September defied its historically ill-famed performance and went on to close out the month on a high note, thanks mainly to feeble hopes regained on Trump's tax-reform proposals. The S&P 500 based ETF SPY and Dow Jones-base fund DIA added about 2% and 2.2%, respectively, while the Nasdaq-100-based ETF QQQ shed about 0.3% in the last one month (as of Sep 29, 2017).
Below we highlight ETF areas that topped and flopped in the month.
Energy shares gained ground in the month on reduced supply glut worries and improvement in the demand scenario. The possibilities of OPEC discussing the extension of the output cut deal, International Energy Agency's (IEA) upgrade of the global oil demand estimate and OPEC's output decline in August for the first time in five months led to this rebound.
Moreover, Turkey gave hints of stopping Kurdish crude import, which pushed the space to the bull territory in late September. WTI crude ETF USO and BNO were up 8.3% and 7.9% in the last one month (as of Sep 29, 2017) (read: 4 ETFs to Capitalize on the Oil Rally ).
PowerShares S&P SmallCap Energy ETF PSCE , SPDR S&P Oil & Gas Equipment&Svcs ETF XES , iShares US Oil Equipment & Services ETF IEZ , PowerShares Dynamic Oil & Gas Svcs ETF PXJ and VanEck Vectors Oil Services ETF OIH advanced about 21%, 21.9%, 17%, 17.2% and 15.9%, respectively, in the last one month (as of Sep 29, 2017).
Lithium prices were on a tear in the month on higher demand for lithium batteries needed for electric cars. Tesla TSLA remains at the forefront for driving lithium demand. Tesla's new Gigafactory in Nevada itself is expected to produce plenty of lithium ion batteries to "power 500,000 electric cars per year by 2020."
BlackRock is bullish on the extensive adoption of electric vehicles. Annual global electric vehicle sales are forecast to reach 24.4 million by 2030 from just one million in 2017, as per Bloomberg. Along with the developed countries, significant traction is expected from China as the country set a goal to phase down sales of fossil-fuel-powered vehicles.
Given the bullish fundamentals, the only equity-based Global X Lithium & Battery Tech ETF LIT gained about 9.5% in the last one-month (as of Sep 29, 2017) (read : Inside The Surge in Lithium ETF ).
The U.S. GDP expanded 3.1% year over year in the second quarter and represented the fastest pace since the first quarter of 2015 . Plus, President Trump has unveiled the much-awaited tax reform, which brightened hopes of stellar activity on the domestic front (read: Three Reasons to Bet on Small Cap ETFs Now ).
Since small-cap stocks perform better in a trending economy, ETFs like Guggenheim S&P SmallCap 600 PureVal ETF RZV , PowerShares S&P SmallCap Industrials ETF PSCI , PowerShares S&P SmallCap Materials ETF PSCM and PowerShares S&P Small-Cap Consumer Discretionary ETF PSCD added about 10%, 10.3%, 7.9% and 8%, respectively, in the last one month (as of Sep 29, 2017).
As the broader market hit highs, volatility levels were at the bottom.VIXY, which lost about 15.2%, provides long exposure to the S&P 500 VIX Short-Term Futures Index, which looks to measure the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. Another volatility-based product iPath S&P 500 VIX Short-Term Futures ETN VXX also shed about 15.1% in the month.
Nickel prices rallied in August and slid in September on profit-booking . Notably, the outlook for nickel investing is still murky with possibilities of higher production in Indonesia and the Philippines. iPath Bloomberg Nickel SubTR ETN JJN and iPath Pure Beta Nickel ETN NINI retreated about 15% and 10.8%, respectively.
Shares of Greek banks retreated in September as the danger of several stress tests raised questions "on the quality -- and scrutiny -- of financial assets" in the stressed nation. Global X MSCI Greece ETF GREK lost about 7.4% in the last one month (as of Sep 29, 2017) (read: Top 3 Foreign ETFs of Q2 ).
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