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5 Sector ETFs That Crushed the Market in July

Sweta Killa

Bulls continued to rage higher in July powered by hopes of easing money policies and positivity surrounding the trade deal. In fact, the S&P 500 hit the major 3,000 milestone and the Dow Jones breached 27,0000 for the first time ever early in the month. Notably, the S&P 500 ETF SPY and Dow Jones ETF DIA are up 2.6% and 2.3%, respectively, this month (read: 10 Stocks of S&P 500 ETF Up More Than 60% This Year).

Lower interest rates will keep borrowing cost down, thereby resulting in higher consumer spending and rise in economic activities. Additionally, recovery in the U.S. housing market, rising oil price and the wave of mergers & acquisitions added to the strength. However, unresolved trade issues, global growth concerns and geopolitical tensions remained an overhang.

The gains are broad-based with a few sector ETFs easily outperforming the broad market. Below we have highlighted five such ETFs that have accumulated handsome gains in July and could be better plays in the months ahead, provided the same trends prevail.

ETFMG Prime Junior Silver ETF SILJ – Up 17.2%

Silver mining stocks have been on an uptrend in July, thanks to a subdued dollar on hopes of  a rate cut. As silver is used in a wide range of industrial applications, the demand for the metal is on the rise. The increase in demand can be attributed to ongoing growth in the global solar PV industry, rebound in global computer shipments, as well as new sources of demand for sensors used in IoT and OLED lighting. SILJ provides direct exposure to the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index. It holds 33 stocks in its basket with higher concentration on the top four firms. Canadian firms take the lion’s share at 67.9%, while the United States, Peru and Brazil take the remainder. The fund has managed assets worth $87.1 million and trades in a good volume of nearly 142,000 shares a day. It charges 69 bps in annual fees (read: 5 Top ETFs of Last Week That Defied Market Slump).

VanEck Vectors Junior Gold Miners ETF GDXJ – Up 13.8%

Gold has rallied on hopes of loose monetary policies across the globe and flight to safe haven owing to rising geopolitical tensions and global growth worries. Being a leveraged play on the underlying metal prices, metal miners experience more gains than their bullion cousins in a rising metal market. GDXJ is a small cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 70 stocks in its basket, it is well spread out across components with none holding more than 6.02% of the assets. Canadian firms dominate the fund’s portfolio at 45.1%, while Australia (24.9%) and South Africa (10%) round out the top three. The product has AUM of $4.5 billion and charges 53 bps in annual fees. It trades in heavy volume of more than 14.7 million shares a day on average (read: Can Gold Mining ETFs Keep Soaring?).

SPDR S&P Semiconductor ETF XSD – Up 10.5%

The semiconductor corner of the broad tech sector has been leading, thanks to a slew of better-than-expected earnings and optimism over trade talks. XSD tracks the S&P Semiconductor Select Industry Index, holding 35 stocks in its portfolio. It is widely spread across a number of securities with none holding more than 3.8% share. The fund has AUM of $349.5 million and charges 35 bps in fees per year. It trades in average daily volume of 116,000 shares and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 Winning ETF Areas of Last Week).

SPDR S&P Telecom ETF XTL – Up 6.2%

Telecom ETFs got a boost from fifth-generation wireless technology or 5G, which is ready to take off and will be a game changer when it is fully implemented. Major telecom companies have started rolling out 5G service in limited areas. XTL follows the S&P Telecom Select Industry Index, holding equally weighted 41 stocks in its basket. It charges 35 bps in annual fees and trades in lower average daily volume of 13,000 shares. The ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Best ETFs to Invest in 5G Theme).

Fidelity MSCI Communication Services Index ETF FCOM – Up 4.6%

Communication Services ETFs surged on better-than-expected earnings. This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 109 stocks in its basket with heavy concentration on the top three firms. The product has amassed $381.9 million in its asset base and trades in average daily volume of 94,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.

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