing and decent volatility levels, these cheap ETFs can be lucrative investing options.
Why Low-Priced ETFs Are a Good Option?
Low-priced stocks remain affordable, enabling investors to diversify more effectively compared to higher-priced stocks. The recent moderate market volatility has created an opportunity for investors to capitalize on these options. This preference extends beyond individual stocks and is also evident in the ETF market.
Low-priced stocks also offer the potential for substantial percentage gains. For instance, a stock priced at $25 that rises by $1 achieves a 4% gain, whereas a $100 stock would only experience a 1% increase for the same $1 price movement.
Further, low-priced stocks have high levels of liquidity, giving these stocks an added advantage. This means that cash can be converted quickly, and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra costs for investors.
However, low-priced stocks tend to be more volatile than higher-priced ones, potentially resulting in substantial losses if their value declines. They are also more vulnerable to price manipulation schemes. Plus, low-priced stocks, particularly penny stocks, are often associated with smaller, less-established companies.
ETFs Under $25 in Focus
Motley Fool Next Index ETF TMFX – Last Closing Price: $20.55
The underlying Motley Fool Next Index is an index of US stocks, recommended by The Motley Fool, LLC (TMF) analysts, either in the Motley Fool IQ analyst opinion database or TMF research publications. From this recommendation pool, the index features mid and small cap companies and weights them according to market capitalization. The index undergoes quarterly reconstitution. The ETF charges 50 bps in fees.
Performance 3-month: 18.27%
Performance 1-month: 4.33%
INQQ The India Internet ETF INQQ – $17.19
The underlying INQQ The India Internet Index measures and monitors the performance of an investable universe of publicly traded Internet & Ecommerce companies in India.
Performance 3-month: 6.24%
Performance 1-month: 7.7%
Global X Clean Water ETF AQWA – $18.08
The underlying Solactive Global Clean Water Industry Index provides exposure to companies that have business operations in the provision of clean water.
Performance 3-month: 5.68%
Performance 1-month: 2.1%
iShares MSCI Singapore ETF EWS – $23.02
The underlying MSCI Singapore 25/50 Index is designed to measure the performance of the large and mid-cap segments of the Singapore market. The ETF charges 50 bps in fees and yields 3.86% annually.
Performance 3-month: 9.18%
Performance 1-month: 3.38%
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iShares MSCI Singapore ETF (EWS): ETF Research Reports
Global X Clean Water ETF (AQWA): ETF Research Reports
Motley Fool Next Index ETF (TMFX): ETF Research Reports
INQQ The India Internet ETF (INQQ): ETF Research Reports
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