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Wall Street has been on a stellar ride, with all three major indices on track to wrap up their best monthly performance of 2023. The S&P 500 is up 8.5% in November, while the Nasdaq Composite Index has advanced nearly 11%. Both averages are tracking their best monthly performance since July 2022. The Dow Jones is up 7.2% in November, on track for its best month since October 2022.
The gains were broad-based and well spread out across various segments. Some of the top performers in the ETF space from different corners of the market are ARK Innovation ETF (ARKK - Free Report) , Roundhill Cannabis ETF (WEED - Free Report) , Kelly CRISPR & Gene Editing Technology ETF , Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) and iShares U.S. Home Construction ETF (ITB - Free Report) .
Out of the 11 sectors, 10 are on track to end the month in positive territory. The technology sector has been leading with 12.8% gains so far this month, while the energy sector has been a laggard, losing 2.3%. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low (read: Tech Turns Hot, ETFs Touch New 52-Week Highs).
The retreat in bond yields, on continued hopes that the Fed’s aggressive interest rate hiking campaign might be nearing an end, has been a significant contributor to the stock rally. The latest round of data points has also strengthened the idea that the Fed is done with rate hikes.
Further, better-than-expected earnings added to the strength. The overall Q3 earnings picture remains stable and largely positive. The third-quarter reporting cycle is on track to record year-over-year earnings growth after three back-to-back quarters of earnings decline. However, there has been a notable acceleration in negative estimate revisions for the fourth quarter over the last few weeks, a development that reverses the largely favorable revisions trend of the preceding six months (read: 5 Best ETF Charts of This Earnings Season).
ETFs in Focus
Let’s dig into the details of the abovementioned ETFs:
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 34 securities in its basket, with some concentration on the top firms.
ARK Innovation ETF has gathered $8 billion in its asset base and charges 75 bps in fees per year from investors. It trades in average daily volume of 16.6 million shares.
Roundhill Cannabis ETF is an actively managed ETF, designed to offer investors exposure to the cannabis sector. The fund may invest in various cannabis-related companies, including cannabis producers and distributors, cannabis-related technology companies, and additional cannabis-related ancillary businesses. It holds eight stocks in its basket through the use of swaps.
Roundhill Cannabis ETF has gathered $3 million in its asset base. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.
Kelly CRISPR & Gene Editing Technology ETF – Up 27.7%
Kelly CRISPR & Gene Editing Technology ETF seeks to provide total return by investing in a passively managed, concentrated portfolio of companies that engage in CRISPR & gene editing technology activities. It holds 24 stocks in its basket, with a higher concentration on the top two firms.
Kelly CRISPR & Gene Editing Technology ETF has accumulated $2.6 million in its asset base and charges 78 bps on an annual basis. It trades in average daily volume of 3,000 shares.
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF follows the Dorsey Wright Consumer Cyclicals Technical Leaders Index, which is designed to identify companies that are showing relative strength (momentum). It holds 39 stocks in its basket, with key holdings in household durables, specialty retail and hotel, restaurants and leisure.
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF has accumulated $18.5 million in its assets base and charges 60 bps in annual fees. It trades in a volume of around 1,000 shares a day on average.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 20.7%
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 (read: 5 ETFs Set to Gain as Inflation Cools Down).
With an AUM of $2 billion, it holds a basket of 46 stocks, with double-digit concentration on the top two firms. iShares U.S. Home Construction ETF charges 40 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
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5 Sector ETFs That Beat the Market in November
Wall Street has been on a stellar ride, with all three major indices on track to wrap up their best monthly performance of 2023. The S&P 500 is up 8.5% in November, while the Nasdaq Composite Index has advanced nearly 11%. Both averages are tracking their best monthly performance since July 2022. The Dow Jones is up 7.2% in November, on track for its best month since October 2022.
The gains were broad-based and well spread out across various segments. Some of the top performers in the ETF space from different corners of the market are ARK Innovation ETF (ARKK - Free Report) , Roundhill Cannabis ETF (WEED - Free Report) , Kelly CRISPR & Gene Editing Technology ETF , Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) and iShares U.S. Home Construction ETF (ITB - Free Report) .
Out of the 11 sectors, 10 are on track to end the month in positive territory. The technology sector has been leading with 12.8% gains so far this month, while the energy sector has been a laggard, losing 2.3%. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low (read: Tech Turns Hot, ETFs Touch New 52-Week Highs).
The retreat in bond yields, on continued hopes that the Fed’s aggressive interest rate hiking campaign might be nearing an end, has been a significant contributor to the stock rally. The latest round of data points has also strengthened the idea that the Fed is done with rate hikes.
Further, better-than-expected earnings added to the strength. The overall Q3 earnings picture remains stable and largely positive. The third-quarter reporting cycle is on track to record year-over-year earnings growth after three back-to-back quarters of earnings decline. However, there has been a notable acceleration in negative estimate revisions for the fourth quarter over the last few weeks, a development that reverses the largely favorable revisions trend of the preceding six months (read: 5 Best ETF Charts of This Earnings Season).
ETFs in Focus
Let’s dig into the details of the abovementioned ETFs:
ARK Innovation ETF (ARKK - Free Report) – Up 37.5%
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 34 securities in its basket, with some concentration on the top firms.
ARK Innovation ETF has gathered $8 billion in its asset base and charges 75 bps in fees per year from investors. It trades in average daily volume of 16.6 million shares.
Roundhill Cannabis ETF (WEED - Free Report) – Up 32%
Roundhill Cannabis ETF is an actively managed ETF, designed to offer investors exposure to the cannabis sector. The fund may invest in various cannabis-related companies, including cannabis producers and distributors, cannabis-related technology companies, and additional cannabis-related ancillary businesses. It holds eight stocks in its basket through the use of swaps.
Roundhill Cannabis ETF has gathered $3 million in its asset base. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.
Kelly CRISPR & Gene Editing Technology ETF – Up 27.7%
Kelly CRISPR & Gene Editing Technology ETF seeks to provide total return by investing in a passively managed, concentrated portfolio of companies that engage in CRISPR & gene editing technology activities. It holds 24 stocks in its basket, with a higher concentration on the top two firms.
Kelly CRISPR & Gene Editing Technology ETF has accumulated $2.6 million in its asset base and charges 78 bps on an annual basis. It trades in average daily volume of 3,000 shares.
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) – Up 20.9%
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF follows the Dorsey Wright Consumer Cyclicals Technical Leaders Index, which is designed to identify companies that are showing relative strength (momentum). It holds 39 stocks in its basket, with key holdings in household durables, specialty retail and hotel, restaurants and leisure.
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF has accumulated $18.5 million in its assets base and charges 60 bps in annual fees. It trades in a volume of around 1,000 shares a day on average.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 20.7%
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 (read: 5 ETFs Set to Gain as Inflation Cools Down).
With an AUM of $2 billion, it holds a basket of 46 stocks, with double-digit concentration on the top two firms. iShares U.S. Home Construction ETF charges 40 bps in annual fees and has a Zacks ETF Rank #3 (Hold).