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5 Sector ETFs That Beat the Market in May

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After a wild ride for most of the month, Wall Street staged a nice comeback last week. The S&P 500 logged in its best week of the year, jumping 6.5% and wiping out its losses in May, while the Dow Jones also snapped its longest losing streak of eight weeks since 1923, climbing 6.2%.

As such, most of the sectors turned green from a one-month look. We highlight five ETFs of them from different corners that gained 20% or more. These are Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) , SonicShares Global Shipping ETF (BOAT - Free Report) , Global X Solar ETF (RAYS - Free Report) , First Trust Natural Gas ETF (FCG - Free Report) and Global X Lithium & Battery Tech ETF (LIT - Free Report) .

Solid earnings from the retail sector, as well as slowing inflation, lifted investor sentiment. Notably, robust earnings from Ulta Beauty (ULTA - Free Report) and Gap (GPS - Free Report) infused optimism into the retail sector. Meanwhile, an inflation gauge closely tracked by the Federal Reserve rose 6.3% year over year in April, just below a four-decade high set in March and the first slowdown since November 2020 (read: ETFs to Gain As Inflation Remains Second Highest in 4 Decades).

Further, the Fed minutes rekindled some interest in the stock market as there were no surprises. The minutes showed that the central bank would continue raising interest rates by half a percentage point each in June and July to combat surging inflation and avoid an economic downturn.

The initial phase of the rate increase will be good for stocks as it will reflect an improving economy, thereby benefiting cyclical sectors like financials, technology, industrials and consumer discretionary. Additionally, higher interest rates usually indicate a healthy economy, leading to greater consumer power and increased IT spending.

Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – Up 24%

Energy has been the top-performing sector of 2022, thanks to an oil price surge brought about by supply disruptions, declining inventories and unprecedented demand. Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (read: Tap the Best-Performing Sector YTD With These ETFs).

Holding 32 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $315.3 million in its asset base and charges 63 bps in annual fees. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

SonicShares Global Shipping ETF (BOAT - Free Report) – Up 24%

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 $34.1 million in its asset base. The fund charges 69 bps in annual fees and trades in an average daily volume of 38,000 shares.

Global X Solar ETF (RAYS - Free Report) – Up 22.5%

Countries across the globe are scaling their renewable energy investments. The United States has been at the forefront of making the climate clean with President Joe Biden’s pledge to go greener. Global X Solar ETF seeks to invest in companies positioned to benefit from the advancement of the global solar technology industry. This includes companies involved in solar power production; the integration of solar into energy systems; and the development/manufacturing of solar-powered generators, engines, batteries, and other technologies related to the utilization of solar as an energy source.

Global X Solar ETF has accumulated $8.1 million in its asset base and charges 50 bps in annual fees. It trades in an average daily volume of 76,000 shares.

First Trust Natural Gas ETF (FCG - Free Report) – Up 22%

Natural gas has been soaring, buoyed by tight supply conditions, adverse weather conditions and declining inventories. First Trust ISE-Revere Natural Gas Index Fund offers exposure to U.S. companies involved in the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 44 stocks in its basket (read: Wall Street's Best Week Since Nov 2020: 5 Best ETF Areas).

First Trust ISE-Revere Natural Gas Index Fund has amassed $923.8 million in its asset base while charging 60 bps in annual fees. Volume is good, with 1.9 million shares exchanged per day, on average. The product has a Zacks ETF Rank #3 with a High risk outlook.

Global X Lithium & Battery Tech ETF (LIT - Free Report) – Up 20.5%

Lithium prices have been soaring on the back of heavy demand for lithium batteries, which is used in electric vehicles. Global X Lithium & Battery Tech ETF provides global exposure to a broad range of firms engaged in lithium mining, refining, and battery production by tracking the Solactive Global Lithium Index. It holds 40 securities in its basket, with the Chinese firms taking the largest share at 37.1%, followed by the United States (22.7%) and South Korea (10.9%).

Global X Lithium & Battery Tech ETF charges investors 75 bps in annual fees and has amassed $4.4 billion in AUM. It trades in an average daily volume of 724,000 shares.