5 Sector ETFs Surviving August Turmoil
Bulls have been beaten badly in August, which is caught in increased trade war gyrations resulting in wild swings in stocks. Additionally, weak global economic data, low inflation, collapse in bond yields, political unrest in Hong Kong as well as a plunge in Argentina's currency and stock markets threatened the bulls. The chaos has triggered several rounds of broad market sell-off.
However, rising hopes of monetary stimulus globally as well as renewed trade optimism have charged up the bulls slightly. This is especially true as major central banks across the globe are taking steps to prop up slowing economic growth that have eased global recession concerns. In the latest trade drama, the United States and China are expected to resume trade talks shortly after an escalation in tension (read: Trade War Gets Uglier: Here Are the ETF Winners & Losers).
That said, a few sector ETFs have easily outperformed the market and are trading in the green this month. Below we have highlighted four such ETFs that have gained handsomely in August and could be better plays in the months ahead, provided the same trends prevail.
iShares MSCI Global Gold Miners ETF RING – Up 11.8%
Gold continued to shine on safe-haven demand triggered by rising trade war tensions and global easy monetary policies. Being a leveraged play on the underlying metal prices, metal miners experience more gains than their bullion cousins in a rising metal market. While most of the ETFs have been rising this month, RING emerged as a winner. This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 35 securities in its portfolio. Canadian firms take half of the portfolio, while United States, South Africa and Australia round out the top four with double-digit exposure each. 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 $312.1 million and trades in good volume of 211,000 shares per day (read: 5 ETFs That Are Up More Than 10% in Volatile August).
ETFMG Prime Junior Silver ETF SILJ – Up 10.4%
Silver mining stocks have been on an uptrend, thanks to a subdued dollar on global monetary easing policies. As silver is used in a wide range of industrial applications, the demand for the metal is on the rise. The increase in demand can be attributed to ongoing growth in the global solar PV industry, rebound in global computer shipments, as well as new sources of demand for sensors used in IoT and OLED lighting. SILJ provides direct exposure to the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index. It holds 32 stocks in its basket with higher concentration on the top four firms. Canadian firms take the lion’s share at 67.9%, while the United States, Peru and Brazil take the remainder. The fund has managed assets worth $102.3 million and trades in good volume of nearly 199,000 shares a day. It charges 69 bps in annual fees.
Invesco Solar ETF TAN – Up 5%
This ETF, which offers global exposure to 22 solar stocks, climbed on a spate of stronger-than-expected results from some of the solar firms like Enphase Energy ENPH, SolarEdge Technologies SEDG and SunPower SPWR. American firms dominate the fund’s portfolio with nearly 52.3% share, followed by China (23.8%) and Spain (7%). The product has amassed $456.5 million in its asset base and trades in average daily volume of 207,000 shares. It charges investors 70 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: The Hottest ETFs of 2019).
Utilities Select Sector SPDR XLU – Up 4.1%
Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or a safe haven amid economic or political turmoil. With AUM of $11 billion, this fund provides exposure to a small basket of 28 securities by tracking the Utilities Select Sector Index. It is heavily concentrated on the top firm with 12.7% share while other firms hold no more than 8% of assets. Electric utilities take the top spot in terms of sectors at 61%, closely followed by multi utilities (32.6%). The product charges 13 bps in annual fees and sees heavy volume of around 16.8 million shares on average.
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Utilities Select Sector SPDR Fund (XLU): ETF Research Reports
Invesco Solar ETF (TAN): ETF Research Reports
iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports
Enphase Energy, Inc. (ENPH): Free Stock Analysis Report
SolarEdge Technologies, Inc. (SEDG): Free Stock Analysis Report
SunPower Corporation (SPWR): Free Stock Analysis Report
ETFMG Prime Junior Silver ETF (SILJ): 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.