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Though October is historically upbeat, this year the month tricked investors. After a downbeat September, October too remained depressed for Wall Street. High oil and gas prices, still-high inflation, and the Fed’s policy tightening spree along with the resultant rise in bond yields kept the market volatile.
The S&P 500, the Dow Jones and the Nasdaq have lost 2.8%, 1.5% and 3.9% past month (as of October 30, 2023) due to rising rate worries. U.S. benchmark treasury yield started the month with 4.69%, reached a high of 4.98% on Oct 19 and stood at 4.88% on Oct 30. Apart from higher rates, there was heightened geopolitical crisis due to the occurrence of war between Israel and Gaza. This has sent oil prices higher.
Meanwhile, the U.S. GDP data for Q3 came in at upbeat. The United States witnessed a substantial economic growth in the third quarter of 2023, with the real gross domestic product (GDP) growing at an annual rate of 4.9%, beating the economists’ expectations of 4.7%.
Consumer spending was one of the main contributors to the U.S. GDP growth. The GDP increase marked the largest gain since the fourth quarter of 2021 (read: Consumer Spending Boosts U.S. Q3 GDP: ETFs to Buy).
Against such a backdrop, let’s take a look at the ETFs that outperformed the S&P 500 in October.
As the broader market slumped on higher rates, the inverse equity ETF HDGE outperformed in October. The AdvisorShares Ranger Equity Bear ETF seeks capital appreciation through short sales of domestically traded equity securities. The expense ratio of the fund is 4.29%.
With the reopening of the Chinese economy in early 2023, the entire shipping industry heaved a sigh of relief. In fact, ocean shipping is hugely dependent on China. Upbeat demand for liquefied natural gas (LNG) represents a huge positive for shipping stocks. Global trade is also showing promising signs of recovery. As a result, this shipping ETF showed resilience in a gloomy October (read: Time for Shipping ETFs Amid Improving Global Trade Scenario?).
iShares MSCI Global Gold Miners ETF (RING - Free Report) – Up 9.1%
Gold bullion ETF SPDR Gold Trust (GLD - Free Report) added about 8.5% in October as the crisis in the Middle East boosted the safe-haven demand for gold. Since gold stocks often act as a leveraged play of the underlying metal, gold mining ETF like RING surged in October.
United States Natural Gas ETF (UNG - Free Report) – Up 7.1%
Natural gas prices surged on a bullish EIA report and cooler-than-normal weather. Meanwhile, a stable demand catalyst in the form of continued strong LNG feed gas deliveries supported natural gas. LNG shipments for export from the United States have been elevated for months due to environmental reasons and Europe’s endeavor to move away from its dependence on Russian natural gas supplies following the war in Ukraine.
Credit Suisse S&P MLP Index ETN – Up 7%
The unrest in the Middle East pushed up oil prices in October. This factor favored the broader energy investing occasionally in the month. Notably, MLPs have relatively consistent cash flows, making them less risky than the other plays in the broader energy space.
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5 Best-Performing ETFs of October
Though October is historically upbeat, this year the month tricked investors. After a downbeat September, October too remained depressed for Wall Street. High oil and gas prices, still-high inflation, and the Fed’s policy tightening spree along with the resultant rise in bond yields kept the market volatile.
The S&P 500, the Dow Jones and the Nasdaq have lost 2.8%, 1.5% and 3.9% past month (as of October 30, 2023) due to rising rate worries. U.S. benchmark treasury yield started the month with 4.69%, reached a high of 4.98% on Oct 19 and stood at 4.88% on Oct 30. Apart from higher rates, there was heightened geopolitical crisis due to the occurrence of war between Israel and Gaza. This has sent oil prices higher.
Meanwhile, the U.S. GDP data for Q3 came in at upbeat. The United States witnessed a substantial economic growth in the third quarter of 2023, with the real gross domestic product (GDP) growing at an annual rate of 4.9%, beating the economists’ expectations of 4.7%.
Consumer spending was one of the main contributors to the U.S. GDP growth. The GDP increase marked the largest gain since the fourth quarter of 2021 (read: Consumer Spending Boosts U.S. Q3 GDP: ETFs to Buy).
Against such a backdrop, let’s take a look at the ETFs that outperformed the S&P 500 in October.
ETFs in Focus
AdvisorShares Ranger Equity Bear ETF (HDGE - Free Report) – Up 9.8%
As the broader market slumped on higher rates, the inverse equity ETF HDGE outperformed in October. The AdvisorShares Ranger Equity Bear ETF seeks capital appreciation through short sales of domestically traded equity securities. The expense ratio of the fund is 4.29%.
Breakwave Tanker Shipping ETF (BWET - Free Report) – Up 9.3%
With the reopening of the Chinese economy in early 2023, the entire shipping industry heaved a sigh of relief. In fact, ocean shipping is hugely dependent on China. Upbeat demand for liquefied natural gas (LNG) represents a huge positive for shipping stocks. Global trade is also showing promising signs of recovery. As a result, this shipping ETF showed resilience in a gloomy October (read: Time for Shipping ETFs Amid Improving Global Trade Scenario?).
iShares MSCI Global Gold Miners ETF (RING - Free Report) – Up 9.1%
Gold bullion ETF SPDR Gold Trust (GLD - Free Report) added about 8.5% in October as the crisis in the Middle East boosted the safe-haven demand for gold. Since gold stocks often act as a leveraged play of the underlying metal, gold mining ETF like RING surged in October.
United States Natural Gas ETF (UNG - Free Report) – Up 7.1%
Natural gas prices surged on a bullish EIA report and cooler-than-normal weather. Meanwhile, a stable demand catalyst in the form of continued strong LNG feed gas deliveries supported natural gas. LNG shipments for export from the United States have been elevated for months due to environmental reasons and Europe’s endeavor to move away from its dependence on Russian natural gas supplies following the war in Ukraine.
Credit Suisse S&P MLP Index ETN – Up 7%
The unrest in the Middle East pushed up oil prices in October. This factor favored the broader energy investing occasionally in the month. Notably, MLPs have relatively consistent cash flows, making them less risky than the other plays in the broader energy space.