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5 American ETFs Enjoying Independence - ETF News And Commentary

Sweta Killa

A marked growth in the U.S. economy has increased the confidence in its people. Yet the U.S. stock market is caught in a bull-bear tug of war this year. This is especially true as the S&P 500 recorded its worst performance in five years, gaining just 0.2% in the first half. Meanwhile, Dow Jones shed over 1% in the same time period (read: Dow Jones ETF Caught in a Bull 'n' Bear Tug-of-War).

A massive decline thanks solely to the Greece crisis spoilt the market mood in the final days of the first half. The debt drama in Greece climaxed after the deal talk collapsed last weekend, forcing prime minister Alexis Tsipras to close the country’s banks and impose capital controls. Further, rounds of downbeat economic data, strong dollar, global economic slowdown concerns, and the prospect of higher interest rates kept the stock prices at check.

Yet in such a sluggish backdrop, some specific zones like small caps, health care, technology and many others shone. The financial sector too is pinning all hopes on the likely interest rates hike later this year. In fact, the tech heavy Nasdaq Composite Index and the small cap Russell 2000 Index have been on a tear, having returned respectively 5.3% and 4.1%.

Nasdaq has been blessed this year. It crossed the 5,000 milestone for the first time in early March since the 2000 dot-com bubble and touched multiple highs at regular intervals. Robust performances were driven by growing demand for novel and advanced technologies, and better job prospects. Economically sensitive sectors like technology generally pick up in an expanding economic cycle and most of the tech companies are sitting on a huge pile of cash, which ensures their strength in the rising rate environment (read: 3 Tech-Inspired ETFs to Ride the Nasdaq Bull).

On the other hand, small caps ensure higher returns when the American economy is arguably leading the way. These pint-sized stocks are closely tied to the U.S. economy and generate most of their revenues from the domestic market, making them safer bets than their large and mid cap counterparts during a global turmoil. Due to their less international exposure, these stocks remained relatively unscathed by the strong dollar and Grexit fears.

Given this, we have highlighted five star-spangled ETFs with handsome returns of at least 10% in the first six months of 2015. These funds focus exclusively on American equities and could definitely be worth a look for investors seeking a domestic tilt to their portfolio following the Fourth of July Holiday. Also, these are free from external threats, and move independently from the major indices:

ALPS Medical Breakthroughs ETF (SBIO)

This fund targets companies with one or more drugs in Phase II or Phase III FDA clinical trials by tracking the Poliwogg Medical Breakthroughs Index. It provides a well spread out exposure to 82 stocks in its basket with none holding more than 4.50% share. SBIO is a small cap centric fund, having amassed $124.7 million in its asset base since its debut six months ago. The product charges 50 bps in fees per year from investors and trades in average daily volume of around 78,000 shares.

It has delivered excellent returns of about 38% in the first half driven by its dual nature – small cap exposure and non-cyclical sector. Aging population, Obamacare, an endless hunt for new drugs, merger mania and cost cutting efforts added to the further strength (read: 5 Healthy Stocks in the Top Biotech ETF).

Barclays Return on Disability ETN (RODI)

This product is also the new entrant in the space, having debuted last September. It provides exposure to the companies that have acted to attract and serve people with disabilities and their friends and family as customers and employees. The fund follows the Return on Disability US LargeCap ETN Total Return USD Index, which measures the 100 largest companies that are outperforming in the disability market.

The note charges 45 bps in annual fees from investors and trades in a meager volume of under 1,000 shares. The ETN was up over 26% in the same timeframe.

ARK Web x.0 ETF (ARKW)

This is an actively managed fund focusing on companies that are expected to benefit from the shift of technology infrastructure from hardware and software to cloud enabling mobile and local services. These companies will primarily be either developers or users in fields such as cloud computing, wearable technology, big data, cryptocurrencies, social media, services and data mining, Internet of Things and digital education (read: 3 New, Cutting Edge ETFs Shooting Higher).
The fund holds 45 stocks in its basket with a tilt toward the top firm – Athenahealth (ATHN) – at 7% while other firms hold less than 5% share. It has amassed $11.4 million in its asset base within less than a year while sees average daily volume of around 2,000 shares. Expense ratio came in at 0.95%. The fund has added over 12% in the first six months of this year.

Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG)

This fund targets the small cap U.S. market and follows the S&P SmallCap 600 Pure Growth Index. Holding 133 securities in its basket, it is well spread out across components with each holding less than 2.2%. Health care, financials, consumer discretionary, information technology, and industrials are top five sectors with double-digit allocation each (read: 3 Small-Cap Growth ETFs to Buy for Q3).

The fund has amassed $182.8 million in its asset base while trades in light volume of about 18,000 shares a day on average. It charges 35 bps in fees per year from investors and gained nearly 12% in the same time period.

PowerShares KBW Regional Banking Portfolio (KBWR)

This fund offers exposure to the regional banking corner of the broad financial market. It tracks the KBW Regional Banking Index and holds 50 stocks in its basket. The product is widely diversified across components with none accounting more than 4.01% share. It is a small cap centric fund as these account for 79% of the portfolio while the rest goes to mid caps (read: Regional Bank ETFs to Gain from Steepening Yield Curve).

The ETF is often overlooked by investors as depicted by its AUM of $41.5 million and average daily volume of under 6,000 shares. It charges 35 bps in annual fees and added nearly 11% in the first half of 2015.  

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ALPS-MED BRKTH (SBIO): ETF Research Reports
BARCLY-RTRN DIS (RODI): ETF Research Reports
ARK- WEB XO ETF (ARKW): ETF Research Reports
GUGG-SP 600 PG (RZG): ETF Research Reports
PWRSH-KBW RBP (KBWR): ETF Research Reports
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