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4 Best-Performing Sector ETFs of February

Sweta Killa

Amid global slowdown concerns, the market bulls continued their strong run in February on progress in the U.S.-China trade deal. In the latest sign of progress in bilateral trade talks, Donald Trump postponed the date for boosting tariffs on Chinese imports (read: Trump Postpones Tariff Deadline: 5 Hot China ETFs Set to Rally).

The Federal Reserve also played an important role in driving market sentiments. The central bank said that it will be patient in raising rates, citing mounting risks to the U.S. economy, including slowdown in Chinese and European economies, and waning stimulus from 2018 tax cuts.

Thanks to these twin tailwinds, the Dow Jones broke 26,000 for the first time since Nov 9 this week and the S&P 500 rose to the highest closing level since Nov 8. The S&P 500 has rallied 19% from the December low, and is now 5% away from its all-time high, while the Dow Jones is enjoying its strongest rally in 24 years by moving up for the ninth consecutive week. Meanwhile, the tech-heavy Nasdaq also notched its ninth consecutive week of gains, marking its longest winning streak since May 2009 (read: Top-Ranked ETF Winners in Dow's Longest Rally in 24 Years).

While the rally has been broad-based, we have highlighted four sectors ETFs that have gained double-digits in February and could be better plays in the months ahead should the trends prevail.  

iShares North American Tech-Multimedia Networking ETF IGN

The technology sector, which was beaten down badly in fourth quarter last year, staged a solid comeback on signs of progress in the U.S.-China trade deal. A slew of stronger-than-expected earnings results by major technology firms also renewed investors’ sentiment. While most of the ETFs are trending higher in February, IGN is leading the way, climbing 12.6%. This ETF provides exposure to telecom equipment, data networking, and wireless equipment companies by tracking the S&P North American Technology-Multimedia Networking Index. It holds 21 securities in its basket with each accounting for less than 9.3% share. The product has accumulated $97.5 million in its asset base while seeing a lower volume of around 23,000 shares a day. Expense ratio comes in at 0.47%. The fund carries a Zacks ETF Rank #2 (Buy) with a High risk outlook.

Invesco WilderHill Clean Energy ETF PBW

The clean energy space has gained momentum on the “Green New Deal,” which is a set of proposed economic stimulus programs in the United States that aim to address the twin crisis of climate change and inequality. PBW product provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds about 39 stocks in its basket with none holding more than 5% of the total assets. The fund has AUM of $121.6 million in its asset base and sees a good volume of nearly 17,000 shares a day. Expense ratio comes in at 0.70%. The ETF has gained 11.7% in February (read: TTop Performing ETF Areas of February).

ARK Genomic Revolution Multi-Sector ETF ARKG

The biotech sector has been on the mend after last year’s slump amid ongoing industry consolidation, attractive valuations and a strong broad market. In particular, the surge in demand for artificial intelligence in the advancement of diagnoses and treatment across the health care spectrum has been driving this ETF higher. This is an actively managed ETF focusing on companies that are expected to benefit from extension and enhancement of the quality of human and other life by incorporating technological and scientific developments, improvements and advancements in genomics into their business. The fund holds 33 stocks in its basket with none holding more than 11% share and has 0.75% in expense ratio. It has accumulated $331.3 million in its asset base and trades in average daily volume of 153,000 shares. ARKG is up 11.7% this month (read: Biotech ETFs Jump on Roche-Spark Deal).

VanEck Vectors Rare Earth/Strategic Metals ETF REMX

Metals, minerals and mining corner of the basic material sector are winners in February. U.S.-China trade deal talks instilled optimism in the world’s second-largest economy leading to speculation for higher demand for these products. In particular, REMX has outperformed, gaining 10.8%. It offers exposure to companies engaged in producing, refining, and recycling of rare earth and strategic metals and minerals. The ETF follows the MVIS Global Rare Earth/Strategic Metals Index, charging investors 61 bps in annual fees. With AUM of $136 million, the fund holds 20 stocks in its basket with each security accounting for less than 8% of the assets. It trades in good volume of 76,000 shares a day on average.

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