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"Worst September in 18 Years"? 4 Sector ETFs Surviving Selloffs

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After a superb August, September looks gloomy for Wall Street. This is especially true given the month’s ill-famed seasonality in the equity market.  According to moneychimp.com, a consensus carried out from 1950 to 2019 has revealed that September ended up offering positive returns in 32 years and negative returns in 38 years, with an average return of negative 0.57%, which is worse than any month.

This year looks to be no exception with a MarketWatch article indicating September 2020 could be the worst in 18 years. Doubts over the faster rollout of coronavirus vaccines, rising COVID-19 cases in the United States and Europe, talks of major banks engaging in transferring illicit funds, profit booking on tech stocks and pre-election volatility in the United States have spelt trouble for the markets (read: A Biden Presidency in the Making? ETF Strategies to Follow).

The S&P 500 has been down about 6% so far in the month. The index has lost 7.4% since it hit the peak on Sep 2. If there is a decline of 10% from a recent peak in the month, it will make an awful September for the index. Previously, it had crashed 11% in the month in 2002 on fears of the dot-com bubble, per the MarketWatch article (read: Is a September Lull Inevitable? Play 6 ETFs).

However, some sectors have still benefited in the month and braved the selloffs. Below we highlight those winners.

Gaming/E-sports

The gaming industry has been booming this year buoyed by the pandemic as people are mostly stuck indoors. As a result, spending on video games in the United States has skyrocketed to new heights in the past few months.

To add more allure to gaming investing, DraftKings (DKNG - Free Report) and Caesars (CZR) recently announced a multi-year deal with ESPN that will feature their content on the network's digital and TV platforms. Per the deal, DraftKings will be the exclusive provider of daily fantasy sports and a co-exclusive partner for gambling link-outs from ESPN, the company said, as quoted on CNBC.

Microsoft has also announced its plans to acquire video game behemoth Bethesda’s parent company — ZeniMax Media — one of the world’s most-important gaming firms, for $7.5 billion. All these news boosted Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) (up 1.5%) in the month (read: 4 Reasons to be Bullish on Microsoft ETFs Now).

Biotech

Although there were doubts about the rollout of vaccines at the beginning of September,AstraZeneca Plc (AZN) resumed the U.K. trial of its COVID-19 vaccine, AZD1222, in collaboration with the University of Oxford, following confirmation by the Medicines Health Regulatory Authority (MHRA) that it was safe to do so. The trial was paused globally after a person who received the vaccine had an unexplained illness (read: ETFs to Gain as AstraZeneca Resumes Coronavirus Vaccine Trial).

Pfizer’s (PFE) management said that the vaccine candidate, BNT162b2, if proven to be safe and effective by federal regulators, in collaboration with BioNTech could reach Americans before the end of this year. No wonder, Virtus LifeSci Biotech Products ETF (BBP - Free Report) (up 4.4%) and Defiance Nasdaq Junior Biotechnology ETF (IBBJ - Free Report) (up 5.6%) are two of the prominent gainers in the space in September (read: Healthcare ETFs, Stocks That Gained Double Digits Last Week).

Clean Energy

Growing consumer electric vehicle adoption, an increase in charging stations by U.S. states, increased solar-storage installations have acted as a tailwind for the clean energy sector. The space is also set to benefit from the increasing deployment of clean energy in Europe and China. Invesco Global Clean Energy ETF (PBD - Free Report) (down 0.01%) has been almost flat this month.

Materials

Since the materials sector tends to be one of the most sensitive to global economic growth projections and the resultant demand, reopening trade led the sector’s way higher in the third quarter. Invesco SP 500 Equal Weight Materials ETF (RTM - Free Report) has lost only 0.5% in the month (read: Materials Sector Gains Steam in Q3: 5 Best ETFs & Stocks).

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