This story was originally published here.
Contrarian investing isn’t just a notion. It’s an actual style and like any other style, sometimes it works and there are times when it doesn’t reward investors. That is to say some of the best ETFs are contrarian ETFs that are founded upon solid contrarian ideas. However, that doesn’t mean there isn’t a fair share of disappointing contrarian styles in the mix either.
The premise here is simple: contrarians swim against the tide. Alone, that implies some degree of difficulty. Today, there are easy, stock-specific contrarian bets to identify, most of which are dangerous. For example, betting against Amazon (NASDAQ:AMZN) isn’t a good idea. Want to run out and rush to wager against tech stocks today? Probably not a good idea.
The other side of the contrarian coin is betting on names that are out of favor and there’s a bumper crop of those to pick from these days thanks to the novel coronavirus outbreak. Airlines, cruise operators and the industrial and real estate sectors all currently fit the contrarian bill.
Here are some of the best ETFs for patient investors looking to make contrarian bets before these ideas again become mainstream.
Let’s take a closer look at what makes each of these contrarian ETFs stand out from the rest of the crowd.
Contrarian ETFs to Buy: U.S. Global Jets ETF (JETS)
Expense Ratio: 0.60%, or $60 annually per $10,000 invested
Whether it’s an individual airline stock or the broader U.S. Global Jets ETF, assets attached to this industry are currently the definition of contrarian investments and that’s the case over shorter and longer time horizons.
Spend enough time on social media and you’ll find some recent pictures of packed passenger jets, but the very grim reality is that economic data simply don’t support a near-term recovery for the airline industry. The airline themselves, including JETS components, are acknowledging as much with some saying there will be jobs for just a small number of recently furloughed workers.
On a longer-ranging basis, Wall Street consensus today on airlines is that no recovery in capacity will be seen until 2022 and that it will be 2023 or 2024 before this moribund industry comes anywhere close to resembling its 2019 self. Bottom line: JETS checks plenty of boxes as one of the best ETFs for contrarian investors.
Data confirm some are buying into that idea. Year-to-date, investors allocated $708 million to JETS.
Editor's Note: Click here to see the other four contrarian ETFs.
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