5 Sector ETFs That Crushed The Market In The First Half

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The U.S. stock market is booming this year with major bourses skyrocketing to new peaks. With millions of Americans now fully vaccinated and pandemic restrictions being rolled back, the U.S. economy is strongly recovering from the pandemic lows.

The economy expanded 6.4% annually in the first quarter, representing the second-strongest increase since 2003, and is expected to top 7% this year, which would be the fastest since 1984, per several economists. This would follow the 3.5% contraction in 2020, which was the worst performance in 74 years. The huge infrastructure package and expanded stimulus are among the major catalysts for the economy that will continue to drive the stocks higher.

Signs of a healing labor market and strong corporate earnings are adding to the strength. The combination of factors has powered activities across all sectors and categories, resulting in increased consumer spending. Americans are spending on big-ticket items such as vacations and weddings, companies are going on hiring sprees, and the transition to new technologies such as electric vehicles is accelerating.

However, inflation fears have kept the stock market edgy given the rising commodity prices for a wide range of commodities from copper to oil to timber.

With just a few trading sessions left to end the first half, the S&P 500 is up about 13.6% while the Dow Jones and the Nasdaq have gained 11.7% and 11.5%, respectively.

While many corners of the equity world are witnessing an upside, a few sector ETFs performed incredibly, thereby comfortably crushing the broader markets. Below, we have highlighted five such funds that have been the mid-year’s star performers and could also be winners in the second half if the current trends continue.

Invesco S&P SmallCap Energy ETF (PSCE - Free Report) – Up 90%

Energy prices are on a tear on bullish demand and tightening supply. A swift global economic recovery and reopening of economies coupled with the start of the summer driving season in the United States have spurred energy demand. This fund provides exposure to the U.S. small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index. It holds 33 stocks in its basket with AUM of $210.8 million. The fund trades in an average daily volume of 770,000 shares and charges 29 bps in fees per year. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

SPDR S&P Retail ETF (XRT - Free Report) – Up 51.4%

Consumers are feeling more optimistic about the economy, thereby leading to increased confidence and higher spending. With AUM of $763 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 106 securities in its basket with key holdings in Internet & direct marketing retail, apparel retail, automotive retail, and specialty stores. The fund charges 35 bps in annual fees and trades in an average daily volume of 2.4 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

North Shore Global Uranium Mining ETF (URNM - Free Report) – Up 50.9%

Uranium miners have been on a bull run this year as countries across the world are pushing toward clean and green energy sources. This ETF provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee. The ETF holds 35 stocks in its basket. It has accumulated $365.3 million in its asset base and trades in a good volume of 166,000 shares per day on average.

Amplify Seymour Cannabis ETF (CNBS - Free Report) – Up 49.6%

Cannabis stocks are soaring on a wave of wider legalization as well as the growing adoption of marijuana in more states. The Biden government has the friendliest political environment for the cannabis industries in U.S. history, as it will expedite the legalization of marijuana at the federal level. Additionally, the deal activities and robust earnings have strengthened the bullish case for marijuana stocks. With AUM of $139.1 million, CNBS is actively managed and invests 80% of its assets in securities of companies with 50% or more of their revenues from the cannabis and hemp ecosystem. The fund holds 33 securities and charges 75 bps in annual fees. It trades in an average daily volume of 98,000 shares.

Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) – Up 43.7%

The consumer discretionary sector has been gaining from increasing consumer confidence about economic growth as well as rising spending. PSCD targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 88 securities in its basket with specialty retail taking the largest share at 38.6% while household durables and hotels, restaurants, and leisure account for double-digit exposure each. The product has attracted $135.6 million in AUM and charges 29 bps in annual fees. It has a Zacks ETF Rank #2 with a High risk outlook.

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