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These Q1 ETF Winners Have More Upside Left
The year 2022 as a whole could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries after an upbeat 2021. No wonder, such worries caused an upheaval in the market in the first quarter of 2022.
In Q1, Wall Street witnessed its worst performance in two years. The Dow Jones and the S&P 500 lost 4.6% and 4.9%, respectively, while the Nasdaq Composite Index shed 9% in the first quarter (read: U.S. Stocks Log Worst Q1 in 2 Years: Top-Ranked ETFs Shine).
Bond Yields Remained Moderatein Q1
A hawkish Fed boosted bond yields in the United States but the Russia-Ukraine war also kept the safe-have trade charged-up and dragged down bond yields. Overall, the benchmark treasury bond yields started 2022 at 1.63% and ended Q1 at 2.32%, having reached a closing high of 2.48%. As a result, rate-sensitive sectors like utilities performed better and the segment is still delivering a steady performance. The sector is recession-free in nature and thus is proving to be a great support in the current market upheaval.
Commodities Win in Q1
Commodities had a great Q1 as the escalation in tensions between Russia and Ukraine sparked a rally in a broad range of commodities. Both countries are commodity-rich, ranging from agriculture to minerals and energy products. The tensions have led to constrained supply concerns in an already-tight commodity market.
In particular, Russia and Ukraine are the major exporters of wheat, corn, edible oils and metals like aluminum, nickel, and palladium.Russia is also among the world’s largest suppliers of oil and natural gas.All these are making agri-based funds like DBA an impressive investment option.
How Has Q2 Opened for Investors?
The global market is at a critical juncture right now. The central banks (including the Fed) of the developed world are aiming a faster policy tightening to fight inflation. This may push the global economy into recession over the medium term, if we go by some analysts. The yield curve inverted from late March. But the trend of bond yields has been quite volatile. Most recently, the 10-year yield jumped to a three-year high as the Fed planned a speedier policy tightening.
Against this backdrop, below we highlight a few ETFs that won in the first quarter and still enjoying an upbeat momentum. These ETFs may win again in Q2.
ETFs in Focus
Invesco DB Agriculture ETF (DBA)
3-Month Return: +11.58%
1-Month Return: +0.60%
Fidelity MSCI Utilities Index ETF (FUTY - Free Report)
3-Month Return: +6.86%
1-Month Return: +6.62%
Invesco DB US Dollar Index Bullish ETF (UUP - Free Report)
3-Month Return: +3.18%
1-Month Return: +1.0%
Global Beta Low Beta ETF
3-Month Return: +2.57%
1-Month Return: +1.80%
Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report)
3-Month Return: +3.20%
1-Month Return: +3.91%
Health Care Select Sector SPDR ETF (XLV - Free Report)
3-Month Return: +0.74%
1-Month Return: +3.86%
Invesco S&P 500 Low Volatility ETF (SPLV - Free Report)
3-Month Return: +0.33%
1-Month Return: +3.43%