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4 Sector ETFs Braved Trade Turmoil in Q2

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As we are drawing close to the trade-tension-wreaked second quarter of 2018, a look at winning sector ETFs makes sense. Not only trade, the quarter has seen hawkish central bank activities, political turmoil in Europe and acute emerging market selloffs.

So, it would be intriguing to find out which sector ETFs have braved all issues and beat key equity gauges like S&P 500 (up 4.2% in the last three months), Dow Jones (up 1.8%) and the Nasdaq Composite (up 7.9%). Below we highlight those sector ETFs in detail.


The energy sector has hit headlines this quarter for various reasons. First, there has been an oil price rally as evident from a 4% one-month rise in United States Oil (USO - Free Report) . And then, OPEC members cut a deal to boost output by a lower-than-expected margin (read: Winning and Losing Sectors ETFs Post OPEC Decision).

“People probably feared 1.5 million barrels a day.” But Saudi Arabia said the renewed deal will result in a nominal output rise of around 1 million barrels per day (bpd) or 1% of global supply while as per Iraq, the real increase would be a little less at around 770,000 bpd as many countries will strive to attain full quotas.

This came as a pleasant surprise for the space, sending oil higher and benefitting ETFs like Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) (up 27.7%), Invesco S&P SmallCap Energy ETF (PSCE - Free Report) (up 24.6%) and First Trust Nasdaq Oil & Gas ETF (FTXN - Free Report) (up 22.2%) in the last three months (as of Jun 26, 2018).

Consumer Staples

The Consumer Staples sector is less ruffled by economic fluctuations due to its non-cyclical nature. And, small-cap stocks are more domestically-focused and thus not exposed to geopolitical risks and negative currency translations. Both criteria enabled Invesco S&P Small-Cap Consumer Staples ETF(PSCC - Free Report) to cash in on an improving U.S. economy while dodging tensions stemming from trade war and a rising dollar. The fund was up 16.9% in the past three months.


This area is known for strong yield and performs well with economic growth. So, as the Fed turned hawkish in Q2 encouraged by solid U.S. growth momentum (especially when compared with other developed economies) and bond yields jumped, some REIT ETFs rallied. 

Investors should note that Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) yields exceptionally well at 7.27% annually, probably which is why investors tapped the fund in Q2. The fund gained 17.2% in the last three months. Also, NuShares Short-Term REIT ETF (NURE - Free Report) (yields 3.3% annually and up 14.2%) was a notable winner.

Health Care

The sector has been enjoying a host of tailwinds. President Trump’s announcement of the drug plans in May, which were in the best interest of pharma companies, favored the space. The U.S. healthcare supply chain is consolidating fast, with deals across the industry covering insurers, pharmacies to drug distributors. Also, increasing demand from emerging markets is helping the sector (read: Play the Best Sector of Summer With These ETFs & Stocks). 

Invesco S&P SmallCap Health Care ETF (PSCH - Free Report) (up 17.8% in the last one month), iShares US Healthcare Providers ETF (IHF - Free Report) (up 14.7%) and SPDR S&P Health Care Services ETF (XHS - Free Report) (up 15.5%) were winners in the space. 

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