With trade optimism acting as the biggest tailwind, the U.S. stock market extended its strong run to start the second half. The trade truce between the United States and China once again sent the S&P 500 and Dow Jones to a new all-time high, overcoming the weak factory data in United Kingdom, the Eurozone and China.
The White House agreed to hold off additional tariffs of 25% on $300 billion of Chinese imports that raised investors’ risk appetite. Trump also eased restrictions on American companies from selling products to Huawei, a giant telecommunications company from China. Meanwhile, China agreed to resume broad purchases of American farm products and other goods. Technology stocks were at the forefront of the market rally, given their higher exposure to Chinese revenues (read: Best & Worst Zones of 1H19 and Their ETFs). Meanwhile, energy stocks also supported the broad market ascent driven by higher oil price. The Organization of the Petroleum Exporting Countries (OPEC) has agreed to extend oil supply cuts until March 2020. Russia also joined Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, until December 2019 or March 2020. VIDEO
Further, the hopes of easy money policies by the Federal Reserve as well as waves of mergers & acquisitions will continue to drive the stocks higher.
While there are several options to play on the bullish trends, we present five top-ranked ETFs that outperformed the market in the first half and will continue to do so given their solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). SPDR S&P Semiconductor ETF XSD This fund targets semiconductor segment of the broad technology sector. It tracks the S&P Semiconductor Select Industry Index, holding 35 stocks in its portfolio. It is widely spread across a number of securities with each holding less than 3.5% share. The fund has AUM of $291.2 million and charges 35 bps in fees per year. It trades in average daily volume of 116,000 shares and has gained 34.6% so far this year. XSD carries a Zacks ETF Rank #2 with a High risk outlook. Invesco DWA Technology Momentum ETF PTF This fund follows the Dorsey Wright Technology Technical Leaders Index and provides exposure to technology companies that are showing relative strength (momentum). Holding 39 stocks in the basket, the product is widely diversified across components with each accounting for less than 7.5% of the assets. It has AUM of $211.6 million and charges 60 bps in annual fees. It trades in average daily volume of 23,000 shares and has risen 39.7% in the same time frame. PTF has a Zacks ETF Rank #2 with a High risk outlook (read: 5 Sector ETFs That Beat the Market in the First Half). Invesco DWA Industrials Momentum ETF PRN This fund provides exposure to 40 companies by tracking the Dorsey Wright Industrials Technical Leaders Index. It is well balanced across each security with none accounting for more than 4.6% share in the basket. In terms of industrial exposure, aerospace and defense, IT services, machinery and building products make up the top four. The fund has amassed $126.3 million in its asset base and charges 60 bps in annual fees. It trades in average daily volume of 4,000 shares and has a Zacks ETF Rank #2 with a Medium risk outlook. PRN is up 31.9% so far this year. Consumer Discretionary Select Sector SPDR Fund XLY This is the largest and the most popular product in the consumer discretionary space with AUM of $13.8 billion and average daily volume of around 4.8 million shares. It tracks the Consumer Discretionary Select Sector Index and holds 63 securities with higher concentration on the top firm – Amazon ( AMZN Quick Quote AMZN - Free Report) – at 23.1%. Other firms make up for a nice mix with each holding no more than 10.3% of the assets. From a sector look, Internet & direct marketing retail takes the top spot with 28.9% of the assets, followed by specialty retail (25.4%), and hotels restaurants & leisure (21.3%). The fund charges 13 bps in fees per year and has gained 22.3% so far this year. It has a Zacks ETF Rank #2 with a Medium risk outlook. Vanguard Growth ETF VUG This ETF provides exposure to the growth corner of the large cap segment by tracking the CRSP US Large Cap Growth Index. It holds 301 stocks in its basket with none accounting for more than 7.8% share. Technology and consumer services are the top two sectors with 33.8% and 20.2% share, respectively. The fund has AUM of $40.8 billion and average daily volume of nearly 858,000 shares. It charges 4 bps in fees per year and has returned about 23.5% so far this year. VUG has a Zacks ETF Rank #1 with a Medium risk outlook (read: All Eyes on the G-20 Summit: ETFs to Gain). Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>