5 ETF Winners this Earnings Season

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This earnings season has been pretty solid with most companies reporting earnings above expectations. In fact, to date, total profits this earnings season are up 1.6% year-over-year while revenues have increased 1.9%.

While the earnings-beat ratio (percentage of companies coming out with positive surprises) of 67% is in line with the previous quarters, the revenue-beat ratio of 52% is certainly better than the last few quarters.

From a sector perspective, financials have been the star performer with a beat ratio of 74.3% for earnings and 62.9% for revenues (read: 3 Bank ETFs Leading the Pack this Earnings Season). On the other hand, technology remains the laggard on the earnings front as 84.6% of the sector’s market cap has reported, and earnings are down -10.9% on +1.8% higher revenues.

Still, even with sluggish tech trading, the remarkable results have sent the market to new levels this earnings season. In fact, a couple of equity ETFs have impressed with their performances.

Below we have highlighted the five top performing U.S. ETFs that have delivered handsome returns over the trailing one month. These five have largely been buoyed by robust earnings results, and have easily led the broad market in the time period (see more in the Zacks ETF Center).

Should these trends continue, these could be the new leaders in the market, and may be worth a closer look by investors seeking new strong sector plays following this earnings season:

PowerShares Nasdaq Internet Portfolio (PNQI)

This fund follows the NASDAQ Internet Index, giving investors exposure to the broad Internet industry. The ETF holds over 80 stocks in its basket with AUM of nearly $98 million while charging 60 bps in fees per year.

The product is concentrated across it top 10 holdings with 59% of total assets and focuses more on large caps. Facebook (FB), priceline.com (PCLN) and Amazon.com (AMZN) occupy the top three positions with a combined 27% share (read: 3 ETFs in Focus on Facebook's Earnings Beat).

From a sector look, more than two-thirds of the assets are allocated to information technology and the rest to consumer discretionary. The ETF gained nearly 11.7% in the trailing four weeks and is up 33.9% in the year-to-date time frame.

PNQI has a Zacks ETF Rank of 3 or ‘Hold’ rating with ‘High’ risk outlook.

SPDR S&P Biotech ETF (XBI)

Another top performing ETF is in the biotechnology corner of the healthcare world. This fund is one of the most popular choices in the biotech space, having accumulated more than a billion dollars in its asset base. The fund tracks the S&P Biotechnology Select Industry Index and holds 56 stocks in its basket while charging 35 bps in annual fees.

The product is widely diversified across each security as no single company makes up more than 2.80% of assets. InterMune (ITMN), Alnylam Pharmaceuticals (ALNY) and Onyx Pharmaceuticals (ONXX) are the top three elements in the basket. Due to the equal-weight nature, XBI is a small cap centric fund as these pint-sized companies account for roughly 60% of the assets.

The fund has added an impressive 8.23% over the past month and over 37% year-to-date (read: 3 Impressive Biotech ETFs Crushing the Market). The ETF has a Zacks ETF Rank of 2 or ‘Buy’ rating with ‘High’ risk outlook.

Columbia Select Large Cap Growth ETF (RWG)

This ETF seeks long-term capital appreciation by investing in large cap securities that Columbia management believes have above-average growth prospects. The fund is relatively unpopular with AUM of just $9.4 million and charges higher fee of 86 bps per year.

In total, the product holds 55 stocks with 93% of total assets allotted to large caps. It is pretty spread across each security as its top 10 holdings account for less than 36% of assets. Michael Kors Holdings (KORS), Gilead Sciences (GILD) and PCLN occupy the top three positions with a combined 12% share in the basket (read: 3 Unknown ETFs that Continue to Crush SPY).

From a sector perspective, information technology takes the top spot with 33.36% share, closely followed by healthcare (21.79%) and consumer discretionary (20.13%). The ETF delivered 9.2% returns over the past month and over 24% in the year-to-date timeframe. RWG has a Zacks ETF Rank of 3 or ‘Hold’ rating with ‘Low’ risk outlook.

First Trust US IPO Index Fund (FPX)

This ETF provides a low-risk and convenient way to profit from the US IPO market resurgence. The product tracks the IPOX-100 U.S. Index, which is a modified value-weighted price index measuring the performance of 100 largest, typically best performing and most liquid U.S. IPOs (read: Profit from the Booming IPO Market with This ETF).

The fund has a nice mix of sectors, with the top four being consumer discretionary, information technology, energy and healthcare. With holdings of 100 securities, the product is skewed towards the top three firms – FB, AbbVi (ABBV) and General Motors (GM) – with a combined 26.45% of assets. While large cap accounts for 60% of total assets, small and mid caps take the remaining portion.

The ETF has managed to attract a modest $105 million in assets so far and charges 60 basis points in annual fees. FPX gained 7.75% over the past four weeks and over 27.3% in the year-to-date timeframe.

iShares U.S. Aerospace & Defense ETF (ITA)

This fund provides exposure to the U.S. aerospace & defense market by tracking the Dow Jones U.S. Select Aerospace & Defense Index. It has amassed $130.7 million in its asset base while charging a fee of 46 bps a year (read: 3 Aerospace & Defense ETFs Defying Gravity).

The ETF holds 35 securities in total with heavy allocation to the top 10 holdings. United Technologies (UTX), Boeing (BA) and Lockheed Martin (LMT) take the top three spots in the basket with a combined share of 23.83%. While the product is tilted towards the large caps with about 46% of the exposure, mid and small caps take up the remaining portion of ITA.

From a sector perspective, aerospace has been the top priority of the fund representing 54.6% of the total assets, followed by defense. In terms of performance, the product has added about 8% over the past month, while it is up over 32% year-to-date.

ITA currently has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a ‘Low’ risk outlook. This suggests that the product will continue to outperform its peers over the next year (read: 2 Top Ranked ETF Picks for the Earnings Season (XLF, ITA)).

 The ETFs can also be summarized in the table below:

 

 

ETF

Sector

AUM (in millions)

1-Month Return (as of Aug 7)

Expense Ratio

 

 

 

 

 

PNQI

Internet

$97.70

11.78%

0.60%

XBI

Biotechnology

$1,012.40

8.23%

0.35%

RWG

Large Cap Growth

$9.40

9.20%

0.86%

FPX

Large Cap Growth

$104.90

7.75%

0.60%

ITA

Aerospace & Defense

$130.70

8.37%

0.46%

 

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