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As consumer confidence rises and the pandemic-stricken economy improves, Americans are ready for a plate stuffed with food and cartful of shopping on Thanksgiving. The celebration of bounty and gratitude is in full swing in the investment world as well with the S&P 500 hitting a series of record highs.
That said, a few corners are easily crushing the broader market in the year-to-date period. These ETFs — First Trust ISE-Revere Natural Gas Index Fund FCG, North Shore Global Uranium Mining ETF URNM, Amplify Transformational Data Sharing ETF BLOK, Invesco S&P SmallCap Value with Momentum ETF XSVM and SPDR S&P Retail ETF XRT — from different zones have been the 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).
How is the Stock Market Faring?
Wall Street is enjoying a smooth ride this year with the major bourses near record highs. Solid corporate earnings and an improving economy have been driving the markets higher though inflation fear is weighing on investor sentiment. The renomination of Powell as Fed Chairperson signals interest rates hikes next year, which in turn underscores a stronger economy.
According to a Bank of America Corp. survey conducted from Nov 5 to 11, global fund managers are ending the year with the biggest overweight in U.S. stocks since August 2013 as risk appetite is outweighing inflation and tapering woes. Fund managers increased their allocation to U.S. equities by 13 percentage points from the previous month to a 29% overweight, suggesting that they have become more optimistic on global growth and earnings (read: ETFs to Buy on Fund Managers' Big Bet on U.S. Stocks).
The latest bouts of data have bolstered investors’ confidence in the economy, leading to further reopening. Consumer confidence is stronger than expected, hiring is picking up and wages are rising. While inflation is rising at the fastest pace in 30 years, retail sales remain robust. U.S. retail sales in October surged for the third consecutive month and have jumped the most since March. The wider reach of vaccinations and COVID-19 boosters has accelerated economic reopening, setting the stage for the stocks’ rally.
Let’s explore the above-mentioned ETFs that have rewarded investors this year:
First Trust ISE-Revere Natural Gas Index Fund (FCG) – Up 110.1%
Natural gas is surging on tightening supplies and low inventories, providing an upside to the natural gas ETFs. First Trust ISE-Revere Natural Gas Index Fund offers exposure to U.S. companies involved in the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 40 stocks in its basket.
First Trust ISE-Revere Natural Gas Index Fund has amassed $450 million in its asset base while charging 60 bps in annual fees. The product trades in an average daily volume of 1.8 million shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
North Shore Global Uranium Mining ETF (URNM) – Up 108.5%
Uranium stocks have been on a tear buoyed by growing social media attention, the restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit, being accelerated by the pandemic-related production cuts. North Shore Global Uranium Mining ETF provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. North Shore Global Uranium Mining ETF follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee.
North Shore Global Uranium Mining ETF holds 35 stocks in its basket and has accumulated $923.7 million in its asset base. It trades in a good volume of 424,000 shares per day on average.
Amplify Transformational Data Sharing ETF (BLOK) – Up 61.9%
Blockchain technology has been emerging rapidly in recent years and gaining increased demand from across the world. Amplify Transformational Data Sharing ETF is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It holds a basket of 49 stocks with none accounting for more than 5.8% of the portfolio. American firms dominate about 74.2% of the portfolio, followed by Asia Pacific (17.7%). From an industrial look, software takes the largest share at 36.8%, while IT services and capital markets round off the next two spots with a double-digit exposure each.
Amplify Transformational Data Sharing ETF has AUM of $1.7 billion in its asset base and trades in an average daily volume of 542,000 shares. BLOK has an expense ratio of 0.71%.
Invesco S&P SmallCap Value with Momentum ETF (XSVM) – Up 60.6%
Small caps have been performing well thanks to an improving economy, cheap valuation and a value tilt amid inflation fears and resurgence in COVID-19 cases outside the United States. Invesco S&P SmallCap Value with Momentum ETF offers exposure to the companies having the highest "value scores" and "momentum scores" by tracking the S&P 600 High Momentum Value Index. XSVM holds a basket of 117 stocks, with each making up for less than 3% share. Invesco S&P SmallCap Value with Momentum ETF has a double-digit allocation each in financials, consumer discretionary and industrials (read: Bet on Small-Cap ETFs for Outperformance).
Invesco S&P SmallCap Value with Momentum ETF has AUM of $522.8 million and an average daily volume of 112,000 shares. XSVM charges 39 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
SPDR S&P Retail ETF (XRT) – Up 57.8%
With the vaccination of millions of Americans and the economy reopening, consumers are feeling more optimistic about the economy, leading to increased spending. SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid-and small-cap stocks. It holds well-diversified 107 stocks in its basket with none making up for more than 1.8% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, Internet & direct marketing retail, specialty stores and automotive retail (read: ETFs to Gain from Supercharged Consumer).
SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $1.1 billion and an average trading volume of 2.8 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
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SPDR S&P Retail ETF (XRT): ETF Research Reports
First Trust Natural Gas ETF (FCG): ETF Research Reports
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
Invesco S&P SmallCap Value with Momentum ETF (XSVM): ETF Research Reports
North Shore Global Uranium Mining ETF (URNM): ETF Research Reports
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