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Wall Street had a smooth ride last month despite the bouts of volatility and uncertainty triggered by a surge in the Delta variant cases of COVID-19. The S&P 500 jumped 2.9%, marking the longest winning streak since a 10-month run ending in December 2017 while the blue-chip Dow Jones added 1.2%. The Nasdaq Composite Index outperformed climbing 4% and notched its third winning month in a row.
Most of the rally was powered by a huge vaccination drive, upbeat corporate earnings and the Fed’s dovish comments that have renewed optimism for sustained global economic recovery. This is especially true as the FDA has granted the first full U.S. approval of a COVID-19 vaccine made by Pfizer (PFE - Free Report) and BioNTech that will help quash the ongoing surge in the Delta variant and lead to the continued reopening of the economy. Meanwhile, the Q2 earnings picture is very strong, with broad-based strength across all major sectors and the overall quarterly total on track to reach a new all-time record (read: 5 Must-Watch ETF Charts of Q2 Earnings).
Though the central bank will gradually begin tapering $120 billion in monthly bond purchases by the end of the year, it is in no hurry to raise interest rates. This will result in lower rates for many more months and will continue to fuel the economy, leading to higher spending power.
Against such a backdrop, we have highlighted five sector ETFs that outperformed in August and are likely to continue doing so, should the same trends prevail.
Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF – Up 22%
With renewed optimism over global economic recovery and the Fed’s dovish stance, the technology sector roared back and outperformed. RIGZ is an actively managed ETF focused on the cryptocurrency mining industry, holding 18 stocks in its basket. It has newly debuted in the space and attracted $10.2 million in its asset base in just a month. It charges 90 bps in annual fees and trades in an average daily volume of 22,000 shares (read: Tech Sector Outperforms in August: 5 Best ETFs).
With increased legalization of online sports betting and ongoing betting growth in the United States, BETZ has been gaining. This ETF has attracted $403.7 million in AUM. It is designed to offer investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. iGaming comprises 32.8% share while sportsbook and technology round off the next two spots with double-digit exposure each. The fund holds 42 stocks in its basket and charges 75 bps in annual fees. It trades in an average daily volume of 176,000 shares.
Rare earth metals are getting a boost from an accelerating shift to new technologies such as electric vehicles. About 27% of rare metals are used in the production of neomagnets, which are the essential components in electric vehicles (EVs). REMX offers exposure to companies engaged in producing, refining and recycling of rare earth and strategic metals and minerals. It follows the MVIS Global Rare Earth/Strategic Metals Index, holding 20 stocks in its basket. The ETF has AUM of $990.1 million and an average daily volume of 247,000 shares. From a country look, Chinese firms dominate the portfolio with a 47.3% share, closely followed by Australia (22.8%) and the United States (12.4%). The product charges 59 bps in annual fees.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 7.1%
The vaccine boost gave a new lease of life to the biotech sector. This fund provides exposure to the companies with one or more drugs in phase II or phase III FDA clinical trials by tracking the S-Network Medical Breakthroughs Index. It holds 102 securities in its basket. The product charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 18,000 shares. It has AUM of $212.5 million in its asset base and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Healthcare ETFs Surge on FDA Full-Vaccine Nod & Deal News).
Hotel stocks surged on economic growth optimism, which will likely result in increased demand for travel and tourism, thus benefiting the hotel industry. BEDZ has newly debuted in the space, having accumulated $8.1 million in its asset base since late April. It is actively managed and the only ETF investing exclusively in global hotel and travel-related services. The product holds 31 stocks in its basket that are pretty spread across components. It charges 79 bps in annual fees and trades in an average daily volume of 5,000 shares.
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5 Sector ETFs That Beat the Market in August
Wall Street had a smooth ride last month despite the bouts of volatility and uncertainty triggered by a surge in the Delta variant cases of COVID-19. The S&P 500 jumped 2.9%, marking the longest winning streak since a 10-month run ending in December 2017 while the blue-chip Dow Jones added 1.2%. The Nasdaq Composite Index outperformed climbing 4% and notched its third winning month in a row.
Most of the rally was powered by a huge vaccination drive, upbeat corporate earnings and the Fed’s dovish comments that have renewed optimism for sustained global economic recovery. This is especially true as the FDA has granted the first full U.S. approval of a COVID-19 vaccine made by Pfizer (PFE - Free Report) and BioNTech that will help quash the ongoing surge in the Delta variant and lead to the continued reopening of the economy. Meanwhile, the Q2 earnings picture is very strong, with broad-based strength across all major sectors and the overall quarterly total on track to reach a new all-time record (read: 5 Must-Watch ETF Charts of Q2 Earnings).
Though the central bank will gradually begin tapering $120 billion in monthly bond purchases by the end of the year, it is in no hurry to raise interest rates. This will result in lower rates for many more months and will continue to fuel the economy, leading to higher spending power.
Against such a backdrop, we have highlighted five sector ETFs that outperformed in August and are likely to continue doing so, should the same trends prevail.
Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF – Up 22%
With renewed optimism over global economic recovery and the Fed’s dovish stance, the technology sector roared back and outperformed. RIGZ is an actively managed ETF focused on the cryptocurrency mining industry, holding 18 stocks in its basket. It has newly debuted in the space and attracted $10.2 million in its asset base in just a month. It charges 90 bps in annual fees and trades in an average daily volume of 22,000 shares (read: Tech Sector Outperforms in August: 5 Best ETFs).
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) – Up 15.3%
With increased legalization of online sports betting and ongoing betting growth in the United States, BETZ has been gaining. This ETF has attracted $403.7 million in AUM. It is designed to offer investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. iGaming comprises 32.8% share while sportsbook and technology round off the next two spots with double-digit exposure each. The fund holds 42 stocks in its basket and charges 75 bps in annual fees. It trades in an average daily volume of 176,000 shares.
VanEck Vectors Rare Earth/Strategic Metals ETF (REMX - Free Report) – Up 11.7%
Rare earth metals are getting a boost from an accelerating shift to new technologies such as electric vehicles. About 27% of rare metals are used in the production of neomagnets, which are the essential components in electric vehicles (EVs). REMX offers exposure to companies engaged in producing, refining and recycling of rare earth and strategic metals and minerals. It follows the MVIS Global Rare Earth/Strategic Metals Index, holding 20 stocks in its basket. The ETF has AUM of $990.1 million and an average daily volume of 247,000 shares. From a country look, Chinese firms dominate the portfolio with a 47.3% share, closely followed by Australia (22.8%) and the United States (12.4%). The product charges 59 bps in annual fees.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 7.1%
The vaccine boost gave a new lease of life to the biotech sector. This fund provides exposure to the companies with one or more drugs in phase II or phase III FDA clinical trials by tracking the S-Network Medical Breakthroughs Index. It holds 102 securities in its basket. The product charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 18,000 shares. It has AUM of $212.5 million in its asset base and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Healthcare ETFs Surge on FDA Full-Vaccine Nod & Deal News).
AdvisorShares Hotel ETF (BEDZ - Free Report) – Up 6.8%
Hotel stocks surged on economic growth optimism, which will likely result in increased demand for travel and tourism, thus benefiting the hotel industry. BEDZ has newly debuted in the space, having accumulated $8.1 million in its asset base since late April. It is actively managed and the only ETF investing exclusively in global hotel and travel-related services. The product holds 31 stocks in its basket that are pretty spread across components. It charges 79 bps in annual fees and trades in an average daily volume of 5,000 shares.