As the U.S. economy bravely trumped all difficulties at home and abroad, 2014 was another great year for the country’s stock market. The S&P 500 posted the third consecutive year of double-digit gains of 11.4% while Dow Jones Industrial Average added 7.5%. With this, the U.S. bull market is strongly moving ahead to celebrate its sixth anniversary on March 9, 2015.
This is especially true given that the economy is growing at a faster rate in over a decade and is on track for the strongest annual job growth since late 1999. While lower oil prices, better job markets, improving business conditions, rising consumer confidence, and low interest rates should continue to benefit stocks in 2015, the expected first interest rates hike in a decade, an aging bull market, and a strong dollar might act as headwinds (read: Top Performing ETFs of 2014 and 3 Great Picks for Next Year).
The slowdown in China and other key emerging economies, turmoil in Russia, a struggling Europe, and recession in Japan is also likely to derail the stock market rally this year. Given the global growth concerns and deflation fears, it will be prudent for investors to remain invested in the domestic market rather putting money in international bourses.
For those investors, we have highlighted five best picks for 2015 that look to outperform and cost less than many other products. Additionally, these funds have either a Zacks Rank 1 (Strong Buy) or 2 (Buy) with a Medium risk outlook.
Vanguard Financials ETF (VFH – ETF report)
The financials sector has strongly rebounded from the great recession with much healthier balance sheets, robust bank profits, improving credit quality and better risk management. The strengthening economy will continue to boost earnings and increase dividend payouts. Further, a rising interest rate scenario would be highly profitable for the financial entities like banks, insurance companies and discount broker sites, as a steeper yield curve assists banking institutions in making more money from a bigger spread between short-term rates for deposits and longer-term rates for loans.
