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5 Sector ETFs At All-Time Highs

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Wall Street has been enjoying a huge rally this year amid a myriad of woes including a resurgence in COVID-19 cases, inflationary pressures, taper talks, and signs of slowdown in China’s economy.

The S&P 500 Index is on the longest winning streak since the 10-month run that ended in December 2017 and is setting 53 record highs. Meanwhile, the Nasdaq Composite Index notched its third winning month in a row after topping 15,000 for the first time ever. The combination of upbeat corporate earnings, renewed optimism in a sustained economic recovery, and the Fed’s dovish view are driving the stocks higher (read: What Awaits the S&P 500 ETFs After the Best YTD Rally Since 1997?).

Rapid vaccinations, business reopenings and trillions of dollars in government stimulus spending are spurring consumer spending and resulting in robust growth. Additionally, chairman Jerome Powell in its latest Jackson Hole conference stated that the central bank is in no hurry to raise interest rates though it will gradually begin tapering $120 billion in monthly bond purchases by the end of the year.

While the rally is broad-based, a few sectors scaled new all-time highs. We have highlighted five ETFs from different sectors that hit new peaks in the recent trading session and have been the leaders in their respective sector so far this year:

Nuveen Short-Term REIT ETF (NURE - Free Report) – Up 41%

The real estate sector has been strongly benefiting from reopening economies and lower rates. Additionally, an uptick in home prices is driving the real estate sector higher as more consumers are moving toward rental. REITs have also benefited from inflation concerns as they are often considered a hedge against inflation.

NURE tracks the Dow Jones U.S. Select Short-Term REIT Index, which is composed of U.S. exchange-traded equity REITs that concentrate their holdings in apartment buildings, hotels, self-storage facilities and manufactured home properties, which have shorter lease terms than REITs that invest in the other sectors. It has amassed $78.7 million in its asset base and trades in an average daily volume of 52,000 shares. The ETF holds 36 stocks in its basket and charges 35 bps in fees per year (read: Why REIT ETFs are Beating the Market).

SPDR S&P Capital Markets ETF (KCE - Free Report) – Up 34%

Rise in yields and stimulus cut hopes lease a new life into the capital markets segment. The Fed in its latest conference stated that the central bank is in no hurry to raise short-term interest rates though it will gradually begin tapering $120 billion in monthly bond purchases by the end of the year. This would lead to a steeper yield curve and result in more money from a wider spread between short-term rates for deposits and longer-term rates for lending. In addition, volatility in the markets is helping asset managers to bring in more capital.

This fund tracks the S&P Capital Markets Select Industry Index, holding 62 stocks in its portfolio. Asset management & custody banks take the top position in the basket at 44.1% while investment banking & brokerage, and financial exchange and date take the remaining share in terms of industrial profile. The product manages assets worth $184.9 million in AUM while the average volume is moderate at 24,000 shares. It charges 35 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Invesco Water Resources ETF (PHO - Free Report) – Up 28.1%

President Biden’s infrastructure bill, which includes $55 billion for water infrastructure and other water system related investments, has provided a boost to the water sector. This fund provides exposure to U.S. water utility stocks that create products to conserve and purify water for homes, businesses and industries. It tracks the Nasdaq OMX US Water index and holds 38 securities in the basket. The fund has amassed $2 billion in AUM and charges 60 bps a year in fees. It trades in an average daily volume of 174,000 shares (read: Here's Why You Should Invest in Water ETFs).

Simplify Volt Cloud and Cybersecurity Disruption ETF – Up 26.7%

This thematic investment product is actively managed and designed to concentrate on those few disruptive companies that are poised to dominate the new era of cloud technology and then enhance the concentrated exposure with options. It holds 24 securities in its basket with the largest allocation to the top three firms. The ETF is a high-cost choice, charging 1.02% in annual fees. It has accumulated $7.2 million in its assets since its inception in late December and trades in an average daily volume of 16,000 shares (read: 5 Niche ETFs Sizzling This Summer).

Pacer BioThreat Strategy ETF (VIRS - Free Report) – Up 24.5%

This fund seeks exposure to U.S. companies whose products or services help to protect against, endure or recover from biological threats to human health by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 51 stocks in its basket. The ETF accumulated $5.2 million in its asset base and charges 70 bps in annual fees. It trades in a paltry average daily volume of 500 shares.

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