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5 Sector ETFs That Survived Last Week's Turmoil

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Wall Street saw tumultuous trading last week with the Dow Jones and the S&P 500 dropping 1.1% and 1.4%, respectively. The tech-heavy Nasdaq Composite Index declined 2.3% last week. The renewed inflation fears have sparked a huge sell-off in the front-loaded week.

The latest inflation data shows the largest annual increase since 2008. The Consumer Price Index spiked 4.2% from a year ago and 0.8% from the prior month to the highest level in 13 years. The Producer Price Index in April expanded 6.2% from the year-ago month, representing its biggest expansion in a decade (read: Inflation Zooms to 13-Year High: 5 Solid TIPS ETF Picks).

The spike in inflation has made investors jittery, compelling them to dump the growth stocks in particular. This is because rising prices tend to squeeze margins and erode corporate profits for the growth companies, which usually have higher valuations. If inflation remains high for a sustained period of time, it could trigger earlier-than-expected tightening policies from the Federal Reserve though the central bank views inflation as temporary.

Additionally, the rounds of latest data have added to the chaos. Consumer confidence in early May tumbled with the preliminary reading for the University of Michigan Index of Consumer Sentiment dipping 6.2% from the month ago to 82.8 for May. U.S. retail sales were flat in April after jumping nearly 11% in March. Though U.S. industrial production rose 0.7% in April, it is down from a sharp increase of 2.4% in March.

However, the stocks rebounded later in the week as investors jumped in to cash the beaten down prices and snapped up the stocks that would benefit from an economic recovery.

Against such a backdrop, we have highlighted five sector ETFs that performed well last week and survived the broad market rout.

JPMorgan Alerian MLP Index ETN (AMJ - Free Report) – Up 4.2%

MLPs gained popularity on President Joe Biden’s capital gain tax hike plan as they offer huge capital tax benefits. While most MLPs gained, AMJ topped the list. This fund provides investors a way to gain exposure to midstream energy MLPs. With AUM of $2.2 billion, the note charges 85 bps in annual fees and trades in an average daily volume of 607,000 shares.

iShares MSCI Global Gold Miners ETF (RING - Free Report) – Up 2.3%

Gold logged in the second consecutive week of gains as U.S. dollar declined. Additionally, the appeal for the yellow metal has increased as it is viewed as a great store of value and hedge against market turmoil. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 40 securities in its portfolio. Canadian firms take half of the portfolio, while the United States and South Africa round off the next two spots. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $506.2 million and trades in a good volume of 188,000 shares per day (read: 5 Best Leveraged ETF Areas of Last Week).

Invesco S&P SmallCap Consumer Staples ETF (PSCC - Free Report) – Up 2%

The consumer staples sector generally act as a safe haven amid political and economic turmoil. Stocks in these sectors generally outperform during periods of low growth and high uncertainty. This fund targets the small-cap segment of the consumer staples sector by tracking the S&P SmallCap 600 Capped Consumer Staples Index. It holds 29 stocks in its basket and charges 29 bps in annual fees. The ETF has managed assets worth $47.5 million and trades in an average daily volume of 6,000 shares. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares U.S. Pharmaceuticals ETF (IHE - Free Report) – Up 1.9%

The pharma sector might be a good defensive play in order to withstand the volatility, providing boost to IHE. This ETF provides exposure to 45 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The product has $362.9 million in AUM and charges 42 bps in annual fees and expense. Volume is light as it exchanges about 6,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook (read: Pharma ETFs in Focus Post Q1 Earnings).

Global X Cybersecurity ETF (BUG - Free Report) – Up 1.3%

The recent ransomware attack on Colonial Pipeline Co. has lifted the cyber security stocks. This ETF offers exposure to the companies that stand to benefit from the increased adoption of cybersecurity technology and follows the Indxx Cybersecurity Index. It holds 32 stocks in its basket and charges 50 bps in annual fees. The ETF has accumulated $342.7 million in its asset base and trades in an average daily volume of 148,000 shares (read: A Quick Guide to Cyber Security ETFs).

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