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4 ETFs at the Heart of the Market Rebound

Sweta Killa
Comtech (CMTL) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

The stock market has made an impressive comeback, recovering more than half of the losses in the vicious sell-off seen in early February due to rising inflation and fears of higher interest rates, which sent the major U.S. indices to a correction territory.

The Dow Jones and S&P 500 climbed 4.3% each, representing their best weekly performances since 2016 and 2013, respectively. Meanwhile, the Nasdaq jumped 5.3%, notching its biggest one-week gain since 2011. Rounds of positive economic data led to the rebound in stocks (read: 5 Hot Stocks Leading the Dow ETF Rebound).

Data Flows

While core consumer price index increased more than expected in January, a year-over-year increase of 1.8% in inflation was on par with the same period a year ago. Additionally, retail sales dipped 0.3% in January — the lowest level in 11 months, signaling that the economy may not be expanding too quickly. The two data eased inflationary pressure. Further, the housing market seems to be riding on strong momentum this year with new home construction rising to the highest level since October 2016 and building permits at a 10½-year high last month. A gauge of homebuilders' confidence is also near the highest level since 1999.

Consumer sentiment as measured by the initial reading of University of Michigan jumped to the second-highest level since 2004 in February. Investors were also encouraged by the strong fourth-quarter corporate earnings. Total earnings for the 398 S&P 500 members that have reported results are up 14.5% from the same period last year on 9% higher revenues, with 77.9% beating EPS estimates and 75.6% beating revenue estimates.

Rising incomes, growing employment, optimism over the new tax legislation as well as surge in global economic growth that continued to boost consumers’ confidence amid the market turbulence add to the strong outlook (read: Leveraged ETFs to Bet on Market Rebound for Big Gains).

Given this, we have highlighted four ETFs that hit their all-time highs last week. Any of these could be excellent plays for investors seeking to ride on the recovering sentiments at least in the near term.

Amplify Online Retail ETF IBUY

This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 39 stocks that are widely diversified, with each holding no more than 5.03% of assets. It has attracted $221.9 million in its asset base and charges 65 bps in fees per year. The product trades in a moderate volume of 66,000 shares a day and soared to new high of $46.12, representing gain of 12.1% so far this year (read: Holiday Sales At 6-Year High: Best Consumer ETFs & Stocks).

ARK Web x.0 ETF ARKW

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 44 stocks in its basket with none accounting for more than 6.52% share. The ETF has amassed $367.4 million in its asset base and trades in a good average daily volume of around 158,000 shares. The expense ratio comes in at 0.75%. The ETF scaled a fresh high of $51.59, and has gained 11% in the year-to-date time frame.

Global X Social Media Index ETF SOCL

This is a pure play ETF in the global social media space and has amassed $196 million in its asset base. The ETF charges 0.65% in annual fees, and sees moderate trading volumes of roughly 68,000 shares a day. It tracks the Solactive Social Media Total Return Index, holding 32 securities in the basket with double-digit allocation going to Twitter TWTR and Tencent Holdings. In terms of country exposure, United States firms take 47% of the portfolio, closely followed by China (32%), Russia (8%) and South Korea (6%). The fund has gained 13.7% in the year-to-date time frame, hitting a fresh high of $37.94, and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Log In to Social Media ETFs on Twitter's Strength).

ETFMG Prime Cyber Security ETF HACK

The fund offers exposure to companies that are part of the cyber security industry, including the ones that provide cyber security related hardware/software and services. It tracks the ISE Cyber Security Index, holding 44 securities in its basket with none accounting for more than 5.5% of assets. In terms of country exposure, United States firms take the top spot at 74%, followed by Israel (10%), the United Kingdom (9%), Japan (5%), the Netherlands (1%), and South Korea (1%). The fund charges 60 bps in annual fees and sees volume of more than 261,000 shares a day on average. It has amassed $1.2 billion in its asset base. It touched an all-time high of $34.10, and has returned about 7% so far this year.

Bottom Line

The abovementioned ETFs are hitting record highs despite the fact that the S&P 500 and Dow Jones are still below 5% from their latest peak. This suggests that the products have solid momentum to ride out any type of uncertainty in the market.

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