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Wall Street is on track to end the second quarter on a positive note. The tech-heavy Nasdaq Composite Index has outperformed, gaining 10.9% since the start of April, while the S&P 500 and the Dow Jones are up 6.6% and 2%, respectively, so far.
Initially, the rally was driven by the mega-cap tech stocks on enthusiasm surrounding artificial intelligence (AI) but has widened beyond the tech sector lately. As such, there are winners from many corners of the space. We have highlighted one ETF each from the five best sectors of the second quarter. These are VanEck Vectors Digital Transformation ETF (DAPP - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) , Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and ALPS Medical Breakthroughs ETF (SBIO - Free Report) .
Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street. Inflation has moderated since the middle of last year, with the Fed's preferred measure of inflation falling substantially from a peak of around 7% last year to 4.4% as of April.
Meanwhile, the Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
Additionally, builders are becoming more optimistic due to ongoing gradual improvements in supply chains, despite difficulties in obtaining builder and developer loans over last year. Further, the recent rounds of economic data signaled economic resilience despite fears of an impending recession.
ETFs in Focus
We have profiled the above-mentioned ETFs in detail below:
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 62.1%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 23 securities in its basket.
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 86,000. DAPP has accumulated $38.4 million in its asset base.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 24.4%
iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With an AUM of $2.2 billion, it holds a basket of 48 stocks with a heavy concentration on the top two firms (read: What's Behind the Surge in Homebuilder Stocks & ETFs?).
iShares U.S. Home Construction ETF charges 39 bps of annual fees and trades in a heavy volume of around 2 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) – Up 22.7%
Defiance Hotel, Airline, and Cruise ETF tracks the BlueStar Global Hotels, Airlines, and Cruises Index, which measures the performance of globally listed companies primarily engaged in the travel and tourism industries. It holds 56 stocks in its basket.
Defiance Hotel, Airline, and Cruise ETF has gathered $44.7 million in its asset base and charges 45 bps in annual fees. Volume is lower as it exchanges around 46,000 shares a day on average.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) – Up 18.2%
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $16.6 billion and an average daily volume of around 4.5 million shares. It offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index.
Consumer Discretionary Select Sector SPDR Fund holds 53 securities in its basket, with key holdings in broad-line retail, automobiles, specialty retail, and hotels, restaurants and leisure with a double-digit allocation each. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 (Strong Buy).
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 17.7%
ALPS Medical Breakthroughs ETF provides exposure to small- and mid-cap stocks of biotechnology companies that have one or more drugs in either Phase II or Phase III of the FDA clinical trials by tracking S-Network Medical Breakthroughs Index. It holds 109 securities in its basket (read: Biotech ETFs in Focus on Covid Vaccines' Fall Rollout).
ALPS Medical Breakthroughs ETF charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 9,000 shares. It has AUM of $116.2 million in its asset base and carries a Zacks ETF Rank #4 (Sell).
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5 Top-Performing Sector ETFs of Q2
Wall Street is on track to end the second quarter on a positive note. The tech-heavy Nasdaq Composite Index has outperformed, gaining 10.9% since the start of April, while the S&P 500 and the Dow Jones are up 6.6% and 2%, respectively, so far.
Initially, the rally was driven by the mega-cap tech stocks on enthusiasm surrounding artificial intelligence (AI) but has widened beyond the tech sector lately. As such, there are winners from many corners of the space. We have highlighted one ETF each from the five best sectors of the second quarter. These are VanEck Vectors Digital Transformation ETF (DAPP - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) , Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and ALPS Medical Breakthroughs ETF (SBIO - Free Report) .
Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street. Inflation has moderated since the middle of last year, with the Fed's preferred measure of inflation falling substantially from a peak of around 7% last year to 4.4% as of April.
Meanwhile, the Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
Additionally, builders are becoming more optimistic due to ongoing gradual improvements in supply chains, despite difficulties in obtaining builder and developer loans over last year. Further, the recent rounds of economic data signaled economic resilience despite fears of an impending recession.
ETFs in Focus
We have profiled the above-mentioned ETFs in detail below:
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 62.1%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 23 securities in its basket.
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 86,000. DAPP has accumulated $38.4 million in its asset base.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 24.4%
iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With an AUM of $2.2 billion, it holds a basket of 48 stocks with a heavy concentration on the top two firms (read: What's Behind the Surge in Homebuilder Stocks & ETFs?).
iShares U.S. Home Construction ETF charges 39 bps of annual fees and trades in a heavy volume of around 2 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) – Up 22.7%
Defiance Hotel, Airline, and Cruise ETF tracks the BlueStar Global Hotels, Airlines, and Cruises Index, which measures the performance of globally listed companies primarily engaged in the travel and tourism industries. It holds 56 stocks in its basket.
Defiance Hotel, Airline, and Cruise ETF has gathered $44.7 million in its asset base and charges 45 bps in annual fees. Volume is lower as it exchanges around 46,000 shares a day on average.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) – Up 18.2%
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $16.6 billion and an average daily volume of around 4.5 million shares. It offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index.
Consumer Discretionary Select Sector SPDR Fund holds 53 securities in its basket, with key holdings in broad-line retail, automobiles, specialty retail, and hotels, restaurants and leisure with a double-digit allocation each. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 (Strong Buy).
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 17.7%
ALPS Medical Breakthroughs ETF provides exposure to small- and mid-cap stocks of biotechnology companies that have one or more drugs in either Phase II or Phase III of the FDA clinical trials by tracking S-Network Medical Breakthroughs Index. It holds 109 securities in its basket (read: Biotech ETFs in Focus on Covid Vaccines' Fall Rollout).
ALPS Medical Breakthroughs ETF charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 9,000 shares. It has AUM of $116.2 million in its asset base and carries a Zacks ETF Rank #4 (Sell).