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4 Top ETF Areas of Q4

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The final quarter of 2017 is drawing to an end. The journey has been smooth so far, thanks to the Trump trade and tax reform talks. Also, the quarter is known for Santa Rally and holiday shopping season. And even though the Fed has enacted its final rate hike of the year earlier this month, the move was already baked in at the current level.

Among the key ETFs, SPDR S&P 500 ETF (SPY - Free Report) has gained 7% in the fourth quarter (as of Dec 22, 2017), SPDR Dow Jones Industrial Average ETF DIA surged about 11.1% in the fourth quarter (as of Dec 22, 2017) and PowerShares QQQ ETF (QQQ - Free Report) rose around 8.4% in this quarter.

Against this backdrop, we highlight four ETF areas that offered solid returns in the fourth quarter.

Metals

A few metal prices were on a tear in the fourth quarter. Among those, were iPath Bloomberg Lead SubTR ETN (up 31.8%), iPath Pure Beta Industrial Metals ETN (up 20.2%) and iPath Bloomberg Nickel SubTR ETN (up 17.2%).

India Small-Cap

India ETFs registered slight gains in the quarter, thanks to pro-growth prime minister Narendra Modi’s State election victory. Modi secured key election wins in two states, Gujarat and Himachal Pradesh, on Dec 18.

India’s GDP grew 6.3% annually in the July-September quarter of 2017 compared with a three-year low of 5.7% in the previous quarter. Moody’s had increased India’s sovereign rating for the first time in 14 years (read: India ETFs in Focus on Modi's State Election Victory).

India-focused offshore funds and Exchange Traded Funds saw net inflows of $565 million in November and led the total to touch around $6.5 billion in 2017, per an article published in Economic Times.  

Since small-caps are domestically-focused, the above-mentioned factors bode well for small-cap stocks and related ETFs. Columbia India Small Cap ETF (up 19.7%) and VanEck Vectors India Small-Cap ETF (17.9%) are two of the beneficiary funds.

Home Construction

The NAHB/Wells Fargo Housing Market Index increased five points in December to 74, marking the third successive rise, per analysts from Wells Fargo. December registered the biggest monthly expansion since March (read: Top Sector ETFs of 2017).

According to these analysts, the index has been hovering around its highest level since July 1999, indicating solid demand. Home sales have also been in great shape. iShares U.S. Home Construction ETF (ITB - Free Report) has gained about 18.8% so far this quarter (as of Dec 22, 2017) (read: Housing ETFs to Buy in 2018).

Solar

Rising demand for solar power, huge levels of panel installation, global warming issues and efficient alternative energy application have given a boost to clean energy ETFs like Guggenheim Solar ETF (TAN - Free Report) . The fund is up 16.8% so far this quarter (as of Dec 22).

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