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4 Best-Performing ETF Themes of the Past Three Months
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After a downbeat Q1, Wall Street has maintained its lackluster journey in Q2. The first half of 2022 could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. The Fed enacted a steep interest rate hike worth 50 basis points in May and another one of 75 bps in June.
No wonder, many analysts are forecasting a U.S. recession this year as the economy is still striving to recover from the pandemic. Notably, the American economy contracted an annualized 1.5% quarter on quarter in Q1 of 2022, following 6.9% growth in Q4 of 2021. The yield curve inverted many times in the second quarter, signaling recession risks.
The S&P 500 has declined 12.1% in the past three months while the Dow Jones and the Nasdaq have lost 9.8% and 14.2%, respectively. Oil prices have gained moderately as United States Oil Fund, LP (USO) added only 2.7% in Q2. Global slowdown fears probably quelled the demand for oil.
Against this backdrop, below we highlight a few best-performing ETF themes of the past three months. These ETF Themes have come across as winners. Data are as per etfdb.com.
ETF Themes in Focus
Commodity – Up 12% Average Past Three-Month Return
After a decade of underperformance, commodities are experiencing a huge rally due to the Russia-Ukraine war, chances of more inflation, pent-up demand after the COVID-19 pandemic, widespread vaccination, chances of more oncoming COVID-19 antiviral pills and still-low rates. It seems the rally will march higher in the coming days (read: More Rally for Commodity ETFs in the Cards?).
Commodities are often viewed as an inflation-protected asset. An oil rally made the space a winner. Physical Palladium Shares ETF (PALL - Free Report) is experiencing high momentum with 7% monthly return.
Volatility – Up 4.26%
Stocks continue to struggle as inflation reached a new four-decade high in June, raising expectations that the Federal Reserve will hike rates aggressively and could send the economy into a recession. No wonder, ETFs that offer exposure to volatility emerged winners in recent times. Simplify Volatility Premium ETF (SVOL - Free Report) is up 3.9% past month.
Alternatives – Up 3.43%
In a falling market, alternative (or long/short) investment strategies prove beneficial. These strategies have the potential to stay afloat in both rising and falling markets. They also add diversification benefits to a portfolio and lower volatility due to low correlations with broader indexes. Simplify Managed Futures Strategy ETF (CTA - Free Report) is in high momentum with 10% monthly return (read: Why Long-Short ETFs are Beating the Market).
Currency – Up 0.56%
Most central banks have been hiking rates to contain inflation. In the policy tightening spree, the U.S. dollar emerged winner. This is because the Fed has hiked rates by 150 bps so far this year and may enact more rate hikes in the coming days. As a result, the greenback has gained strength this year. Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has advanced 3.3% past month.
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4 Best-Performing ETF Themes of the Past Three Months
After a downbeat Q1, Wall Street has maintained its lackluster journey in Q2. The first half of 2022 could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. The Fed enacted a steep interest rate hike worth 50 basis points in May and another one of 75 bps in June.
No wonder, many analysts are forecasting a U.S. recession this year as the economy is still striving to recover from the pandemic. Notably, the American economy contracted an annualized 1.5% quarter on quarter in Q1 of 2022, following 6.9% growth in Q4 of 2021. The yield curve inverted many times in the second quarter, signaling recession risks.
The S&P 500 has declined 12.1% in the past three months while the Dow Jones and the Nasdaq have lost 9.8% and 14.2%, respectively. Oil prices have gained moderately as United States Oil Fund, LP (USO) added only 2.7% in Q2. Global slowdown fears probably quelled the demand for oil.
Against this backdrop, below we highlight a few best-performing ETF themes of the past three months. These ETF Themes have come across as winners. Data are as per etfdb.com.
ETF Themes in Focus
Commodity – Up 12% Average Past Three-Month Return
After a decade of underperformance, commodities are experiencing a huge rally due to the Russia-Ukraine war, chances of more inflation, pent-up demand after the COVID-19 pandemic, widespread vaccination, chances of more oncoming COVID-19 antiviral pills and still-low rates. It seems the rally will march higher in the coming days (read: More Rally for Commodity ETFs in the Cards?).
Commodities are often viewed as an inflation-protected asset. An oil rally made the space a winner. Physical Palladium Shares ETF (PALL - Free Report) is experiencing high momentum with 7% monthly return.
Volatility – Up 4.26%
Stocks continue to struggle as inflation reached a new four-decade high in June, raising expectations that the Federal Reserve will hike rates aggressively and could send the economy into a recession. No wonder, ETFs that offer exposure to volatility emerged winners in recent times. Simplify Volatility Premium ETF (SVOL - Free Report) is up 3.9% past month.
Alternatives – Up 3.43%
In a falling market, alternative (or long/short) investment strategies prove beneficial. These strategies have the potential to stay afloat in both rising and falling markets. They also add diversification benefits to a portfolio and lower volatility due to low correlations with broader indexes. Simplify Managed Futures Strategy ETF (CTA - Free Report) is in high momentum with 10% monthly return (read: Why Long-Short ETFs are Beating the Market).
Currency – Up 0.56%
Most central banks have been hiking rates to contain inflation. In the policy tightening spree, the U.S. dollar emerged winner. This is because the Fed has hiked rates by 150 bps so far this year and may enact more rate hikes in the coming days. As a result, the greenback has gained strength this year. Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has advanced 3.3% past month.