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3 Sector ETFs That Gained Double-Digits in Q1

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January 2018 marked the best start to a year for Wall Street in more than three decades, with a series of record highs. This is primarily thanks to an uptick in economies around the world, strong corporate earnings, booming trade, the new tax legislation, jump in oil prices, and a weak dollar (read: Market at New Highs: Mega Cap ETFs & Stocks On A Roll).

However, the strong gains quickly eroded as we moved into the second month given a host of challenges that led to several selloff. The first round of selling came in early February following the better-than-expected January jobs report that ignited inflation fears and the resultant expectation of faster-than-expected rate hikes. In fact, worries have pushed all the three major indices into correction territory (down 10% from the latest peak).

The list of other woes includes geopolitical tensions, Washington turmoil, Facebook (FB - Free Report) led tech selloff, and global trade war fears. In particular, fears of trade war brewing between the United States and China led the U.S. stock market into a tailspin lately. The steep decline was prompted by Trump’s tariff on steel and aluminum imports, and possible tariffs on up to $60 billion in Chinese imports. But fears seem to have abated with both countries engaging in trade talks.

Given the Trump’s protectionist drama, the major stock indexes notched their best day in more than two years on March 27 just after logging in the worst week in more than two years. Nevertheless, the gains were unable to turn the indices into green for the first quarter. Notably, the Dow Jones is still in correction territory, losing 10.4% from the latest peak while the S&P 500 is down 9% from the all-time high made in late January. Meanwhile, Nasdaq is down 8.2% from the latest peak (read: Wall Street Recoups on Fading Trade Fear: 6 ETF Winners).

Although most sectors are deep in red, there are still a few that have easily survived the market turbulence in the first quarter. Below we have highlighted such sectors ETFs that have gained in double-digits and could be better plays in the months ahead should the trends prevail.

Loncar Cancer Immunotherapy ETF CNCR

The biotech sector got a boost from its non-cyclical nature, which provides a defensive tilt to the portfolio in a turbulent market. Also, a wave of mergers and acquisitions and encouraging trends including faster drug approvals, new products and Trump’s tax reform have added to the strength.  

CNCR tracks the Loncar Cancer Immunotherapy Index and provides exposure to a basket of companies that develop therapies to treat cancer by harnessing the body’s own immune system. It holds 31 stocks with heavy concentration on the top firm at 7.3% while other firms account for no more than 5.7% share. The ETF has amassed $66.5 million in its asset base and trades in a lower average daily volume of around 29,000 shares. The expense ratio comes in at 0.79%. The product has gained 21.7% in the first quarter and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Here's an ETF to Invest in Immunotherapy--the Game Changing Cancer Treatment).

SPDR S&P Internet ETF XWEB

Despite the wild swings witnessed in February and March, the technology sector remained the hot spot for investors given the dual tailwinds of a rising rate scenario and the new tax repatriation policy. The emergence of cutting-edge technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, and artificial intelligence (AI) as well as strong corporate earnings are acting as the key catalysts (read: Top Performing Tech ETFs of 2018).

This product, which targets the Internet corner of the broad tech space turned out to be a winner, climbing 12.3%. It tracks the S&P Internet Select Industry Index and holds 68 stocks in its basket with an equal-weight exposure of around 2%. The fund has accumulated $3.9 million in its asset base and charges 35 bps in fees from investors. It trades in a light volume of under 1,000 shares a day on average and carries a Zacks ETF Rank #3.

Amplify Online Retail ETF IBUY

The retail sector showed upside potential thanks to growing consumer confidence, higher spending as well as growing demand for online shopping. A massive $1.5-trillion tax cut will provide consumers with extra cash that will lead to higher discretionary spending.

IBUY offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 39 stocks that are widely diversified, with each holding not more than 5.7% of assets. It has attracted $281.2 million in its asset base and charges 65 bps in fees per year. The product trades in a moderate volume of 77,000 shares a day and has gained 10.1% in the first quarter (read: 5 Best ETF Charts of Q4 Earnings).

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