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5 ETF Areas Up At Least 45% in 2019

Sanghamitra Saha

We are fast approaching the end of 2019 and it’s been a stellar year so far for the Wall Street. The S&P 500 hit a record high of 3,200 for the first time when just two weeks are left in the calendar year. The index is up now 27.7% (read: Wall Street to See Best Year Since 2013: Will ETF Rally Last?).

Key events of this year that drove the markets were three Fed rate cuts, massive global policy easing in the second half, announcement of the phase-one U.S.-China trade deal after almost two-years of wrangling, a deal on USMCA and the easing of Brexit uncertainty.

Against this backdrop, below we highlight a few ETF areas that have been the winners in 2019.

Clean Energy

Invesco Solar ETF TAN, Invesco WilderHill Clean Energy ETF PBW and ALPS Clean Energy ETF ACES added about 63.8%, 57.2% and 50% this year. Clean energy ETFs have ridden higher this year despite President Trump’s inclination toward booting fossil-fuel energy. Going by an International Energy Agency (IEA) report, worldwide supplies of renewable electricity are expected to expand 50% in the next five years (read: Is TAN ETF a Solid Pick for 2020?).

A transition toward 100% clean electricity is in process in the United States. China is a major player building a green environment. Almost half of the European Union’s (EU) 28 member states have already reached or are about to touch their 2020 renewable energy targets. All these explain a rally in clean energy ETFs.

Semiconductor

The phase-one U.S.-China trade deal, a 5G boom and rising consumer spending on technology have propelled the sector.  Expectations of higher smartphone sales have given an added boost. IDC expects the smartphone market to record 1.5% growth in 2020, after three straight years of global contraction. Investors should note that not only semiconductor, the entire tech space has rallied this year. In fact, technology is on its way to record the best year since 2009.

VanEck Vectors Semiconductor ETF SMH (up 61.9%), SPDR S&P Semiconductor ETF XSD (up 61.4%), iShares PHLX Semiconductor ETF SOXX (up 60.3%) and First Trust Nasdaq Semiconductor ETF FTXL (up 59.2%) have proven to be the clear winners.

Biotech

The Santa rally for the biotech space started long before December, thanks to loads of mergers and acquisitions, positive drug data and FDA approvals. Trade tensions are not likely to have a major impact on biotech. Investors can thus buy Virtus LifeSci Biotech Clinical Trials ETF BBC (up 58.5%) and ALPS Medical Breakthroughs ETF SBIO (up 50.8%) deserve special mention.

Palladium

Palladium prices have been on a tear for two years. Pure-play Palladium ETF Aberdeen Standard Physical Palladium Shares ETF PALL added about 51.7% in 2019.  The rally has mainly been backed by growing global demand and stagnating supply. The Palladium market is on its way to an eighth consecutive year of deficit in 2019, according to specialty-chemicals company Johnson Matthey, as quoted MarketWatch.  

Amid muted supplies, demand has been on the rise on increased consumption of gasoline engines. Stringent emission control norms have been fueling demand for Palladium-using petrol-fueled cars as governments around the world look to fight climate change (read: Will Palladium ETF's 2019 Rally Continue Next Year?).

Home Building

Low mortgage rates have worked wonders for housing stocks this year. With the Fed being dovish, this rate-sensitive sector has every reason to outperform. Plus, solid corporate earnings and lack of direct correlation with the U.S.-China trade scenario have benefited the sector. iShares U.S. Home Construction ETF ITB has added about 48.5% this year(read: After a Stellar 2019, Housing ETFs Set for a Sturdy 2020).

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iShares U.S. Home Construction ETF (ITB): ETF Research Reports
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Aberdeen Standard Physical Palladium Shares ETF (PALL): ETF Research Reports
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
 
Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
ALPS Medical Breakthroughs ETF (SBIO): ETF Research Reports
 
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
 
Virtus LifeSci Biotech Clinical Trials ETF (BBC): ETF Research Reports
 
ALPS Clean Energy ETF (ACES): ETF Research Reports
 
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