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After logging big first-half gains, Wall Street has been caught in feeble trading. Worries over longer-than-expected higher interest rates have been weighing on investors’ sentiment. Still, with just a couple of trading days left, the Nasdaq Composite Index has emerged as the top-performing index of 2023, gaining about 25%. Meanwhile, the S&P 500 jumped 11.3% and Dow Jones Industrial is up 1.2%.
The gains were broad-based and well spread out across various segments. Some of the top performers in the ETF space from different corners of the market include Valkyrie Bitcoin Miners ETF (WGMI - Free Report) , Sprott Uranium Miners ETF (URNM - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) and Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) .
The Fed, in its latest meeting, kept interest rates steady at a 22-year high in the range of 5.25% to 5.5% but signaled one more hike this year. Though inflation is easing, it remains elevated and above the Fed’s 2% target. The ongoing strength in the economy and the surging oil prices threaten to revive inflationary pressure. Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong and the unemployment rate has remained low. The U.S. banking system is also deemed to be sound and resilient (read: Bet on Quality ETFs as Fed Keeps Rate Steady, View Hawkish).
ETFs in Focus
We have profiled the abovementioned ETFs in detail below:
Bitcoin, the world's largest cryptocurrency, had a strong start to 2023, surging 83% to a peak of $31,035 and shrugging off the economic uncertainty and regulatory crackdown woes on some crypto exchanges. However, a significant drop of 7.2% was observed in mid-August, with its value declining from $29,000 to $26,000 within a single day. Bitcoin dipped again in September, reaching as low as $25,000 but it didn't breach its resistance level.
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top five firms. It has amassed $13.7 million in its asset base while trading in an average daily volume of 111,000 shares. WGMI charges 75 bps in annual fees (read: Bitcoin Miner ETF Tops in First Nine Months: 5 Best Stocks).
The uranium miners have been building up strong momentum from the last several months, underpinned by the global push to consider nuclear energy as an eco-friendly alternative to coal and gas. Uranium, used mainly in nuclear power plants, is one of the cleanest ways to produce electricity. Sprott Uranium Miners ETF provides exposure to companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 83 bps in annual fee (read: Why Uranium ETFs Are Going Nuclear).
Sprott Uranium Miners ETF holds 37 stocks in its basket and has AUM of $1.3 billion in its asset base. It trades in a good volume of 507,000 shares per day on average.
Communication Services Select Sector SPDR Fund (XLC - Free Report) – Up 34.3%
The communication service sector got a boost from the surge in mega-cap stocks in the first half, followed by the blockbuster movie Barbie, which marked a historic moment in the film industry, in the third quarter. Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $13.2 billion in its asset base. It follows the Communication Services Select Sector Index and holds 24 stocks in its basket. About 47% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 5 million shares. It has a Zacks ETF Rank #2.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 29.3%
The U.S. housing market has shown immense improvement this year buoyed by solid demand for housing, lack of existing inventory and gradual improvements in supply chains. However, rise in mortgage rates lately has dampened some housing market activity. iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index.
With AUM of $2.1 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 with a High risk outlook
Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) – Up 29%
After lagging for most of this year, the energy sector made a solid comeback in the third quarter on a recovery in oil prices on tightening supply conditions and the prospect of higher demand. The global oil market is expected to face the biggest deficit in over a decade and comes as the two major oil-producing nations, Saudi Arabia and Russia, extended their voluntary cuts by the end of the year. On the other hand, world oil demand is scaling record highs driven by strong air travel, increased oil use in power generation and surging Chinese petrochemical activity (read: ETFs to Tap Oil Price Strength).
Invesco Dynamic Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 31 stocks in its basket. Invesco Dynamic Oil & Gas Services ETF has accumulated $43.8 million and charges 63 bps in fees per year. It trades in an average daily volume of 21,000 shares and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
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5 Best-Performing Sector ETFs of Nine Months
After logging big first-half gains, Wall Street has been caught in feeble trading. Worries over longer-than-expected higher interest rates have been weighing on investors’ sentiment. Still, with just a couple of trading days left, the Nasdaq Composite Index has emerged as the top-performing index of 2023, gaining about 25%. Meanwhile, the S&P 500 jumped 11.3% and Dow Jones Industrial is up 1.2%.
The gains were broad-based and well spread out across various segments. Some of the top performers in the ETF space from different corners of the market include Valkyrie Bitcoin Miners ETF (WGMI - Free Report) , Sprott Uranium Miners ETF (URNM - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) and Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) .
The Fed, in its latest meeting, kept interest rates steady at a 22-year high in the range of 5.25% to 5.5% but signaled one more hike this year. Though inflation is easing, it remains elevated and above the Fed’s 2% target. The ongoing strength in the economy and the surging oil prices threaten to revive inflationary pressure. Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong and the unemployment rate has remained low. The U.S. banking system is also deemed to be sound and resilient (read: Bet on Quality ETFs as Fed Keeps Rate Steady, View Hawkish).
ETFs in Focus
We have profiled the abovementioned ETFs in detail below:
Valkyrie Bitcoin Miners ETF (WGMI - Free Report) – Up 102.7%
Bitcoin, the world's largest cryptocurrency, had a strong start to 2023, surging 83% to a peak of $31,035 and shrugging off the economic uncertainty and regulatory crackdown woes on some crypto exchanges. However, a significant drop of 7.2% was observed in mid-August, with its value declining from $29,000 to $26,000 within a single day. Bitcoin dipped again in September, reaching as low as $25,000 but it didn't breach its resistance level.
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top five firms. It has amassed $13.7 million in its asset base while trading in an average daily volume of 111,000 shares. WGMI charges 75 bps in annual fees (read: Bitcoin Miner ETF Tops in First Nine Months: 5 Best Stocks).
Sprott Uranium Miners ETF (URNM - Free Report) – Up 48%
The uranium miners have been building up strong momentum from the last several months, underpinned by the global push to consider nuclear energy as an eco-friendly alternative to coal and gas. Uranium, used mainly in nuclear power plants, is one of the cleanest ways to produce electricity. Sprott Uranium Miners ETF provides exposure to companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 83 bps in annual fee (read: Why Uranium ETFs Are Going Nuclear).
Sprott Uranium Miners ETF holds 37 stocks in its basket and has AUM of $1.3 billion in its asset base. It trades in a good volume of 507,000 shares per day on average.
Communication Services Select Sector SPDR Fund (XLC - Free Report) – Up 34.3%
The communication service sector got a boost from the surge in mega-cap stocks in the first half, followed by the blockbuster movie Barbie, which marked a historic moment in the film industry, in the third quarter. Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $13.2 billion in its asset base. It follows the Communication Services Select Sector Index and holds 24 stocks in its basket. About 47% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 5 million shares. It has a Zacks ETF Rank #2.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 29.3%
The U.S. housing market has shown immense improvement this year buoyed by solid demand for housing, lack of existing inventory and gradual improvements in supply chains. However, rise in mortgage rates lately has dampened some housing market activity. iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index.
With AUM of $2.1 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 with a High risk outlook
Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) – Up 29%
After lagging for most of this year, the energy sector made a solid comeback in the third quarter on a recovery in oil prices on tightening supply conditions and the prospect of higher demand. The global oil market is expected to face the biggest deficit in over a decade and comes as the two major oil-producing nations, Saudi Arabia and Russia, extended their voluntary cuts by the end of the year. On the other hand, world oil demand is scaling record highs driven by strong air travel, increased oil use in power generation and surging Chinese petrochemical activity (read: ETFs to Tap Oil Price Strength).
Invesco Dynamic Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 31 stocks in its basket. Invesco Dynamic Oil & Gas Services ETF has accumulated $43.8 million and charges 63 bps in fees per year. It trades in an average daily volume of 21,000 shares and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.