VFH - BofA favors stocks to bonds and prefers financials energy and materials

2023-08-09 11:43:30 ET

The 2023 trading year has been a positive one for stocks while bond yields have also pushed up of late. Bank of America argued on Wednesday that they still favor exposure to stocks over bonds and the financial institution also prefers exposure to free cash flow names versus traditional longer-term growth plays.

“We still prefer stocks to bonds, and within equities, we would avoid long-term growth stocks in favor of high free cash flow yielding cyclicals/beta,” BofA said in an investor note to its clients on Wednesday.

“Our recommended overweighted sectors skew higher beta: Financials, Energy and Materials.”

For investors that share a similar mindset as BofA, they may look to further analyze the below grouping of exchange traded funds in greater detail as they each provide a diversified set of exposures to the three sectors Bank of America highlighted.

Financials

• Financial Select Sector SPDR Fund ( NYSEARCA: XLF )
• Vanguard Financials ETF ( VFH )
• iShares U.S. Financials ETF ( IYF )
• Fidelity MSCI Financials Index ETF ( FNCL )

Energy

• Energy Select Sector SPDR Fund ( NYSEARCA: XLE )
• Vanguard Energy ETF ( VDE )
• iShares Global Energy ETF ( IXC )
• Fidelity MSCI Energy Index ETF ( FENY )

For further details see: