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The fourth quarter has been solid for Wall Street despite the fact that the S&P 500 and the Nasdaq Composite Index officially entered correction territory in late October. The U.S. stocks bounced back strongly from that level, driven by cooling inflation, bets that the Fed is nearing the end of the tightening cycle, and a decline in yields.
All three major indices wrapped up their eighth consecutive weekly advance. We have highlighted the best ETFs, each from the top five segments of the fourth quarter. These are Global X Blockchain ETF (BKCH - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) , SPDR S&P Regional Banking ETF (KRE - Free Report) , Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) and Amplify Online Retail ETF (IBUY - Free Report) .
Broad market sentiments have turned extremely bullish following the Fed’s dovish tone this month, which pushed the three benchmarks to new 52-week highs on several occasions. In fact, the Dow Jones touched a historic high while the other two indices — the S&P 500 and the Nasdaq Composite Index — reached new 2023 highs (read: Dow Jones ETFs at Record High: More Rally Expected in 2024?).
In the latest meeting, Federal Reserve Chair Jerome Powell hinted at a major policy shift as inflation is easing and the economy is holding up better. The central bank kept interest rates steady for the third time and penciled in three rate cuts of 75 bps for 2024. Lower interest rates generally lead to reduced borrowing costs, which can stimulate economic growth.
Recent indicators suggest that economic activity has been expanding at a moderate pace, buoyed by robust consumer spending, strong job gains and a low unemployment rate.
ETFs in Focus
Let’s dig into the details of the abovementioned ETFs:
Bitcoin, the world's largest cryptocurrency, surged to a 12-month high of $45,000 in early December. The milestone came on the back of broad enthusiasm about U.S. interest rate cuts and the imminent regulatory approval for Bitcoin ETFs. Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration. Global X Blockchain ETF holds 25 stocks in its basket, with nearly double-digit allocation to the four top firms.
Global X Blockchain ETF has gathered $139.8 million in its asset base and trades in an average daily volume of 124,000 shares. It charges 50 bps in annual fees.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 29%
The U.S. housing sector performed well in the fourth quarter as a decline in mortgage rates prompted an increase in prospective buyers, leading to an uptick in sales. Mortgage rates fell below 7% for the first time since August last week and are hovering at the lowest level since July, reigniting some life in the housing market. 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: Homebuilder ETFs 2024 Prospects Appear Bright).
With AUM of $2.5 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #3 (Hold).
Regional bank indices erased all the losses made this year and have recovered from one of its most challenging years since the 2008 financial crisis. SPDR S&P Regional Banking ETF provides exposure to the regional banks segment by tracking the S&P Regional Banks Select Industry Index. It holds 140 stocks in its basket, with each accounting for no more than 4.2% of the assets (read: 4 Reasons Why Bank ETFs Can Rebound in 2024).
SPDR S&P Regional Banking ETF has AUM of $4 billion and charges 35 bps in annual fees. It trades in an average daily volume of 18 million shares and has a Zacks Rank #4 (Sell).
Americans are feeling more confident about the economy than they did over the past few months. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Rising consumer sentiment bodes well for household spending in the coming months. It has a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending.
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 40 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 $51.2 million in its assets base and charges 60 bps in annual fees. It trades in a volume of around 10,000 shares a day on average.
Retail ETFs are getting a boost from solid holiday shopping trends. Amplify Online Retail ETF offers global exposure to companies with significant revenues from the online retail business, traditional online retail, online travel, online marketplace, and omnichannel retail by tracking the EQM Online Retail Index. IBUY holds 72 stocks in its basket, with none accounting for more than 5% of assets. Amplify Online Retail ETF has the largest allocation in online retail at 39% and online marketplace at 38%.
Amplify Online Retail ETF has attracted $193.2 million in its asset base and charges 65 bps in annual fees. IBUY trades in an average daily volume of 26,000 shares.
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5 Sector ETFs That Beat the Market in Q4
The fourth quarter has been solid for Wall Street despite the fact that the S&P 500 and the Nasdaq Composite Index officially entered correction territory in late October. The U.S. stocks bounced back strongly from that level, driven by cooling inflation, bets that the Fed is nearing the end of the tightening cycle, and a decline in yields.
All three major indices wrapped up their eighth consecutive weekly advance. We have highlighted the best ETFs, each from the top five segments of the fourth quarter. These are Global X Blockchain ETF (BKCH - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) , SPDR S&P Regional Banking ETF (KRE - Free Report) , Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) and Amplify Online Retail ETF (IBUY - Free Report) .
Broad market sentiments have turned extremely bullish following the Fed’s dovish tone this month, which pushed the three benchmarks to new 52-week highs on several occasions. In fact, the Dow Jones touched a historic high while the other two indices — the S&P 500 and the Nasdaq Composite Index — reached new 2023 highs (read: Dow Jones ETFs at Record High: More Rally Expected in 2024?).
In the latest meeting, Federal Reserve Chair Jerome Powell hinted at a major policy shift as inflation is easing and the economy is holding up better. The central bank kept interest rates steady for the third time and penciled in three rate cuts of 75 bps for 2024. Lower interest rates generally lead to reduced borrowing costs, which can stimulate economic growth.
Recent indicators suggest that economic activity has been expanding at a moderate pace, buoyed by robust consumer spending, strong job gains and a low unemployment rate.
ETFs in Focus
Let’s dig into the details of the abovementioned ETFs:
Global X Blockchain ETF (BKCH - Free Report) – Up 122.6%
Bitcoin, the world's largest cryptocurrency, surged to a 12-month high of $45,000 in early December. The milestone came on the back of broad enthusiasm about U.S. interest rate cuts and the imminent regulatory approval for Bitcoin ETFs. Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration. Global X Blockchain ETF holds 25 stocks in its basket, with nearly double-digit allocation to the four top firms.
Global X Blockchain ETF has gathered $139.8 million in its asset base and trades in an average daily volume of 124,000 shares. It charges 50 bps in annual fees.
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 29%
The U.S. housing sector performed well in the fourth quarter as a decline in mortgage rates prompted an increase in prospective buyers, leading to an uptick in sales. Mortgage rates fell below 7% for the first time since August last week and are hovering at the lowest level since July, reigniting some life in the housing market. 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: Homebuilder ETFs 2024 Prospects Appear Bright).
With AUM of $2.5 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #3 (Hold).
SPDR S&P Regional Banking ETF (KRE - Free Report)
Regional bank indices erased all the losses made this year and have recovered from one of its most challenging years since the 2008 financial crisis. SPDR S&P Regional Banking ETF provides exposure to the regional banks segment by tracking the S&P Regional Banks Select Industry Index. It holds 140 stocks in its basket, with each accounting for no more than 4.2% of the assets (read: 4 Reasons Why Bank ETFs Can Rebound in 2024).
SPDR S&P Regional Banking ETF has AUM of $4 billion and charges 35 bps in annual fees. It trades in an average daily volume of 18 million shares and has a Zacks Rank #4 (Sell).
Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) – Up 28.3%
Americans are feeling more confident about the economy than they did over the past few months. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Rising consumer sentiment bodes well for household spending in the coming months. It has a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending.
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 40 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 $51.2 million in its assets base and charges 60 bps in annual fees. It trades in a volume of around 10,000 shares a day on average.
Amplify Online Retail ETF (IBUY - Free Report) – Up 24.1%
Retail ETFs are getting a boost from solid holiday shopping trends. Amplify Online Retail ETF offers global exposure to companies with significant revenues from the online retail business, traditional online retail, online travel, online marketplace, and omnichannel retail by tracking the EQM Online Retail Index. IBUY holds 72 stocks in its basket, with none accounting for more than 5% of assets. Amplify Online Retail ETF has the largest allocation in online retail at 39% and online marketplace at 38%.
Amplify Online Retail ETF has attracted $193.2 million in its asset base and charges 65 bps in annual fees. IBUY trades in an average daily volume of 26,000 shares.