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Wall Street lost all its sheen in February on fears that the Fed will keep raising rates longer than expected. All three main indices are in red this month. The S&P 500 and the tech-heavy Nasdaq Composite Index posted their third straight week of declines, falling 3.3% each.

The Dow Jones fell 3% last week, logging in the fourth consecutive week of decline and turning red from a year-to-date look. This marks the longest losing streak in 10 months.

Still, a few corners of the stock market are outperforming. Advocate Rising Rate Hedge ETF (RRH - Free Report), SonicShares Global Shipping ETF (BOAT - Free Report), Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report), KraneShares Global Carbon Offset Strategy ETF (KSET - Free Report) and Simplify Managed Futures Strategy ETF (CTA - Free Report) have gained in double digits in February.

Hot economic data lately suggest stronger economic activity and have rekindled worries about a longer-than-expected Fed rate hike. U.S. consumer spending increased the most in nearly two years in January amid a surge in wage gains, while inflation accelerated. U.S. retail sales increased the most in nearly two years in January after two straight monthly declines, pointing to the economy's continued resilience despite higher borrowing costs.

Hiring surprisingly surged with the economy adding a solid 517,000 jobs in January. The unemployment rate fell from 3.5% to 3.4%, the lowest since 1969. Business activity unexpectedly rebounded in February, reaching its highest level in eight months, while U.S. builder confidence rose for the second consecutive month to the highest level since September 2022.

Inflation has also come in hotter than expected. The Federal Reserve’s preferred inflation gauge accelerated in January at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year. Earlier this month, per the government report, the consumer price index jumped 0.5% in January following a 0.1% increase in December. It climbed 6.4% year over year, down from a peak of 9.1% in June but far above the Fed’s 2% inflation target (read: PCE Inflation Jumps the Most Since June: 5 ETFs to Play).

The housing market is showing signs of improvement. U.S. builder confidence has risen for the second consecutive month to the highest level since September 2022. Signed contracts to buy existing homes in the United States rose the most since June 2020 in January. After climbing for most of 2022, mortgage rates have been trending downward from a peak in November.

ETFs in Focus

We have profiled the above-mentioned ETFs in detail below:

Advocate Rising Rate Hedge ETF (RRH) – Up 16.7%

Advocate Rising Rate Hedge ETF is a multi-asset ETF that seeks to generate capital appreciation during periods of rising long-term interest rates, specifically interest rates with maturities of five years or longer. It is an actively managed fund and seeks to achieve its investment objective primarily by investing in a combination of U.S. Treasury securities; forwards, futures or options on various currencies; long and short positions on the short and long-end of the Treasury or swap yield curve via futures, swaps, forwards and other over-the-counter derivatives; long and short positions on equity indexes and investment companies, including ETFs; and commodity futures and options.

Advocate Rising Rate Hedge ETF has accumulated $39.6 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 52,000 shares.

SonicShares Global Shipping ETF (BOAT) – Up 13.9%

SonicShares Global Shipping ETF provides pure-play exposure to the global maritime shipping industry by tracking the Solactive Global Shipping Index. The index consists of global shipping companies engaged in the maritime transportation of goods and raw materials, including consumer and industrial products, vehicles, dry bulk, crude oil and liquefied natural gas.

SonicShares Global Shipping ETF holds 57 stocks in its basket and has amassed $22.4 million in its asset base since. The fund charges 69 bps in annual fees and trades in an average daily volume of 8,000 shares.

Simplify Volt Robocar Disruption and Tech ETF (VCAR) – Up 13.4%

Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.

Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $3.3 million in its asset base while trading in an average daily volume of 4,000 shares.

KraneShares Global Carbon Offset Strategy ETF (KSET) – Up 13.1%

KraneShares Global Carbon Offset Strategy ETF tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. These futures contracts include Nature-Based Global Emission Offsets (N-GEOs) and Global Emission Offsets (GEOs), which trade through the CME Group, the world's largest financial derivatives exchange. KSET is designed to dynamically add additional offset markets as they reach scale.

KraneShares Global Carbon Offset Strategy ETF has amassed $2.8 million in its asset base since its inception last April. It charges 79 bps in fees per year and trades in a volume of 5,000 shares a day on average (read: Best-Performing ETFs of Last Week).

Simplify Managed Futures Strategy ETF (CTA) – Up 10.1%

Simplify Managed Futures Strategy ETF seeks long-term capital appreciation by systematically investing in futures in an attempt to create an absolute return profile that also has a low correlation to equities and can provide support in risk-off events.

Simplify Managed Futures Strategy ETF has accumulated $133.4 million in its asset base and trades in an average daily volume of 130,000 shares. It charges 75 bps in annual fees.

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