Prime ETFs for taking part in European banking, gaming, & telecom in 2025

00:00 Speaker A

2025 has been a great one, a great 12 months for US shares. The S&P 500 registering 28 report highs to this point this 12 months. Where has that power been felt on the ETF ETF facet of the ledger? Aniket Oel, CFRA Research head of ETF information and analytics joins me for this week’s ETF report delivered to you by Invesco QQQ. Aniket, thanks a lot for being right here. So, um one would think about that issues just like the spies and the QQQs have good had a great years together with shares general. But if you drill down into it, what actually stands out to you is the outperformers that we have seen this 12 months?

01:03 Aniket Ullal

You’re proper, Spy has had a great 12 months, however uh there are particular ETF sectors which have outperformed Spy and and executed very well. One is banking, notably European banking. If you take a look at an ETF like EUFN, which is the Ishares MSCI Europe Financials ETF, that is up nearly 50% this 12 months. We knew coming into this 12 months that that is going to be a great 12 months for banking, notably within the US. We anticipated some tail winds from deregulation, um in addition to elevated M&A exercise. I feel the power in European banking has caught everybody unexpectedly. Actually, we have seen nearly twice the return in European financials relative to US banks, which have truly executed fairly properly. You know, you’ve got bought banks like Santander, HSBC and others uh which can be held on this ETF. So, I’d say European banking has definitely been one robust sector pushed each by on the lending facet, a stabilization in web curiosity revenue and on the non-lending facet, some development in non-interest revenue pushed by capital markets exercise and so forth. So definitely that is been a robust sector.

02:27 Speaker A

And and Anikah, do you suppose that that robust two a two-part query if you’ll. Do you suppose that the monetary’s efficiency goes to proceed and do you suppose that these European ETFs are going to proceed to outperform the US monetary ETFs?

02:44 Aniket Ullal

Right now, we’re obese uh at CF we’re obese monetary. So we’re bullish on the monetary sector proceed to be robust. Uh European banking is is one other one we do suppose will outperform uh properly into subsequent 12 months. Uh as you as you identified, it has had a great run this 12 months, however we expect that may proceed as a result of the basics proceed to look robust each by way of web curiosity revenue stabilizing in addition to continued development from um non-interest uh revenue sources. So we we’re bullish on European banking uh trying forward into subsequent 12 months.

03:32 Speaker A

And then one other space that has outperformed this 12 months has been um social media and video gaming, which is attention-grabbing. What what’s been propelling these and and as all the time, it is essential what’s within the ETF to attempt to perceive why they’ve executed so properly.

03:52 Aniket Ullal

You’re completely proper. There are a few ETFs on this house and it sits at a really attention-grabbing intersection of know-how, communication providers and client discretionary, which is why I feel this these ETFs have executed properly. You’ve bought ETFs just like the Global X Social media ETF, ticker SOCL, which has truly executed properly of about up about 45% this 12 months. And then ESPO, which is a Vanc ETF that focuses on video gaming. As you identified, the holdings do matter. SOCL is somewhat bit extra tilted in the direction of social media firms, factor shares like Meta, Reddit, all of which have had a robust 12 months. Whereas ESPO is somewhat bit extra centered on gaming. It holds shares like Roblox, uh Unity, Applovin, a few of which has truly benefited from international development, notably Roblox. So these are sectors which have truly had an excellent 12 months to this point.

04:46 Speaker A

And then additionally telecom. Now telecom is attention-grabbing as a result of it isn’t one which um has gotten lots of consideration, however once more, that is one the place there’s a few issues occurring, however one of many issues is you must look beneath the hood to see what’s within the telecom ETFs.

05:05 Aniket Ullal

Absolutely as a result of we have talked a lot this 12 months about tariffs, however truly we discovered the one huge stunning invoice has in all probability had an even bigger influence on a few of these ETFs in some methods greater than tariffs. And one in all these implications is on the tax facet, if we take a look at what occurred within the within the within the stunning invoice this 12 months, you recognize, firms have been allowed to primarily deduct their complete bills in the identical 12 months. Um so there’s type of a return to full depreciation on on um certified capital belongings. That’s large for telecom firms. These are firms investing lots in towers, in fiber deployment. So firms like AT&T, Verizon, T-Mobile are actually in a position to save lots in money tax saving for AT&T perhaps 6 to eight billion over the following three years. That’s actually helped tickers like IYZ, which is the telecom ETF. So that is a sector we like proper now primarily based on the advantages from the gorgeous invoice.

06:05 Speaker A

So you so you do not you talked about it enjoying out over the following a number of years, however you do not suppose that that’s priced in but, that there is additional potential upside right here?

06:17 Aniket Ullal

We we do suppose there’s additional potential upside. We even have a purchase ranking on this ETF, however in fact a few of it’s priced in as a result of buyers can look forward and see the advantages already.

06:33 Speaker A

Aniket, thanks a lot for becoming a member of us. Appreciate it.

06:36 Aniket Ullal

Thank you.