Top-Ranked ETFs That Crushed The Market In A Month

Amid trade and Brexit uncertainty, Wall Street has gained solid momentum to start the fourth quarter with all the three major indices hitting new all-time highs last week. This is especially true against the backdrop of renewed trade deal optimism, better-than-expected earnings and monetary easing policy that have bolstered the risk appetite of investors.  

Both China and the United States agreed last month to finalize the phase one trade deal, which is expected to be signed later this month. Meanwhile, of the 447 S&P members that reported Q3 results, 72.5% of companies beat EPS estimates and 57.9% beat on revenues. The proportion of these companies beating EPS and revenue estimates is in the historical range.

The Fed slashed interest rates once again by 25 basis points last month, representing the third rate cut for the year. Lower interest rates have made borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. The combination of factors is providing a huge boost to the stock market.

The latest rally has been broad-based with many corners of the space generating above-market returns over a month. We have highlighted one ETF from these outperforming zones with a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting continued outperformance for the rest of the year.

SPDR S&P Semiconductor ETF (XSD - Free Report) – Up 9.6%

This ETF offers exposure to the semiconductor corner of the broad tech sector. It tracks the S&P Semiconductor Select Industry Index, holding 35 stocks in its portfolio. The fund has AUM of $419.9 million and charges 35 bps in fees per year. It trades in average daily volume of 114,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

iShares Nasdaq Biotechnology ETF (IBB - Free Report) – Up 9.4%

This fund provides exposure to 217 U.S. biotechnology and pharmaceutical companies by tracking the Nasdaq Biotechnology Index. IBB is the most-popular fund is the biotech space with AUM of $7 billion and average daily volume of 2.3 million shares. Expense ratio comes in at 0.47%. The product has a Zacks ETF Rank #2 with a High risk outlook.

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