7 Biggest ETF Stories Of 2017 To Continue In 2018

The year 2017 is underscored by an aging eight-year bull run, which still has legs. Several events led to the rally in the stock market and impacted the ETF world in either a positive or a negative way. Below are some of the major events that hit the headlines for longer than expected and are worth watching in 2018:

Tax Reform

After a huge battle, President Donald Trump finally signed a massive $1.5-trillion tax cut bill to end 2017. This will likely create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings, leading to increased dividend and buyback activities and paving the way for increased mergers and acquisitions.

While many corners of the market will enjoy a huge rally, small caps will likely be the biggest beneficiary of the trend in 2018 as these pay huge amounts in corporate tax. As such, iShares Morningstar Small-Cap Growth ETF JKK stole the show in this space gaining 24.4% this year, followed by gains of 23.5% for First Trust Small Cap Growth AlphaDEX Fund FYC and 22.7% for iShares Russell 2000 Growth ETF (IWO – Free Report) . These funds have a Zacks ETF Rank #2 (Buy).

Among the S&P 500 sectors, financials will gain most from reduced tax rates and a shift to the territorial system. The tax reform may also cause a rise in interest rates that would expand net margins and bolster banks’ profits. That said, Financial Select Sector SPDR Fund (XLF – Free Report) is up 22.2% and will likely continue its strong performance given that it has a Zacks ETF Rank #2.

Dow & S&P 500 Sets New Milestones

The Dow Jones Industrial Average was the biggest beneficiary of the rotation in leadership in the large-cap domestic space. The index climbed 25%, marking the best annual performance since 2013, and has moved up 5,000-points this year — the biggest annual gain in its history. Additionally, it has logged in the highest-ever number of record closes in 2017. On the other hand, the S&P 500 is also poised for its best year since 2013 having risen 20%. The index hit successive milestones of 2,300 in January, 2,400 in May, 2,500 in September and finally 2,600 in November.