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What Slump? 4 Sector ETFs Up At Least 14% in Q3

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The third quarter of 2022 has just wrapped up. The broader market posted a muted performance during this time frame mainly due to red-hot inflation, a super-hawkish Fed and the resultant rising-rate worries. Central banks around the world have been on this path in recent days to tame inflation.

The Fed has hiked interest rates this year by 300 bps. Last week, Fed officials raised interest rates by 75 basis points for three times in a row, and Chairman Jerome Powell indicated that policymakers were ready to digest the economic recession in order to tame inflation.

The S&P 500, the Dow Jones and the Nasdaq Composite have lost about 6.3%, 7.6% and 5%, respectively, in the past three months (as of Sep 30, 2022). The small-cap index Russell 2000 has lost 3.7%.

Against this backdrop, below, we highlight a few sector ETFs that won in the third quarter.

Clean Energy

Alps Clean Energy ETF (ACES - Free Report) – Up 14.2%

Proshares S&P Kensho Cleantech ETF (CTEX - Free Report) – Up 14%

Clean-energy shares received a boost from the Inflation Reduction Act of 2022. The framework provided $370 billion to combat climate change and would be the biggest climate spending package in U.S. history. It included tax credits for wind, solar, hydrogen, and nuclear energy, and battery storage, among other things.

Biotech

Strategic Crispr & Gene Editing Technology ETF (XDNA - Free Report) – Up 15%

Bioshares Biotech Clinical Trial (BBC - Free Report) – Up 14%

The rally in biotech stocks in Q3 was a pronounced one. Per FT, hedge funds have started buying beaten-down biotech stocks since they believe that ultra-cheap valuations could revive M&A activity in the space. Many big pharma companies are looking to boost their drug pipelines through acquisitions. Biotech stocks were huge beneficiaries of the pandemic as many of these companies were developing new vaccines and treatments for COVID-19, leading to a surge in IPOs and venture capital investments.

Uranium Miners

Sprott Uranium Miners ETF (URNM - Free Report) – Up 14.0%

The war in Ukraine has accelerated the transition to alternative sources of energy, particularly in view of surging natural gas prices. Nuclear power is back in prominence as governments try to tackle climate change and reduce dependence on Russian fossil fuels. Uranium, used mainly in nuclear power plants, is one of the cleanest ways to produce electricity. However, nuclear energy currently makes up about 10% of the world’s electricity production.

Cryptocurrency  

FT Skybridge Crypto Industry and Digital Economy (CRPT - Free Report) – Up 20.5%

iShares Blockchain and Tech ETF (IBLC - Free Report) – Up 16.6%

Tech ETFs made a solid comeback in July. The crypto space especially gained in August after the announcement of a partnership with BlackRock Inc. to help institutional investors manage and trade Bitcoin, per Business Standard. The very news bodes well for the entire crypto and fintech space.

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