Since the start of the fourth quarter, Wall Street is witnessing new highs on the back of a better-than-expected earnings season, easing policies and trade deal optimism.
Total earnings for 403 S&P members that reported Q3 results are down 1.7% on 4% higher revenues, with 73% beating EPS estimates and 58.1% beating on revenues. While earnings growth is less than what this group of companies witnessed in recent periods, revenue growth is only modestly tracking lower. The proportion of these companies beating EPS and revenue estimates is in the historical range.
Major central banks across the globe are taking steps to prop up slowing economic growth that have eased global recession concerns and in turn lifted investors’ confidence. The Fed has slashed interest rates three times so far this year and the European Central Bank also cut interest rates in a package of easing measures (read: Value ETFs Trumping Momentum ETFs: Here's Why).
In the latest trade development, the United States agreed to remove tariffs in phases and Beijing is also considering removing restrictions on poultry imports. Per Bloomberg News, the first agreement between the superpowers will be signed in the next few weeks.
While there have been winners in many corners of the space, we highlight nine ETFs from different zones that have outperformed so far this year. These are expected to continue outperforming, provided the fundamentals remain intact.
SPDR S&P Semiconductor ETF (XSD - Free Report) – Up 52.7%
This ETF, which offers exposure to the semiconductor corner of the broad tech sector, has emerged as an undisputed winner this year on trade deal optimism. It tracks the S&P Semiconductor Select Industry Index, holding 35 stocks in its portfolio. The fund has AUM of $407.4 million and charges 35 bps in fees per year. It trades in average daily volume of 116,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: S&P 500 at Record High: 6 ETF Winners of Last Week).
Invesco Solar ETF (TAN - Free Report) – Up 49.9%
This ETF, which offers global exposure to 22 solar stocks, has been rising on strong solar installation, a rebound in global solar demand, California’s push to make solar panels and competitive pricing. American firms dominate the fund’s portfolio with nearly 44.5% share, followed by China (25.7%) and Germany (9.1%). The product has amassed $408.9 million in its asset base and trades in average daily volume of 240,000 shares. It charges investors 70 bps in fees per year and has a Zacks ETF Rank #2 with a High risk outlook.
iShares U.S. Home Construction ETF (ITB - Free Report) - Up 46.1%
The U.S. homebuilding market has been buoyant on lower mortgage rates and decelerating home price growth, which have encouraged people to buy more homes. ITB provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $1.2 billion, it holds a basket of 45 stocks and charges 42 bps in annual fees. It trades in a hefty volume of around 2.1 million shares per day on average and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Why Homebuilder ETFs Are Rising).
Invesco WilderHill Clean Energy ETF (PBW - Free Report) – Up 42.3%
This product, powered by a solar surge, provides exposure to 40 U.S. companies engaged in the business of advancement of cleaner energy and conservation. It has AUM of $183.4 million and expense ratio of 0.70%. The ETF trades in average daily volume of 30,000 shares.
Global X Internet of Things ETF (SNSR - Free Report) – Up 40.6%
This fund follows the Indxx Global Internet of Things Thematic Index and provides exposure to companies that stand to benefit from the broader adoption of IoT. Holding 51 stocks, it has accumulated $109.6 million in AUM and sees average daily volume of around 26,000 shares. Expense ratio comes in at 0.68%.
The Defiance Quantum ETF (QTUM - Free Report) – Up 40.1%
This ETF offers investors liquid, transparent and low-cost access to companies developing and applying Quantum Computing and other transformative computing technologies. It follows the BlueStar Quantum Computing and Machine Learning Index (BQTUM), which measures the performance of approximately 60 globally-listed stocks across all market capitalizations. QTUM has expense ratio of 0.40% and trades in average daily volume of 2,000 shares. It has accumulated $8.3 million in its asset base (read: Play This ETF & Dump Stocks Unfit for Technological Disruption).
Invesco Aerospace & Defense ETF (PPA - Free Report) — Up 39.4%
It offers exposure to 48 companies involved in the development, manufacturing, operations and support of US defense, homeland security and aerospace operations. It tracks the SPADE Defense Index, charging 59 bps in annual fees from investors. The fund has so far managed assets of $1.1 billion and trades in average daily volume of 76,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
SPDR S&P Kensho Final Frontiers ETF (ROKT - Free Report) – Up 36.2%
This ETF follows the S&P Kensho Final Frontiers Index, which utilizes AI and a quantitative weighting methodology to capture companies, which offer products and services that are driving innovation behind the exploration of the final frontiers, including the areas of outer space and the deep sea. It holds a basket of 27 stocks and charges 45 bps in annual fees. The product has accumulated AUM of $4.6 million and trades in volume of 1,000 shares a day on average. It has a Zacks ETF Rank #2 (read: Space ETFs: Explore the Final Frontier).
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU - Free Report) : Up 35.8%
This fund provides investors with access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means. It tracks the U.S. Global Go Gold and Precious Metal Miners Index, holding 29 stocks in its basket. Canada takes the lion’s share at 59.4%, followed by the United States (13.4%) and Australia (11.6%). It has amassed $36.4 million in its asset base and charges 60 bps in fees per year. Volume is light at nearly 49,000 shares.
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