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4 Top-Performing Sector ETFs of Q4

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The fourth quarter of 2021 has been an eventful one through and through. There were sudden eruptions of the Omicron variant of COVID-19, which is much more infectious than the last-found deadly strain Delta, renewed lockdowns in several parts of the globe, sky-high inflation in the United States and the start of Fed’s pretty-fast QE tapering.

While these developments called for negative sentiments in the market, there were positives like upbeat corporate earnings, the passage of the $1.2-trillion bipartisan infrastructure bill, higher attention toward alternative energy thanks to COP-26 taking place in Glasgow in late-October and last but not the least more successful data for COVID-19 therapies from the likes of Merck and Pfizer (read: ETFs to Play as Merck Shares Surge on COVID Treatment News).

Still, rising inflation and COVID fears kept the broader market at check. S&P 500-based SPDR S&P 500 ETF Trust (SPY), Dow Jones-based SPDR Dow Jones Industrial Average ETF Trust (DIA), and Nasdaq-100-based Invesco QQQ Trust (QQQ) gained about 4.2%, 2.3%, and 0.8% respectively, in the past three months (as of Dec 17, 2021). Small-cap iShares Russell 2000 ETF (IWM) lost about 2.8% in the past three-month period.

Against this backdrop, below we highlight the winning sector ETFs of the fourth quarter.

Technology & Electric Vehicle

Although tech stocks took a beating in the quarter on rising rate worries, some specific areas of this sector still held their heads high. Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) (up 23.5%), North American Tech-Multimedia Networking ETF (IGN - Free Report) (up 13.7%) and semiconductor ETFs like S&P Semiconductor SPDR (XSD - Free Report) (up 12.2%) deserve a loud applause in this category.

VCAR is a clear beneficiary of Tesla’s surge (up 22.8%) despite strong volatility. Rivian's (RIVN) IPO success (up 36.4% so far) in the quarter also strengthened investors’ sentiment toward electric vehicles (read: Time for Electric Vehicle ETFs Instead of Rivian & Tesla?).

Meanwhile, semiconductor stocks are benefiting from the global shortage of chips worldwide. The pandemic has bolstered the demand for chips, leading to the worst global shortage in many years.

Real Estate

Pacer Benchmark Industrial Real Estate ETF (INDS - Free Report) (up 17.3%)is the top ETF in the space. The underlying Benchmark Industrial Real Estate SCTR Index is composed of the U.S.-listed equity securities of companies that derive their revenues from real estate operations in the industrial real estate sector and self-storage real estate operations.

Investors should note that the entire real estate sector is charged-up now due to prevailing low rates and high yield offered by the segment. Upbeat industrial sector and tech activities have especially benefitted this specific fund INDS. Plus, real estate is a winning sector amid higher inflation (read: 4 Sector ETFs to Win From About a 40-Year High Inflation). 


Manufacturing activities are in the pink in the United States. The Institute for Supply Management (ISM) said on Dec 1 that its index of national factory activity rose to a reading of 61.1 last month from 60.8 in October. The data beat the economists’ estimate of 61.0 polled by Reuters by a whisker. The passage of a massive infrastructure bill is a plus for the sector. DWA Industrials Momentum Invesco ETF (PRN - Free Report) (up 10.5%) has emerged a winner (read: 4 Sector ETFs to Make the Most of Infrastructure Bill).


iShares U.S. Home Construction ETF (ITB - Free Report) added 10.2% in the past three months. The thirst for home buying has risen even in the face of increasing housing prices and supply-chain disturbances, thus benefiting homebuilders. No wonder, existing home sales data have been strong. Rates have slumped lately on Omicron fears. This went in favor of the rate-sensitive sectors like housing.