February was pretty volatile for Wall Street. Though the start of the month was upbeat, rising rate worries triggered a crash at month-end. Growing vaccine distribution and hopes of hefty stimulus under the Biden presidency along with a dovish Fed stoked inflationary pressure and boosted long-term treasury yields. Overall, the S&P 500, the Dow Jones, the Nasdaq Composite and the small-cap Russell 2000 advanced about 2.61%, 3.17%, 0.93% and 6.14%, respectively.
The tech-heavy Nasdaq was the worst performer among the big three as the bunch of stocks that won during the pandemic-ridden 2020 on low rates and rising rates are now wreaking havoc on the segment. High growth companies’ value normally relies on expected earnings growth and as long-term yields rise, it lowers the present value of companies’ future earnings.
U.S. benchmark Treasury yields started the month with 1.09% while it ended the month at 1.44%, having
hit a high of 1.60% (the maximum in a year) in the final week of the month. Stocks logged a steep selloff in the last week of February. There has been a rout in the bond market too with selloff taking pace while value stocks and economic reopening-friendly stocks gained momentum.
Against this backdrop, below we highlight a few winning ETFs of the last month.
Breakwave Dry Bulk Shipping ETF ( BDRY Quick Quote BDRY - Free Report) – Up 32.4%
This fund was on a winning streak. The pickup in global economic growth has supported the dry bulk shipping rates. Gradually rising demand across all vessel categories have probably aided the area and the related fund (read:
Top & Flop Zones of 2020 and Their ETFs).
The underlying index of the fund Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC measures rates for shipping dry bulk freight. It provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices.
Transformational Data Sharing Amplify ETF ( BLOK Quick Quote BLOK - Free Report) – Up 30.8%
Blockchain’s success can be easily attributed to the outstanding bitcoin rally. Bitcoin tore the $58,000-mark to record high last month. Greater mainstream acceptance has been powering the rally.
Last month we received the news that the world’s largest asset manager which oversees about $9 trillion in assets,
Blackrock, has started investing in bitcoin. Also, world’s largest electric-car maker Tesla announced that it has purchased $1.5 billion worth of bitcoin. Per another latest developments, Apple Pay users can now spend in bitcoin and other cryptocurrencies.
Though bitcoin ETFs are not available to investors, they have blockchain ETFs at their disposal. Per a source, “the
blockchain in Bitcoin literally acts a ledger; it keeps track of the balances for all users and updates them as money changes hands.” Hence, the blockchain ETF BLOK gained materially last month. Dynamic Energy Exploration & Production Invesco ( PXE Quick Quote PXE - Free Report) – Up 27.6%
freezing weather in the United States instigated the oil rally last month. Winter storm and arctic blast of cold weather hurt power supply, and in turn curtailed about 500,000 to 1.2 million barrels per day (bpd) of crude production in the Permian Basin in Texas.
Also, “frigid weather means that many oil wells may be shut in. Water is produced along with oil, that water can freeze up equipment,” oil analyst Andy Lipow had written last month,
as quoted on CNBC. No wonder, such cold snap and the resultant adverse impact on the oil patch has boosted energy ETFs in February (read: Will the Energy ETFs See a Sustained Rally?). Amplify Seymour Cannabis ETF ( CNBS Quick Quote CNBS - Free Report) – Up 26.7%
After making the world's largest video game retailer —
GameStop ( GME Quick Quote GME - Free Report) a hero recently, Reddit’s discussion has popularized marijuana stocks in early February. The pending merger between Tilray and Aphria was supposedly the main driver of the promotion that time (read: Marijuana ETFs on a High on Reddit Frenzy).
In any case, the cannabis companies have also received a boost from the Democratic Party’s intentions to legalize the plant at the federal level. Shares of major cannabis stocks rallied this year on Democratic victories in Georgia’s two runoff elections.
ETFMG Travel Tech ETF ( AWAY Quick Quote AWAY - Free Report) – Up 22.9%
As the risk-rally initiated and the vaccination program gained momentum, value stocks and reopening-friendly stocks got a new lease of life. No wonder, travel stocks had a reason to outperform last month. We expect the momentum to remain steady as the United States’ FDA has sanctioned the emergency use authorization for J&J COVID-19 vaccine on Feb 27.
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