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August was a strong month for the broad U.S. stock market. This is especially true as the Dow Jones and the S&P 500 logged in their best August in more than 30 years while the Nasdaq Composite Index had its best monthly performance since 2000.
Most of the rally was driven by the progress to develop treatments and vaccines for COVID-19 as well as the prolonged support by the central bank to contain the pandemic. The tech sector’s surge, rise in mergers and acquisitions, and better-than-expected earnings results added to the strength (read: Q2 Earnings Effect: 5 Must-Watch ETF Charts).
In particular, the Federal Reserve recently unveiled an aggressive new policy that would keep rates lower for longer and tolerate higher inflation levels while supporting the labor market as much as possible. Meanwhile, the Food and Drug Administration approved the use of convalescent plasma from recovered COVID-19 patients as a treatment for serious coronavirus cases. The Trump administration is also seeking emergency use authorization of an experimental vaccine being developed by AstraZeneca (AZN - Free Report) and Oxford University ahead of the Nov 3 presidential election.
While the rally was broad-based, a few sectors outperformed the market in August. Below we have highlighted five such ETFs that raked in double-digits gains last month and could be better plays if the trend prevails.
The solar industry has been on fire buoyed by solid earnings and the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 28 stocks in the basket. American firms dominate with half of the fund’s portfolio, followed by China (21.9%) and Spain (7.2%). The product has amassed $1.3 billion in its asset base and trades in a solid volume of around 621,000 shares a day. It charges investors 71 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Clean Energy Stocks & ETFs to Buy as Biden Gains Popularity).
The digital shift has led to the rapid adoption of esports and increased video game usage. This ETF debuted in early June and has already attracted $103.4 million in AUM. It is designed to offer retail and institutional investors exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. The fund holds 37 stocks in its basket. It charges 75 bps in annual fees and trades in average daily volume of 306,000 shares.
FAANG stocks have been roaring on stay-at-home trends with Apple (AAPL - Free Report) , Tesla (TSLA - Free Report) and Facebook hitting new levels in August. This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in equal weights of 10% each in its basket and charges 58 bps in annual fees. The product has accumulated $58.6 million in its asset base and trades in average daily volume of 18,000 shares (read: ETFs to Click as Facebook Tops $300 on E-Commerce Bets).
First Trust Nasdaq Transportation ETF (FTXR - Free Report) – Up 17.1%
The transportation sector has rebounded on an improving economy and hopes of vaccine, which will lead to increased demand for transportation, including land and water. This fund offers exposure to the 31 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. It holds 31 stocks in its basket. FTXR has amassed $8.5 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #4 (Sell).
First Trust NASDAQ Global Auto ETF (CARZ - Free Report) – Up 16.3%
This ETF has benefited from soaring Tesla share price. The electric carmaker has been on a crazy ride after reporting the longest streak of profitability in the company’s history and a 5-for-1 stock split announcement. CARZ offers a pure-play global exposure to 34 auto stocks by tracking the NASDAQ OMX Global Auto Index. Tesla is the top firm accounting for 11.6% share. CARZ has a lower level of $8.5 million in AUM and charges 70 bps in fees per year. The product trades in average daily volume of 10,000 shares. It has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Tesla ETFs Set to Soar Further on 5-for-1 Stock Split).
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5 Sector ETFs That Beat the Market in August
August was a strong month for the broad U.S. stock market. This is especially true as the Dow Jones and the S&P 500 logged in their best August in more than 30 years while the Nasdaq Composite Index had its best monthly performance since 2000.
Most of the rally was driven by the progress to develop treatments and vaccines for COVID-19 as well as the prolonged support by the central bank to contain the pandemic. The tech sector’s surge, rise in mergers and acquisitions, and better-than-expected earnings results added to the strength (read: Q2 Earnings Effect: 5 Must-Watch ETF Charts).
In particular, the Federal Reserve recently unveiled an aggressive new policy that would keep rates lower for longer and tolerate higher inflation levels while supporting the labor market as much as possible. Meanwhile, the Food and Drug Administration approved the use of convalescent plasma from recovered COVID-19 patients as a treatment for serious coronavirus cases. The Trump administration is also seeking emergency use authorization of an experimental vaccine being developed by AstraZeneca (AZN - Free Report) and Oxford University ahead of the Nov 3 presidential election.
While the rally was broad-based, a few sectors outperformed the market in August. Below we have highlighted five such ETFs that raked in double-digits gains last month and could be better plays if the trend prevails.
Invesco Solar ETF (TAN - Free Report) – Up 23.3%
The solar industry has been on fire buoyed by solid earnings and the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 28 stocks in the basket. American firms dominate with half of the fund’s portfolio, followed by China (21.9%) and Spain (7.2%). The product has amassed $1.3 billion in its asset base and trades in a solid volume of around 621,000 shares a day. It charges investors 71 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Clean Energy Stocks & ETFs to Buy as Biden Gains Popularity).
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) – Up 22.2%
The digital shift has led to the rapid adoption of esports and increased video game usage. This ETF debuted in early June and has already attracted $103.4 million in AUM. It is designed to offer retail and institutional investors exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. The fund holds 37 stocks in its basket. It charges 75 bps in annual fees and trades in average daily volume of 306,000 shares.
MicroSectors FANG+ ETN (FNGS - Free Report) – Up 19.5%
FAANG stocks have been roaring on stay-at-home trends with Apple (AAPL - Free Report) , Tesla (TSLA - Free Report) and Facebook hitting new levels in August. This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in equal weights of 10% each in its basket and charges 58 bps in annual fees. The product has accumulated $58.6 million in its asset base and trades in average daily volume of 18,000 shares (read: ETFs to Click as Facebook Tops $300 on E-Commerce Bets).
First Trust Nasdaq Transportation ETF (FTXR - Free Report) – Up 17.1%
The transportation sector has rebounded on an improving economy and hopes of vaccine, which will lead to increased demand for transportation, including land and water. This fund offers exposure to the 31 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. It holds 31 stocks in its basket. FTXR has amassed $8.5 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #4 (Sell).
First Trust NASDAQ Global Auto ETF (CARZ - Free Report) – Up 16.3%
This ETF has benefited from soaring Tesla share price. The electric carmaker has been on a crazy ride after reporting the longest streak of profitability in the company’s history and a 5-for-1 stock split announcement. CARZ offers a pure-play global exposure to 34 auto stocks by tracking the NASDAQ OMX Global Auto Index. Tesla is the top firm accounting for 11.6% share. CARZ has a lower level of $8.5 million in AUM and charges 70 bps in fees per year. The product trades in average daily volume of 10,000 shares. It has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Tesla ETFs Set to Soar Further on 5-for-1 Stock Split).
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 >>