6 Sector ETFs Surviving The Market Rout

Wall Street saw a wild swing last week with the U.S. stocks posting the second consecutive weekly loss. The Nasdaq Composite Index underperformed, shedding 4.1% last week while the S&P 500 and Dow Jones Industrial Average lost 2.5% and 1.7%, respectively.

The volatility is expected to continue in the weeks ahead given elevated valuation concerns and election uncertainty. Rise in U.S.-China trade tensions, delay in the late-stage trial of the leading COVID-19 vaccine candidates from AstraZeneca Plc (AZN - Free Report), and failure to have the new coronavirus aid approved also pushed the bears higher last week.

If we go be history, September is a weak month for the stock market. The seasonal phenomenon took a toll on the stocks as investors are more prone to selling than buying when they return from their summer vacations, trading volume after Labor Day is mostly bearish, many mutual funds have fiscal years ending Sep 30, window-dressing is rampant, and investors generally sell stocks to pay tuition bills for their kids’ private schools and colleges.

However, strong support from the Fed, enthusiasm surrounding a COVID-19 vaccine, and improving economic backdrop will continue to fuel a stock rally.

Amid the uncertainties, a few sectors have survived last week’s turmoil. We have highlighted six of that could be compelling picks for the weeks ahead as long as volatility persists.

The Cancer Immunotherapy ETF (CNCR - Free Report) — Up 4.8%

This ETF offers exposure to a basket of companies that develop therapies to treat cancer by harnessing the body's own immune system. It holds 30 stocks in its basket with each accounting for less than 6% of assets. The fund has AUM of $39.3 million and charges 79 bps in annual fees. The fund trades in average daily volume of 9,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

iShares U.S. Home Construction ETF (ITB - Free Report) – Up 3.8%

This fund provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $2.2 billion, it holds a basket of 44 stocks with heavy concentration on the top two firms. The product charges 42 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 with a High risk outlook.

Invesco Solar ETF (TAN - Free Report) – Up 2.4%

This fund offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 28 stocks in the basket. American firms dominate with half of the fund’s portfolio, followed by China (22.5%) and Germany (7%). The product has amassed $1.2 billion in its asset base and trades in a solid volume of around 761,000 shares a day. It charges investors 71 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

ETFMG Treatments Testing and Advancements ETF (GERM - Free Report) – Up 1.8%

This fund offers exposure to biotech companies directly engaged in the testing and treatments of infectious diseases by tracking the Prime Treatments, Testing and Advancements Index. It holds 57 stocks in its basket and charges 68 bps in annual fees. The ETF has amassed $49.4 million in its asset base within three months of debut and trades in average daily volume of 129,000 shares.

iShares Global Materials ETF (MXI - Free Report) – Up 1.3%

This ETF follows the S&P Global 1200 Materials Sector Index and offers exposure to companies involved with the production of raw materials, including metals, chemicals, and forestry products. It holds 104 stocks in its basket with each accounting for no more than 6.3% of assets. The product has AUM of $397.8 million and charges 45 bps in fees and expenses. Volume is good as it exchanges around 37,000 shares a day.

iShares MSCI Global Gold Miners ETF (RING - Free Report) – Up 1.3%

This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 37 securities in its portfolio. Canadian firms take half of the portfolio, while the United States and South Africa round off the next two spots. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $564.9 million and trades in a good volume of 255,000 shares per day.

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 specific ...

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