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10 Sector ETFs Flying Higher on a Recovering Economy
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The U.S. economy is showing signs of improvement this year from the pandemic-driven recession. This is especially true given the rounds of solid upbeat economic data.
The country added 379,000 jobs – the largest since October – in February while unemployment dropped to 6.2%. U.S. manufacturing activity increased to a three-year high last month amid acceleration in new orders. Consumer spending rose the most in seven months in January while construction spending surged to a record high, boosted by strong private and public outlays. All these indicate that the economy is growing faster than expected (read: 4 Sector ETFs to Sizzle on Solid February Jobs Data).
Increasing pace of vaccination, progress toward more vaccines, reopening of the economy as well as the prospect of further $1.9 trillion stimulus are fueling growth in the economy. The combination of all these factors will lead to pent-up demand, resulting in higher demand for all types of products and services in the economy.
Many analysts are bullish on the economy given the encouraging developments coupled with a new stimulus package. Jefferies expects GDP growth of 9.5% in the first quarter and nearly 7% for this year while Goldman foresees the economy to grow 5.5% in the first quarter and then accelerate to 11% in the second. New York Federal Reserve President John Williams projects GDP growth to be the strongest this year in decades with strong federal fiscal support and continued progress on vaccination (read: $1.9-T Stimulus to Boost U.S. Equity Demand? ETFs to Gain).
When the economy improves, the stock market sees a boom, especially the cyclical stocks, which are closely tied to economic activities. That said, below we present 10 ETFs from the cyclical sectors that scaled new highs in the latest trading session. The ascent might continue in the weeks ahead given the bullish trends and investors’ risk appetite.
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report)
This ETF offers exposure to small and mid-cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. It holds 57 stocks in its basket and charges 70 bps in annual fees. The product has $116.5 million in AUM and trades in a lower volume of around 12,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 4 Best ETF Charts of Q4 Earnings).
This fund has amassed $2.7 billion in its asset base and offers exposure to 115 stocks by tracking the MSCI US Investable Market Materials 25/50 Index. The ETF has 0.10% in expense ratio, while volume is moderate at 159,000 shares. Specialty chemicals industrial gases take the largest share at 29.4% and 18.2%, respectively, while others offer a single-digit exposure each. The product has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
This fund offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries by tracking the Dynamic Leisure and Entertainment Intellidex Index. It holds a small basket of 32 stocks with AUM of $1.6 billion and an average trading volume of 584,000 shares per day. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
SPDR S&P North American Natural Resources ETF (NANR - Free Report)
This ETF provides exposure to U.S. and Canadian publicly traded large and mid-cap companies within the sub???industries of the energy, metals & mining or agriculture categories. It follows the S&P BMI North American Natural Resources Index, holding 29 stocks in its basket. The fund has amassed $493 million and charges 35 bps in annual fees. It trades in a lower volume of 40,000 shares a day on average.
This product offers exposure to 32 stocks that are engaged in the manufacture, sale or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index. With AUM of $68.4 million, the fund charges 63 bps in annual fees from investors and sees a light average daily volume of 22,000 shares. However, it currently has a Zacks ETF Rank #4 (Sell) (read: U.S. Manufacturing at 3-Year High: ETFs in Focus).
This fund offers exposure to the U.S. investment banks, discount brokerages, and stock exchange firms by tracking the Dow Jones U.S. Select Investment Services Index. The product currently holds 24 securities and charges 42 bps in annual fees. It has accumulated $355.5 million in AUM and trades in a moderate volume of nearly 62,000 shares a day. The product has a Zacks ETF Rank #2 with a High risk outlook.
With AUM of $97.7 million, this fund offers exposure to 82 securities engaged in the ownership and management of forests, timberlands and production of products using timber as the raw material. It tracks the MSCI ACWI IMI Timber Select Capped Index and charges 61 bps in fees per year from investors. The product trades in an average daily volume of 19,000 shares.
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 has amassed $968 million in its asset base and charges 60 bps in annual fees. The average trading volume is a good at 182,000 shares per day. FTXR has a Zacks ETF Rank #2.
Invesco S&P 500 Equal Weight Communication Services ETF
This fund targets the communication services sector and tracks the S&P 500 Equal Weight Communication Services Plus Index. It holds 27 stocks in its basket and charges 40 bps in annual fees. The product has amassed $35.4 million in its asset base and trades in a lower average daily volume of 11,000 shares. It has a Zacks ETF Rank #3 (read: 6 Sector ETFs at All-Time Highs Braving Tech Rout).
This fund offers exposure to the sizable pipeline network of one of the world’s largest consumers of energy by tracking the Tortoise North American Pipeline Index. Holding 57 stocks in its basket, it has AUM of $420.4 million and charges 40 bps in annual fees. The average daily trading volume is good at 194,000 shares.
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10 Sector ETFs Flying Higher on a Recovering Economy
The U.S. economy is showing signs of improvement this year from the pandemic-driven recession. This is especially true given the rounds of solid upbeat economic data.
The country added 379,000 jobs – the largest since October – in February while unemployment dropped to 6.2%. U.S. manufacturing activity increased to a three-year high last month amid acceleration in new orders. Consumer spending rose the most in seven months in January while construction spending surged to a record high, boosted by strong private and public outlays. All these indicate that the economy is growing faster than expected (read: 4 Sector ETFs to Sizzle on Solid February Jobs Data).
Increasing pace of vaccination, progress toward more vaccines, reopening of the economy as well as the prospect of further $1.9 trillion stimulus are fueling growth in the economy. The combination of all these factors will lead to pent-up demand, resulting in higher demand for all types of products and services in the economy.
Many analysts are bullish on the economy given the encouraging developments coupled with a new stimulus package. Jefferies expects GDP growth of 9.5% in the first quarter and nearly 7% for this year while Goldman foresees the economy to grow 5.5% in the first quarter and then accelerate to 11% in the second. New York Federal Reserve President John Williams projects GDP growth to be the strongest this year in decades with strong federal fiscal support and continued progress on vaccination (read: $1.9-T Stimulus to Boost U.S. Equity Demand? ETFs to Gain).
When the economy improves, the stock market sees a boom, especially the cyclical stocks, which are closely tied to economic activities. That said, below we present 10 ETFs from the cyclical sectors that scaled new highs in the latest trading session. The ascent might continue in the weeks ahead given the bullish trends and investors’ risk appetite.
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report)
This ETF offers exposure to small and mid-cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. It holds 57 stocks in its basket and charges 70 bps in annual fees. The product has $116.5 million in AUM and trades in a lower volume of around 12,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 4 Best ETF Charts of Q4 Earnings).
Vanguard Materials ETF (VAW - Free Report)
This fund has amassed $2.7 billion in its asset base and offers exposure to 115 stocks by tracking the MSCI US Investable Market Materials 25/50 Index. The ETF has 0.10% in expense ratio, while volume is moderate at 159,000 shares. Specialty chemicals industrial gases take the largest share at 29.4% and 18.2%, respectively, while others offer a single-digit exposure each. The product has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
This fund offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries by tracking the Dynamic Leisure and Entertainment Intellidex Index. It holds a small basket of 32 stocks with AUM of $1.6 billion and an average trading volume of 584,000 shares per day. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
SPDR S&P North American Natural Resources ETF (NANR - Free Report)
This ETF provides exposure to U.S. and Canadian publicly traded large and mid-cap companies within the sub???industries of the energy, metals & mining or agriculture categories. It follows the S&P BMI North American Natural Resources Index, holding 29 stocks in its basket. The fund has amassed $493 million and charges 35 bps in annual fees. It trades in a lower volume of 40,000 shares a day on average.
Invesco Dynamic Food & Beverage ETF (PBJ - Free Report)
This product offers exposure to 32 stocks that are engaged in the manufacture, sale or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index. With AUM of $68.4 million, the fund charges 63 bps in annual fees from investors and sees a light average daily volume of 22,000 shares. However, it currently has a Zacks ETF Rank #4 (Sell) (read: U.S. Manufacturing at 3-Year High: ETFs in Focus).
iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report)
This fund offers exposure to the U.S. investment banks, discount brokerages, and stock exchange firms by tracking the Dow Jones U.S. Select Investment Services Index. The product currently holds 24 securities and charges 42 bps in annual fees. It has accumulated $355.5 million in AUM and trades in a moderate volume of nearly 62,000 shares a day. The product has a Zacks ETF Rank #2 with a High risk outlook.
Invesco MSCI Global Timber ETF (CUT - Free Report)
With AUM of $97.7 million, this fund offers exposure to 82 securities engaged in the ownership and management of forests, timberlands and production of products using timber as the raw material. It tracks the MSCI ACWI IMI Timber Select Capped Index and charges 61 bps in fees per year from investors. The product trades in an average daily volume of 19,000 shares.
First Trust Nasdaq Transportation ETF (FTXR - Free Report)
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 has amassed $968 million in its asset base and charges 60 bps in annual fees. The average trading volume is a good at 182,000 shares per day. FTXR has a Zacks ETF Rank #2.
Invesco S&P 500 Equal Weight Communication Services ETF
This fund targets the communication services sector and tracks the S&P 500 Equal Weight Communication Services Plus Index. It holds 27 stocks in its basket and charges 40 bps in annual fees. The product has amassed $35.4 million in its asset base and trades in a lower average daily volume of 11,000 shares. It has a Zacks ETF Rank #3 (read: 6 Sector ETFs at All-Time Highs Braving Tech Rout).
Tortoise North American Pipeline Fund (TPYP - Free Report)
This fund offers exposure to the sizable pipeline network of one of the world’s largest consumers of energy by tracking the Tortoise North American Pipeline Index. Holding 57 stocks in its basket, it has AUM of $420.4 million and charges 40 bps in annual fees. The average daily trading volume is good at 194,000 shares.
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 >>