6 ETFs to Invest in June

The S&P 500 just posted its strongest May performance in more than three decades, largely driven by a surge in the "Magnificent Seven" tech stocks: Apple AAPL, Alphabet GOOGL, GOOG , Microsoft MSFT, Amazon AMZN, Meta META, Tesla TSLA and NVIDIA NVDA (read: 4 ETF Areas Up At Least 25% in May).

While easing trade tensions was the key to the stock outperformance, Big Tech benefited the most from easing trade tensions.  Strong Q1 earnings from Big Tech have also been a key driver (read: S&P 500 ETFs Log Best May in 30+ Yrs on AI, Large-Cap Safety).

In Q1, the Magnificent Seven posted a combined 27.7% earnings increase year over year, compared to 9.4% growth among the other 493 S&P 500 companies, according to FactSet’s senior earnings analyst John Butters. Additionally, these companies outpaced analyst expectations, beating estimates by 11.7% on average — well above the 4.6% beat from the rest of the index, as quoted on Yahoo Finance.

What Lies Ahead for June?

Notably, June is not known for good returns. A consensus carried out from 1950 to 2024 shows that June ended up offering positive stock returns in 40 years and negative returns in 35 years, per moneychimp.com, with an average positive return of 0.08%.

Moreover, trade tensions are not over yet. U.S. President Donald Trump recently said that China’s president, Xi Jinping, was “extremely hard” to make a deal with. U.S.-EU trade tensions are also still present.

Against this backdrop, we highlight a few exchange-traded fund (ETF) options that can come across as intriguing bets for the month. The below-mentioned ETFs have a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Aerospace – Global X Defense Tech ETF SHLD

The Aerospace sector holds the best Zacks Sector Rank #1 out of 16.

The underlying Global X Defense Tech Index seeks to provide exposure to defense technology companies that are positioned to benefit from technology, services, systems and hardware that cater to the defense and military sector. The fund charges 50 bps in fees.

Medical – Health Care Select Sector SPDR ETF XLV

The medical sector, too, holds an upbeat Zacks Sector Rank #4 out of 16.

The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; healthcare providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology. The ETF charges 8 bps in fees.

Technology – Technology Select Sector SPDR ETF XLK

The prospect for the tech sector is also bullish. The Computer and Technology sector falls in the top 32% segment of the 16 Zacks-classified sector universe.   

The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The fund charges 8 bps in fees.

Dividend – ProShares S&P 500 Dividend Aristocrats ETF NOBL

Dividend stocks often beat their non-dividend-paying counterparts amid market uncertainty. Dividend stocks point to quality investing — a prerequisite to making money in a volatile environment.

The underlying S&P 500 Dividend Aristocrats Index targets companies that are currently members of the S&P 500, have increased dividend payments each year for at least 25 years & meet certain market capitalization & liquidity requirements. The NOBL ETF charges 35 bps in fees and yields 2.12% annually.

Europe – iShares MSCI Eurozone ETF EZU

The European market has been gaining traction this year, given the rally in the continent’s stocks. Wall Street strategists are increasingly igniting this conversation as investors weigh the economic toll of tariffs and a likely flare-up in inflation in the United States.

The euro zone’s inflation is easing fast. The ECB cut key rate on June 5 to the lowest level since early 2023 and hinted at a pause in its year-long easing cycle. More attractive valuations in Europe compared with the United States also act as a tailwind.  Higher defense spending in Europe is also acting as a plus (read: 6 Factors to Play Europe ETFs Now).

Single-Stock ETF – YieldMax NVDA Option Income Strategy ETF NVDY

NVIDIA stock turned green for the year, as the stock gained momentum lately on market-pleasing earnings. Over the past month, the stock jumped 24.7%.

The NVDY ETF is an actively managed fund that seeks to generate monthly income by selling/writing call options on NVDA. NVDY pursues a strategy that aims to harvest compelling yields, while retaining capped participation in the price gains of NVDA. The ETF currently charges 99 bps in fees and yields 108.32% annually.

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This article originally published on Zacks Investment Research (zacks.com).

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