5 Market-Beating Sector ETFs Of March

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Amid the volatility, the Wall Street ended March on a high note with Dow Jones and the S&P 500 logging in their best month since November, gaining 6.6% and 4.3%, respectively.

The rally were driven by the combination of factors including continued progress in more vaccines, rapid vaccination rollout and rounds of more stimulus that has led to faster-than-expected economic recovery. Additionally, reopening of the economy and improving corporate earnings added to the strength. All these have resulted in increased industrial activity and pickup in consumer demand, thereby driving the market sentiments higher.

However, surging yields continued to weigh on the stocks as it sparked overvaluation concerns and triggered a sell-off in the technology sector. As such, the tech-heavy Nasdaq Composite Index was the relative underperformer, gaining just 0.4% last month.

Against such a backdrop, we have highlighted five sector ETFs that outperformed in March and are likely to continue doing so, should the same trends prevail.

iShares U.S. Home Construction ETF (ITB - Free Report) – Up 13.9%

The housing market is showing strong resiliency amid surging raw material prices like lumber and wood, increasing construction costs and rising mortgage rates. This is because demand for homes remains robust with tightening supplies. 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 $2.6 billion, it holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 42 basis points (bps) in annual fees and trades in heavy volume of around 3 million shares a day on average. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

John Hancock Multifactor Utilities ETF (JHMU - Free Report) – Up 10.5%

The utility sector has gained from bouts of volatility last month. Being the low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or safe haven in turbulent times.

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