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3 Top Areas of Q3 & Their Top ETFs

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The third quarter of 2021 has just wrapped up. The broader market posted a muted performance during this frame mainly due to the COVID-19 Delta-variant scare, Fed’s taper talks and the resultant rising rate worries, the probability of a tax hike, and China’s real estate developer Evergrande’s default risks.

The S&P 500 and the Nasdaq Composite has gained about 1.4% and 0.13%, respectively, in the past three months (as of Sep 28, 2021). The Dow Jones has added even more muted gains of 0.02%. The small-cap index Russell 2000 has lost 3.4%.

Let’s see which ETF areas won in the quarter.

Energy

Oil and gas prices were super-sturdy in the third quarter with the month of September witnessing a special ascent. Oil crossed the $75 level. Brent hit the highest level since October 2018. The rally was driven by supply disruptions and storage drawdowns as well as growing demand with the easing of pandemic restrictions. Oil drillers in the Gulf of Mexico are still struggling to restore output more than two weeks after Hurricane Ida made landfall on the coast of Louisiana, with almost a third of production still idled.

Meanwhile, natural gas prices spiked to a seven-year high buoyed by the growing concerns over tight winter supplies as well as the expiration of October options. Additionally, soaring global gas prices are prompting buyers from around the world to continue purchasing all the liquefied natural gas that the United States is producing.

According to a new report by the International Energy Agency, global gas demand is expected to rise 3.6% in 2021 before easing to an average growth rate of 1.7% over the following three years. By 2024, demand is forecast to be up 7% from 2019’s pre-COVID-19 levels (read: Best Performing Stocks of the Top US ETF of September).

iPath.B Natural Gas Subindex ETN (GAZ - Free Report) – Up 51.3%        

US Natural Gas Fund (UNG - Free Report) – Up 50.7%

Vaneck Unconventional Oil & Gas ETF – Up 6.6%              

Shipping

About 90% of the world’s trade is carried by sea, making maritime shipping an important area. The demand for shipping is going high considering the improvement in global economic growth and a commodity boom from easing COVID-led restrictions. These factors are leading to very high freight rates. The space is also getting support from easy monetary and fiscal policies, supply-chain issues caused due to COVID-19 and higher demand from e-commerce companies (read: Inside the New Green Shipping ETF).

Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 35.1% in the past three months

SonicShares Global Shipping ETF (BOAT - Free Report) – Up 16.1%

Agriculture

Most of the agricultural commodities surged in the third quarter. Coffee prices are rising due to weather concerns in the top-producing country Brazil. Global coffee prices are forecast to touch $4.44 a kilogram due to Brazilian cold snap due to drought situation in growing region and supply chain issues.

Meanwhile, cocoa production in the world's top grower Ivory Coast is expected to drop up to 11% in the 2021/2022 season that starts on Oct 1.  The U.S. cotton exports have hit the highest level of 16.4 million bales in 15 years in 2020-21 driven by a surge in global imports (per an article on Fibre2Fashion.com). On the other hand, raw sugar futures on ICE rose toward 20 cents per lb, the highest since August-end boosted by falling supplies from Brazil and higher demand from the United States.

iPatha.B Coffee Subindex TR ETN (JO - Free Report) – Up 30.2%

iPatha.B Cotton Subindex TR ETN (BAL - Free Report) – Up 21.5%

iPatha.B Softs Subindex TR ETN (JJS - Free Report) – Up 19.6%

iPath Cocoa Subindex TR Index ETN (NIB - Free Report) – Up 12.5%

Teucrium Sugar (CANE - Free Report) – Up 12.3%