Americans are ready for a plate stuffed with food and cartful shopping as it’s time for Thanksgiving. The celebration of bounty and gratitude is in full swing in the investment world as well. Let’s explore it by screening ETFs that have rewarded investors this year (read: 4 ETFs & Stocks for Meaty Returns in Thanksgiving Week).
How is the Stock Market Faring?
Amid trade uncertainty, Brexit issues and geopolitical tensions, the American stock market has been roaring higher with the three major indices hitting record highs lately. The rally is mainly powered by easing U.S.-China trade worries, stronger-than-expected earnings and easing policies.
United States is expected to sign a phase one trade deal with China anytime soon. Major central banks across the globe are taking steps to prop up slowing economic growth that have eased global recession concerns and in turn lifted investors’ confidence. The Fed has slashed interest rates three times so far this year and the European Central Bank also cut interest rates in a package of easing measures. A slew of mergers and acquisitions is also driving stocks higher.
Notably, the S&P 500 breached the 3,100 level for the first time and the Dow Jones also topped the 28,000 milestone early this month (read: Top & Flop ETFs Halfway Through Q4).
That said, a few corners are easily crushing the broader market in the year-to-date period. Below we have highlighted five ETFs from different zones that have been star performers so far this year and could be better plays in the coming months. These ETFs deserve special thanks and attention going into the New Year too (see: all the Categories ETF here).
VanEck Vectors Semiconductor ETF SMH - Up 53.5%
Semiconductors have been shining and are leading the broader technology sector on trade optimism as chip stocks have a lot of exposure to China. They derive a large portion of their revenues from China since it is the world’s biggest chip market and have supply chains in the country. While all the semiconductor ETFs are rising, SMH is the biggest winner. This fund provides exposure to 25 semiconductor companies by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $1.3 billion and charges 35 bps in annual fees and expenses. The ETF trades in average daily volume of 5.1 million shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 4 ETFs to Invest in Soaring Semiconductor Stocks).
iShares U.S. Home Construction ETF ITB – Up 51.4%
The U.S. homebuilding market has been buoyant on lower mortgage rates and decelerating home price growth. The Fed’s easy monetary policy stance has pushed mortgage rates down and made refinance cheaper, encouraging people to buy more homes. ITB provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $1.2 billion, it holds a basket of 45 stocks and charges 42 bps in annual fees. It trades in a hefty volume of around 2.2 million shares per day on average and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Upbeat Data to Renew Confidence in Homebuilding ETFs).
Invesco Solar ETF TAN – Up 49.8%
This ETF, which offers global exposure to 22 solar stocks, has been rising on strong solar installation, a rebound in global solar demand, California’s push to make solar panels and competitive pricing. American firms dominate the fund’s portfolio with nearly 45.2% share, followed by China (24.5%) and Germany (9.2%). The product has amassed $393.3 million in its asset base and trades in average daily volume of 239,000 shares. It charges investors 70 bps in fees per year and has a Zacks ETF Rank #2 with a High risk outlook.
SPDR S&P Aerospace & Defense ETF XAR – Up 41.5%
Aerospace & defense sector is ripping higher driven by hopes of a U.S.-China trade deal that has led to risk-on trade and improving growth outlook. In addition, rising geopolitical tension have resulted in increased defense spending all over the world. XAR offers equal-weight exposure to 30 companies in the aerospace & defense segment. It follows the S&P Aerospace & Defense Select Industry Index, charging 35 bps in annual fees from investors. The fund has been able to manage $1.8 billion in its asset base, while trading in average daily volume of around 129,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook (read: Why Aerospace & Defense ETFs are Soaring).
ALPS Medical Breakthroughs ETF SBIO – Up 36.9%
Biotech ETFs surged on a string of positive news flow, including trial results, favorable regulatory tidings and deal activities, as well as better-than-expected earnings. While most biotech ETFs have gained, SBIO led the way higher. This fund provides exposure to companies with one or more drugs in Phase II or Phase III FDA clinical trials by tracking S-Network Medical Breakthroughs Index. It holds 76 securities in its basket and charges 50 basis points in fees per year from investors. The product trades in a moderate average daily volume of about 34,000 shares and has AUM of $190.1 million in its asset base. It has a Zacks ETF Rank #3 with a High risk outlook (read: Healthcare Sector Outperforming: 5 Best ETFs & Stocks QTD).
These products have not only built a better portfolio for investors this year but are also bring in diversification benefits by eliminating company-specific risks to a large extent with lower costs. As a result, these are considered praiseworthy in the ETF space.
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SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports
ALPS Medical Breakthroughs ETF (SBIO): ETF Research Reports
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
Invesco Solar ETF (TAN): ETF Research Reports
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
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