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Top Sector ETFs of 1H

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Now that we are about to draw the curtain on the first half of 2017, a flashback of these six months sounds like a good idea. The start of the year was buoyant with Trump taking the presidential chair in the U.S. and the broader market continuing to cheer his pro-growth promises. The behavior of the oil patch was also decent with the OPEC output cut deal.

However, risk-off sentiments showed up to finish the first half thanks to Trump’s policy uncertainty on political disagreement, an oil price slide on rising U.S. crude and overvaluation concerns.

All these developments led the Dow Jones Industrial Average-based (DIA - Free Report) to a 9.7% YTD gain, the Nasdaq 100-based (QQQ - Free Report) to a 18.8% YTD advancement and the S&P 500-based (SPY - Free Report) to about 9.9% YTD returns (as of June 28, 2017).

Needless to say, there were some sectors that offered a stellar show in the first half. Below we highlight three sectors that outperformed and their top-performing ETFs.


The space has been red hot this year with the biggest tech ETF Technology Select Sector SPDR Fund (XLK - Free Report) returning over 16% on a year-to-date basis. The technology sector is said to be a cyclical one and performs well in a growing economy. Investors should note that the earnings picture of the technology sector has lately been reassuring (read: Is the Tech Rout Overstated? Buy 3 Stocks & ETFs on the Dip).

Analysts like Goldman Sachs stated that Facebook (FB - Free Report) , Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Google-Alphabet (GOOGL - Free Report) or the FAAMG stocks have lower valuations and better cash balances. Canaccord expects FANGs to continue capitalizing on “digital advertising, digital video consumption, e-commerce and cloud services.”

All these factors made the sector a winner in 1H17. And the winning ETFs were ARK Innovation ETF ARKK (up 48.6%), PureFunds Video Game Tech ETF GAMR (up 38.3%) and Global X Social Media ETF (SOCL - Free Report) (up 32.9%).

Biotech & Healthcare

This segment also caught investors’ attention in the first half. The pharma and biotech industry has been hit hard in recent times on the price gouging issue. The issue was first raised by Hillary Clinton in September 2015 and since then the space has been battered by increasing political and media focus on high prices for some drugs. Even President Trump occasionally bothered the sector on this issue.

However, the stringent approach is easing, allowing investors to enter the space all over again. Also, President Trump’s pledges to reduce FDA regulations and removal of taxes and fees on pharmaceutical and medical-device manufacturers may prove to be a boon to the space (read: 5 Reasons Why Biotech ETFs are Soaring).

Successful clinical trials for new drugs has acted as another catalyst to the space. Plus, mergers and acquisitions have worked wonders for biotech companies. These also gave funds like BioShares Biotechnology Clinical Trials BBC (up 34.6%), SPDR S&P Biotech ETF XBI (up 34.1%) and PowerShares DWA Healthcare Momentum ETF PTH (up 32%) a boost in the first half.


The housing sector has been in good shape lately. If we go by the latest data points, new home sales rebounded in May after a downbeat April. Existing home sales for the month of May also increased to the third highest monthly level in a decade.  Favorable mortgage rates and a solid labor market helped the sector to put up a decent show. iShares US Home Construction (ITB - Free Report) (up 24%) and SPDR S&P Homebuilders ETF (XHB - Free Report) (up 14.5%) were the two beneficiaries of the pickup in homebuilding activity (read: Surprise ETF Winners Post Fed Hike).

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