5 Sector ETFs Reaching New Highs Amid Market Volatility

The US stock market has performed well, although concerns about rising inflation and high valuations of growth tech stocks weighed on investor sentiment. A key indicator of inflation – the basic personal consumption expenditure price index – jumped 3.1% year over year in April – the highest in nearly three decades.

Although inflation is high, the Fed sees this as temporary. The central bank buys at least $ 120 billion in bonds each month and has kept short-term benchmark rates close to zero. With millions of Americans now fully vaccinated and pandemic restrictions lifted, the US economy is on the right track to recovery (read: Consumer discretionary ETFs to shine as the US economy reopens).

In addition, huge infrastructure spending as well as massive fiscal and monetary stimulus are instilling strong confidence in the economy. The combination of factors leads to pent-up demand for all types of products and services in the economy. Thus, the sectors likely to benefit the most from such a trend are experiencing a meteoric rise and outperforming.

In addition, lower interest rates make borrowing cheaper, which in turn stimulates both investment in new projects and the repayment of higher rate debt. Hence, it leads to strong economic growth and thus is a boon to the stock market. The most recent data episodes have also instilled strong confidence in economic growth. US manufacturing activity hit a record high in May for the second consecutive month, supported by a stronger expansion in production and new orders. Meanwhile, the basic personal consumption expenditure index rose 3.1% in April from a year ago – the highest reading since 1992 and significantly higher than the March reading of 1. 9%.

Against this background, we have highlighted a number of ETFs from various sectors which have reached new heights in the last two sessions. Any of these could be great games for investors looking to overcome the uptrend in the coming months given their high momentum and favorable ETF ranking Zacks # 1 (strong buy). , 2 (purchase) or 3 (conservation).

Sector Energy Select SPDR XLE

It is the largest and most popular ETF in the energy industry with $ 24.4 billion AUM and an average daily volume of 27.8 million shares per day. The expense ratio is 0.12%. The fund follows the Energy Select Sector index and has 23 stocks in its basket. The product has a Zacks ETF Rank # 2 with a high risk outlook (read: 5 energy ETFs at the forefront of the oil rally with more potential).

Vanguard VNQ Real Estate ETF

This fund follows the MSCI US Investable Market Real Estate 25/50 index and has 174 stocks in its basket. Specialty REITs occupy the largest share at 37.6%, while Residential REITs and Industrial REITs round out the top three with double-digit exposure each. The expense ratio is 0.12%. VNQ is the most popular and liquid ETF with an AUM of $ 40.1 billion and an average daily volume of around 4.2 million shares per day. He has a Zacks ETF Rank # 3 with a medium risk outlook.

iShares US Financials ETF IYF

This ETF provides exposure to US banks, insurers and credit card companies by tracking the Dow Jones US Financials Capped Index. He owns 232 stocks in his basket with key holdings in diversified financial services, banking, real estate and insurance. The fund has raised $ 2.4 billion in its asset base and charges 42 basis points in annual fees. He has a Zacks ETF Rank # 2 with a medium risk outlook.

Invesco Dynamic Food & Beverage PBJ ETF

This product provides exposure to 32 stocks engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index. With assets under management of $ 123.6 million, the fund charges 63 basis points of annual fees to investors and records a small average daily volume of 19,000 shares. He currently has a Zacks ETF Rank # 3 (Hold) (read: Game reopening – Friendly ETFs before Memorial Day).

First Trust NASDAQ Global Auto CARZ ETF

This fund offers pure global exposure to 33 automotive stocks by tracking the NASDAQ OMX Global Auto index. It has $ 59.3 million in assets under management and trades a small average daily trading volume of around 22,000 stocks. The product charges 70 basis points of fees per year and has a Zacks Rank # 3 ETF with a high risk outlook.

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SPDR-EGY SELS (XLE): ETF Research Reports

VANGUARD REIT (VNQ): ETF Research Reports

FT-NDQ GL AUTO (CARZ): ETF Research Reports

ISHARS-US FN SE (IYF): ETF Research Reports

INVS-DYN FD&BV (PBJ): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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