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The U.S. stock market has come roaring back lately and set the stage for a powerful rally. This is especially true given that hopes of further stimulus package and wider reach of COVID-19 vaccinations have spurred bets for speedy economic recovery. This will result in a pickup in economic activities across all service and business sectors.
Stronger-than-expected Q4 results, which have led analysts’ to raise their estimates for the coming quarters, added to the strength. Earnings growth for Q4 has turned positive after three straight quarters of decline, thanks to impressive results from the tech sector leaders. The continued progress in the development of more vaccines and an improving job market are also driving the stocks higher. Further, the injection of trillions of dollars into the economy has been the biggest catalyst (read: Ride Market Rally With High-Beta ETFs & Stocks).
Against such a backdrop, almost every sector of the stock market is enjoying a rally. As the cyclical sectors are tied to economic activities, these outperform when economic growth improves. If history is any guide, a cyclical sector tends to benefit the most during the stock market surge in the six-month period from November to April buoyed by seasonal trends. Plus, small caps are poised to outperform when the economy improves as these are more domestically tied. These pint-sized stocks generate most of their revenues from the domestic market, making them great choices during an uptrend.
Thus, several ETFs have built a solid relationship with investors, gaining more than 18% so far this year. As such, we have highlighted five ETFs from different zones that continue to receive investors’ affection as these have potentially superior weighing methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
The fund targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 91 securities in its basket with specialty retail taking the largest share at 30% while household durables, hotels, restaurants and leisure, textile, apparel & luxury goods, and auto components account for double-digit exposure each. The product has attracted $35.6 million in AUM and charges 29 bps in annual fees. It has a Zacks ETF Rank #2.
Invesco S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) – Up 24.9%
This fund targets the small-cap segment of the broad stock market by tracking the S&P SmallCap 600 Pure Growth Index and charging investors 35 bps in annual fees. Holding 130 securities in its basket, healthcare and consumer discretionary takes the top two spots at more than 20% share each, while information technology and financials round off the next two with a double-digit allocation each. The fund has amassed $139.2 million in its asset base and has a Zacks ETF Rank #2 (read: 5 Small-Cap ETFs at the Forefront of the 2021 Market Rally).
With AUM of $515.4 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 94 securities in its basket with key holdings in Internet & direct marketing retail, automotive retail, apparel retail, and specialty stores. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report) – Up 23.5%
This fund tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $3.2 billion. In total, it holds 45 securities with each accounting for less than 8.8% share. The product charges 60 bps in fees per year and has a Zacks ETF Rank #2 (read: A Complete Guide to Clean Energy ETFs).
This fund tracks the Dynamic Semiconductor Intellidex Index and offers exposure to companies that are principally engaged in the manufacture of semiconductor. Holding 31 securities in its basket, it has AUM of $472.8 million and an expense ratio of 0.57%. PSI has a Zacks ETF Rank #1 (read: Can Semiconductor Stocks & ETFs Keep Soaring in 2021?).
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You Can't Help Falling in Love With These ETFs
The U.S. stock market has come roaring back lately and set the stage for a powerful rally. This is especially true given that hopes of further stimulus package and wider reach of COVID-19 vaccinations have spurred bets for speedy economic recovery. This will result in a pickup in economic activities across all service and business sectors.
Stronger-than-expected Q4 results, which have led analysts’ to raise their estimates for the coming quarters, added to the strength. Earnings growth for Q4 has turned positive after three straight quarters of decline, thanks to impressive results from the tech sector leaders. The continued progress in the development of more vaccines and an improving job market are also driving the stocks higher. Further, the injection of trillions of dollars into the economy has been the biggest catalyst (read: Ride Market Rally With High-Beta ETFs & Stocks).
Against such a backdrop, almost every sector of the stock market is enjoying a rally. As the cyclical sectors are tied to economic activities, these outperform when economic growth improves. If history is any guide, a cyclical sector tends to benefit the most during the stock market surge in the six-month period from November to April buoyed by seasonal trends. Plus, small caps are poised to outperform when the economy improves as these are more domestically tied. These pint-sized stocks generate most of their revenues from the domestic market, making them great choices during an uptrend.
Thus, several ETFs have built a solid relationship with investors, gaining more than 18% so far this year. As such, we have highlighted five ETFs from different zones that continue to receive investors’ affection as these have potentially superior weighing methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) – Up 25.5%
The fund targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 91 securities in its basket with specialty retail taking the largest share at 30% while household durables, hotels, restaurants and leisure, textile, apparel & luxury goods, and auto components account for double-digit exposure each. The product has attracted $35.6 million in AUM and charges 29 bps in annual fees. It has a Zacks ETF Rank #2.
Invesco S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) – Up 24.9%
This fund targets the small-cap segment of the broad stock market by tracking the S&P SmallCap 600 Pure Growth Index and charging investors 35 bps in annual fees. Holding 130 securities in its basket, healthcare and consumer discretionary takes the top two spots at more than 20% share each, while information technology and financials round off the next two with a double-digit allocation each. The fund has amassed $139.2 million in its asset base and has a Zacks ETF Rank #2 (read: 5 Small-Cap ETFs at the Forefront of the 2021 Market Rally).
SPDR S&P Retail ETF (XRT - Free Report) – Up 24.4%
With AUM of $515.4 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 94 securities in its basket with key holdings in Internet & direct marketing retail, automotive retail, apparel retail, and specialty stores. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report) – Up 23.5%
This fund tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $3.2 billion. In total, it holds 45 securities with each accounting for less than 8.8% share. The product charges 60 bps in fees per year and has a Zacks ETF Rank #2 (read: A Complete Guide to Clean Energy ETFs).
Invesco Dynamic Semiconductors ETF (PSI - Free Report) – Up 18.1%
This fund tracks the Dynamic Semiconductor Intellidex Index and offers exposure to companies that are principally engaged in the manufacture of semiconductor. Holding 31 securities in its basket, it has AUM of $472.8 million and an expense ratio of 0.57%. PSI has a Zacks ETF Rank #1 (read: Can Semiconductor Stocks & ETFs Keep Soaring in 2021?).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>