Concerns about stagflation have resurfaced, driven by the Middle East conflict and persistent U.S. labor market softness. In other words, analysts are flagging the risks of an economic scenario where growth weakens while inflation rises.
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Exchange-traded funds (ETFs) remain a key vehicle for investors to navigate such challenging conditions. To this end, this article highlights three ETFs investors can consider. The funds are:
- Fidelity MSCI Utilities Index ETF (FUTY)
- Utilities Select Sector SPDR Fund (XLU)
- Vanguard Health Care ETF (VHT)
These funds have holdings in companies considered pillars of any economy. These businesses attract patronage even during periods of economic disturbance, as their products are critical for everyday survival.
The Fidelity MSCI Utilities Index ETF (FUTY)
This ETF is focused on the utility sector and holds stakes in companies that provide electricity, water, and natural gas for both residential and industrial use.
FUTY has risen about 8% since the start of the year and currently offers about 10% upside based on an average price target of $65.30. The ETF holds a Moderate Buy consensus rating from analysts.
The Utilities Select Sector SPDR Fund (XLU)
Like FUTY, XLU is also aimed at providing investors with exposure to the utility industry. In other words, the ETF also invests in utility providers that deliver electricity, water, natural gas, and wastewater services required for the smooth flow of economic activities.
XLU has jumped about 8% year-to-date and currently offers about 10% upside. This comes with a Moderate Buy consensus rating from analysts and an average price target of $50.70.
Vanguard Health Care ETF (VHT)
VHT invests in health companies, targeting those active in pharmacy, biotechnology, and medical devices.
The ETF also holds a Moderate Buy consensus rating from analysts but offers a significantly larger upside of 23%. This potential gain is based on an average price target of $336.89.
