Best and Worst Sector ETFs for December
The month of December has been one of the strongest periods of the year for equities, and some areas of market and sector-related exchange traded funds may stand out during the Santa Claus rally.
Over the past month, the SPDR S&P 500 ETF (SPY) , iShares Core S&P 500 ETF (IVV) and Vanguard 500 Index (VOO) have gained 0.4%. Year-to-date, the S&P 500 ETFs rose 3.0%.
After a weak November, the S&P 500 may enjoy a better run this month. According to Kensho data, over the past 25 years, the S&P 500 has been positive 80% of the time for an average gain of 1.78%, reports Bob Pisani for CNBC.
According to the Stock Trader’s Almanac, since 1950, December has been the best month for the S&P 500, with an average gain of 1.7%.
Looking at a sector-by-sector basis, industrials have been the best performing area in December for the past 25 years, showing a positive return 84% of the time for an average 2.93% gain.
For ETF investors, that could be a good sign for industrial sector-specific funds, including the Industrial Select Sector SPDR (XLI) , Vanguard Industrials ETF (VIS) , iShares U.S. Industrials ETF (IYJ) and Fidelity MSCI Industrials Index ETF (FIDU) .
Additionally, utilities have been the second best sector in December with a 2.74% gain. However, utility-sector ETFs like the Utilities Select Sector SPDR (XLU) , Vanguard Utilities ETF (VPU) and iShares U.S. Utilities ETF (IDU) have weakened 2.0% over the past month ahead of a mid-December Federal Open Market Committee meeting where the Fed could announce its first interest rate hike in almost a decade.
Surprisingly, the growth-oriented tech sector has been the weakest link in the stock market over the December month. Technology stocks only posted a positive return 52% of the time for an average 0.6% gain. Consequently, investors who have exposure to tech sector ETFs, like the Technology Select Sector SPDR (XLK) , iShares U.S. Technology ETF (IYW) and Vanguard Information Technology ETF (VGT) , may want to be vigilant for any short-term turns.
For more information on the market sectors, visit our sector ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
