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5 Sector ETFs That Crushed the Market in Q1

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The first quarter of 2022 has been marked by huge uncertainty and volatility in the stock markets. The Ukraine conflict coupled with inflationary pressures and the Fed’s tightening policy has made investors jittery. Additionally, a resurgence of virus cases in China that has sparked global economic growth concerns added to the chaos.

While most corners of the market are in the red from a year-to-date look, a few have performed well. VanEck Vectors Oil Services ETF (OIH - Free Report) , SPDR S&P Metals & Mining ETF (XME - Free Report) , VanEck Vectors Steel ETF (SLX - Free Report) , SonicShares Global Shipping ETF (BOAT - Free Report) and North Shore Global Uranium Mining ETF (URNM - Free Report) have gained in double-digits so far this year.

These funds have been the quarter’s star performers and could also be winners next quarter if the current trends continue.

First-Quarter Market Trend

The ongoing Russia-Ukraine war has led to supply disruption fears in an already-tight commodity market. As Russia is a commodities powerhouse and a key supplier of energy, metals and agri, the worsened relations have sparked a rally in a broad range of commodities, thereby benefiting the commodity producers the most.

Meanwhile, the central bank raised interest rates by 25 basis points (bps) to 0.25%-0.50% and signaled hikes in all the six remaining meetings this year to tackle the fastest inflation in four decades even as risks to economic growth mount. All the hikes would take the interest rate to 1.9% by this year’s end (read: ETFs to Buy on Latest Fed Rate Hike and More Hereafter).

The move, which was highly anticipated and reflected the efforts to control the highest inflation in decades, renewed investors’ interest in the stock market. Fed Chair Jerome Powell also showed confidence that the American economy is strong enough to withstand a tighter monetary policy.

With just a week of trading session left to end the first quarter, the S&P 500 and Dow Jones plunged 5.2% and 4.5%, respectively, while the Nasdaq Composite index fell 9.3%.

VanEck Vectors Oil Services ETF (OIH - Free Report) – Up 52.6%

The energy sector is the top performer this year as oil prices are soaring further on supply disruptions and unprecedented demand. VanEck Vectors Oil Services ETF has been the biggest winner, gaining 52.6% so far this year. It tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. VanEck Vectors Oil Services ETF holds 25 stocks in its basket with a double-digit allocation each in the top two firms.

With AUM of $3.7 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees and trades in an average daily volume of 1.3 million shares. The product has a Zacks ETF Rank #3 (Hold) with a High-risk outlook (read: Best ETF Areas YTD Amid Stocks' Fifth-Worst Start in 95 Years).

SPDR S&P Metals & Mining ETF (XME - Free Report) – Up 41.5%

As prices of various metals have been on the rise, the metals & mining ETFs have been witnessing solid growth. SPDR S&P Metals & Mining ETF offers broad exposure to the U.S. metal and mining industry by tracking the S&P Metals and Mining Select Industry. It holds 32 stocks in its basket, with steel firms accounting for 42.2% of the portfolio while coal & consumable fuels, aluminum and gold round off the next two spots with double-digit exposure each.

SPDR S&P Metals & Mining ETF has 0.35% in expense ratio and has AUM of $3.6 billion. It trades in an average daily volume around 7.3 million shares.

VanEck Vectors Steel ETF (SLX - Free Report) – Up 30%

Rising raw materials and production costs around the world are supporting steel prices, thereby providing a boost to steel stocks. VanEck Vectors Steel ETF provides a pure-play exposure to a small basket of 25 stocks in the steel sector. It tracks the NYSE Arca Steel Index. American firms dominate the fund’s returns at 40%, followed by Brazil (24.8%) and Australia (15.3%).

VanEck Vectors Steel ETF has amassed $143.2 million in its asset base and charges 56 bps in fees from investors. It trades in a moderate volume of 67,000 shares a day on average.

SonicShares Global Shipping ETF (BOAT - Free Report) – Up 18.8%

The ongoing supply chain issues around the world continued to bolster the demand for shipping, pushing the rates higher. SonicShares Global Shipping ETF provides pure-play exposure to the global maritime shipping industry by tracking the Solactive Global Shipping Index. The index consists of global shipping companies engaged in the maritime transportation of goods and raw materials, including consumer and industrial products, vehicles, dry bulk, crude oil and liquefied natural gas.

SonicShares Global Shipping ETF holds 50 stocks in its basket and has amassed $30 million in its asset base since. The fund charges 69 bps in annual fees and trades in an average daily volume of 42,000 shares (read: Wall Street Had the Best Week Since Nov 2020: 5 ETF Winners).

North Shore Global Uranium Mining ETF (URNM - Free Report) – Up 18.6%

Uranium stocks have been on the rise buoyed by the restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit. North Shore Global Uranium Mining ETF provides exposure to companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee.

North Shore Global Uranium Mining ETF holds 35 stocks in its basket and has accumulated $1 billion in its asset base. It trades in a good volume of 394,000 shares per day on average.