5 ETFs Up Most On Fed's 75 Bps Rate Hike

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Wall Street rebounded strongly following the Federal Reserve's latest monetary policy decision that has rekindled investors’ interest in the stock market. The move restored confidence that the central bank is serious about fighting inflation. Notably, the S&P 500 jumped 1.5% to end a five-day losing streak and the Dow Jones Industrial Average gained about 1%. The Nasdaq Composite climbed 2.5%.

While the U.S. stocks saw smooth trading, with 10 of the S&P 500’s 11 sectors moving higher, technology, which has been among the hardest-hit areas of the market this year, was among the biggest gainers. Some of the gainers include Small/Mid Cap Growth Alpha ETF (JSMD - Free Report), ARK Innovation ETF (ARKK - Free Report), ARK Next Generation Internet ETF (ARKW - Free Report), Global X Education ETF (EDUT - Free Report), and ProShares Online Retail ETF (ONLN - Free Report).

Fed Chair Jerome Powell raised interest rates by 75 bps, pushing the federal funds rate between 1.5% and 1.75%, to quell inflation through a tighter monetary policy. This marked the biggest interest-rate increase since 1994. Powell said that the Fed could raise rates by 50 or 75 basis points at the July Fed meeting and stressed that policy will be "sensitive and flexible.” This comment has renewed optimism in the market. All the Fed officials see rates rising to at least 3% by year-end, with a median estimate of 3.4%. They expect rates to rise to 3.8% by the end of 2023.

Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. The central bank hopes that higher borrowing costs will slow spending enough to tame inflation but will not cause a recession.

The initial phase of the rate increase will be good for stocks as it will reflect an improving economy.

Small/Mid Cap Growth Alpha ETF (JSMD) – Up 7.3%

Janus Henderson Small/Mid Cap Growth Alpha ETF seeks to provide risk-adjusted outperformance by identifying top-tier small and mid-cap companies with some of the strongest fundamentals that can deliver sustainable growth in a variety of market environments. It follows the Janus Henderson Small/Mid Cap Growth Alpha Index.

Janus Henderson Small/Mid Cap Growth Alpha ETF holds 243 stocks in its basket with key holdings in information technology, health care, industrials and consumer discretionary. It has amassed $153.1 million in its asset base and charges 30 bps in annual fees. JSMD has a Zacks ETF Rank #3 (Hold).

ARK Innovation ETF (ARKK) – Up 6.6%

ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 35 securities in its basket with a concentration on the top three firms.

ARK Innovation ETF has gathered $7 billion in its asset base and charges 75 bps in fees per year from investors. It trades in a volume of 33.2 million shares per day on average.

ARK Next Generation Internet ETF (ARKW) – Up 6.2%

ARK Next Generation Internet ETF is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 37 stocks in its basket, with none accounting for more than 9.4% of the assets.

ARK Next Generation Internet ETF has amassed $1.3 billion in its asset base and charges 83 bps in annual fees. It trades in an average daily volume of 1.7 million shares.

Global X Education ETF (EDUT) – Up 4.8%

Global X Education ETF seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education, and professional education. It follows the Indxx Global Education Thematic Index and holds 35 stocks in its basket. Consumer discretionary takes the largest share at 48.5%, while communication services and information technology round off the next two spots.

Global X Education ETF has accumulated $3.8 million in its asset base and charges 50 bps in annual fees from investors. It trades in a paltry volume of 1,000 shares a day on average.

ProShares Online Retail ETF (ONLN) – Up 4.3%

ProShares Online Retail ETF offers exposure to the company that principally sells online or through other non-store channels and then zeroes in on the companies reshaping the retail space. It tracks the ProShares Online Retail Index, holding 38 stocks in its basket. ONLN is highly concentrated on the top two firms, while other firms hold no more than 5.1% of the assets. American firms make up three-fourths of the portfolio, while Chinese firms account for 17% share.

ProShares Online Retail ETF has accumulated $294.8 million in its asset base and charges 58 bps in annual fees. ONLN trades in an average daily volume of 105,000 shares.

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