5 Sector ETFs That Beat The Market In June

The stock market was off to a solid start in June buoyed by optimism over accelerating economic activities, a booming technology sector, an unprecedented stimulus, and hopes of a potential coronavirus vaccine.

In particular, the Fed’s latest move to provide liquidity in markets and the Trump administration’s $1 trillion infrastructure spending package added to the strength. The central bank announced that it would begin purchasing individual corporate bonds as part of its emergency lending program to inject liquidity into the virus-stricken economy.

However, volatility flared up to end the month as the second wave of new coronavirus cases made investors’ jittery. This is because the rise in new infections sparked off worries that reopening of businesses and economies could be curtailed again, slowing down the current recovery, which, however, is faster than expected. Re-emergence of trade tension and the International Monetary Fund’s downgrade of the economic growth outlook added to the chaos.

Amid volatility, some sector ETFs have outperformed the market. Below we have highlighted five such ETFs that have raked in substantial gains in June and could be better plays if the trend prevails.

Credit Suisse S&P MLP ETN (MLPO - Free Report) – Up 30.8%

Master Limited Partnerships (MLPs) represent an attractive investment option for income-focused investors as these pay out almost all of their income to investors on a regular basis. These have relatively consistent and predictable cash flows, making them safer and less risky than the other plays in the broader energy space. In addition to high yields and the potential for capital appreciation, MLPs also have lower volatility and provide diversification benefits to the portfolio.

The ETN MLPO, linked to the S&P MLP Index, charges 95 bps in annual fees. It is unpopular and illiquid in the MLP space with AUM of $17.6 million and average daily volume of 8,000 shares.

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