5 Market-Beating Sector ETFs Of Q1

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Wall Street is set to wrap up the first quarter with strong gains. The S&P 500 is on track for its best first quarter since 2019 and the 12th strongest first quarter since 1945, having gained more than 9% so far. In a historic move that signals optimism for the financial markets, the S&P 500 Index surpassed 5,200 last week, following the Fed’s latest signal to cut interest rates.

Meanwhile, the Dow Jones is up 4.4%, which could represent the best first quarter since 2021, and the Nasdaq Composite Index is set to be the outperformer with 9.3% gains. Fed rate cut bets, stronger earnings and the continued AI boom continue to fuel the rally in the stock market.

The gains were broad-based and well spread out across various segments. Some of the top performers in the ETF space from different sectors of the market were First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report), Roundhill Cannabis ETF (WEED - Free Report), VanEck Vectors Semiconductor ETF (SMH - Free Report), Range Cancer Therapeutics ETF (CNCR - Free Report) and Invesco KBW Property & Casualty Insurance ETF (KBWP - Free Report).

In the latest meeting, the Fed maintained its interest rates steady in a range of 5.25%-5.50% and signaled three rate cuts this year, citing expanding economic activity and easing but elevated inflation. Lower interest rates generally lead to reduced borrowing costs, helping businesses to expand their operations more easily and resulting in increased profitability. This, in turn, will stimulate economic growth and provide a boost to the stock market.

ETFs in Focus

Let’s dig into the details of the abovementioned ETFs:

First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT) – Up 47.4%

The world's largest cryptocurrency has been on an unstoppable rally amid surging optimism. Demand for the token is widening beyond committed digital-asset enthusiasts. A looming reduction in the digital token’s supply growth (halving event) is also contributing to its huge rally. First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economy-related innovation. SkyBridge identifies securities primarily via “bottom-up” research focused on finding companies leading in the crypto industry ecosystem.

First Trust SkyBridge Crypto Industry & Digital Economy ETF holds 30 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $56.1 million in its asset base and trades in an average daily volume of 80,000 shares.

Roundhill Cannabis ETF (WEED) – Up 36.4%

Cannabis stocks and ETFs have been on a surge on speculation over the potential reclassification of marijuana as a less dangerous drug. A reclassification could potentially expand the market for marijuana, which is a multi-billion-dollar industry in the United States and a cash crop in many states where cannabis has been newly legalized.

Roundhill Cannabis ETF is designed to offer concentrated exposure to the largest U.S. cannabis companies. The fund may invest in various cannabis-related companies, including cannabis producers and distributors, cannabis-related technology companies and additional cannabis-related ancillary businesses. It offers precise exposure to five leading U.S. MSOs. Roundhill Cannabis ETF has gathered $6.1 million in its asset base so far. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.

VanEck Vectors Semiconductor ETF (SMH) – Up 28.6%

The semiconductor sector is performing well this year, driven by the expansion of artificial intelligence (AI) applications, which are ushering in fresh opportunities for growth within the sector. Additionally, a spate of strong earnings reports from well-known players in the space has instilled confidence in the sector.

VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which measures the overall performance of companies involved in semiconductor production and equipment. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket and has managed assets worth $18 billion. It charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 9 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

Range Cancer Therapeutics ETF (CNCR) — Up 17.3%

The healthcare sector is benefiting from cutting-edge medicines, new drug approvals, technological advancements, deal activities and strong earnings. In particular, investor enthusiasm in areas like weight-loss treatments boosted the sector.

Range Cancer Therapeutics ETF offers exposure to a wide range of cancer therapeutic modalities. It follows the Range Cancer Therapeutics Index and holds 79 stocks in its basket, with each accounting for less than 3.7% of the assets. Range Cancer Therapeutics ETF has AUM of $24.2 million and charges 79 bps in annual fees. The fund trades in an average daily volume of 40,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Invesco KBW Property & Casualty Insurance ETF (KBWP) – Up 17.3%

The insurance sector is benefiting from a combination of factors, including technological innovation, strategic transformations and adapting to evolving market conditions and consumer needs. Additionally, the resilient economy is leading to higher demand for all types of insurance services, thereby driving the sector higher.

Invesco KBW Property & Casualty Insurance ETF provides exposure to 25 companies primarily engaged in U.S. property and casualty insurance activities. It follows the KBW Nasdaq Property & Casualty Index and is concentrated on the top five firms that make up for at least 8% share each. Invesco KBW Property & Casualty Insurance ETF has managed $247 million in its asset base and has an expense ratio of 0.35%. KBWP trades in an average daily volume of 20,000 shares but has a Zacks ETF Rank #3 with a Medium risk outlook.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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