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Key Winning ETF Areas Despite Subdued April Manufacturing Data
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The ISM Manufacturing PMI dropped to 60.7 in April 2021 from 64.7 in March, falling short of market forecasts of 65 as shortage of raw materials put pressure on production. Despite the decline, the latest reading marked expansion in the manufacturing sector for 11 successive months.
A slowdown was recorded in production (62.5 vs. 68.1), new orders (64.3 vs. 68) and employment (55.1 vs. 59.6) while inventories shrank (46.5 vs. 50.8). On the other hand, new export orders rose faster (54.9 vs. 54.5).
All the 18 manufacturing industries posted growth in April. Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; and Petroleum & Coal Products were the key winners.
Against this backdrop, below we highlight a few sectors and the related ETFs that emerged winners in the month of April in the light of the ISM survey data.
Metal prices have been soaring steadily. It means there should be a solid gain in XME that follows the S&P Metals & Mining Select Industry Index. The fund charges 35 bps in fees.
Steel prices especially have risen massively in recent months as indicated in the manufacturing survey. This makes SLX a great winner. The fund looks to track the overall performance of companies involved in the steel sector. The net expense ratio is 0.56%.
“Business is picking up as restaurants open,” was the takeaway from the survey conducted on the Food, Beverage & Tobacco Products industry. In this light, the pureplay restaurant ETF should do well.
Survey done the Petroleum & Coal Products industry indicated that “oil production has been steady, along with market prices and capital expenditures.” The underlying Energy Select Sector Index of the fund XLE includes companies from the following industries: oil, gas & consumable fuels and energy equipment & services. The fund charges 12 bps in fees and yields about 4.11% annually (read: Exxon, Chevron Turns to Profit in Q1: Energy ETFs in Focus).
The survey from the transportation equipment industry indicated that there has been “continued strong sales.” Though the global chip crunch has been bothering the space, it hasn’t hurt inventories meaningfully as yet. However, strong sales mean solid demand in the transportation space. The Zacks Rank #2 (Buy) fund XTN puts about 33% weight in Trucking, 24.15% in Airlines and 24% in Air Freight & Logistics (read: Mixed Q1 Earnings Put Transport ETFs in Focus).
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Key Winning ETF Areas Despite Subdued April Manufacturing Data
The ISM Manufacturing PMI dropped to 60.7 in April 2021 from 64.7 in March, falling short of market forecasts of 65 as shortage of raw materials put pressure on production. Despite the decline, the latest reading marked expansion in the manufacturing sector for 11 successive months.
A slowdown was recorded in production (62.5 vs. 68.1), new orders (64.3 vs. 68) and employment (55.1 vs. 59.6) while inventories shrank (46.5 vs. 50.8). On the other hand, new export orders rose faster (54.9 vs. 54.5).
All the 18 manufacturing industries posted growth in April. Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; and Petroleum & Coal Products were the key winners.
Against this backdrop, below we highlight a few sectors and the related ETFs that emerged winners in the month of April in the light of the ISM survey data.
ETFs in Focus
SPDR S&P Metals and Mining ETF (XME - Free Report)
Metal prices have been soaring steadily. It means there should be a solid gain in XME that follows the S&P Metals & Mining Select Industry Index. The fund charges 35 bps in fees.
VanEck Vectors Steel ETF (SLX - Free Report)
Steel prices especially have risen massively in recent months as indicated in the manufacturing survey. This makes SLX a great winner. The fund looks to track the overall performance of companies involved in the steel sector. The net expense ratio is 0.56%.
AdvisorShares Restaurant ETF (EATZ - Free Report)
“Business is picking up as restaurants open,” was the takeaway from the survey conducted on the Food, Beverage & Tobacco Products industry. In this light, the pureplay restaurant ETF should do well.
Energy Select Sector SPDR Fund (XLE - Free Report)
Survey done the Petroleum & Coal Products industry indicated that “oil production has been steady, along with market prices and capital expenditures.” The underlying Energy Select Sector Index of the fund XLE includes companies from the following industries: oil, gas & consumable fuels and energy equipment & services. The fund charges 12 bps in fees and yields about 4.11% annually (read: Exxon, Chevron Turns to Profit in Q1: Energy ETFs in Focus).
SPDR S&P Transportation ETF (XTN - Free Report)
The survey from the transportation equipment industry indicated that there has been “continued strong sales.” Though the global chip crunch has been bothering the space, it hasn’t hurt inventories meaningfully as yet. However, strong sales mean solid demand in the transportation space. The Zacks Rank #2 (Buy) fund XTN puts about 33% weight in Trucking, 24.15% in Airlines and 24% in Air Freight & Logistics (read: Mixed Q1 Earnings Put Transport ETFs in Focus).
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 >>