Call it the industrials revolution. After dominating the sector fund universe for much of this year, techs and biotechs are being dethroned by energy and other industrials.
[ibd-display-video id=2328929 width=50 float=left autostart=true]Rising oil futures boosted energy stocks and funds in September, though prices have slipped this month.
The accompanying table shows the top sector ETFs for the past month handily outperforming the S&P 500. But nearly all have lagged the benchmark index by a wide margin over the long haul. Only one, Global X Lithium & Battery Tech ( LIT ), produced an average annual return that beat the S&P 500 over the past three years.
Eleven of the 13 funds shown are oil and gas plays. SPDR S&P Oil & Gas Equipment & Services ( XES ) led with a 20.2% gain for the past month through Oct. 3, according to Morningstar Direct. It retook its 50-day moving average Sept. 12 after spending most of the prior seven months below the support line. Shares are 34% off their 52-week high.
The $334.2 million fund, launched in June 2006, aims to provide exposure to small-, mid- and big-cap companies. It tracks the S&P Oil & Gas Equipment & Services Select Industry Index. Top holdings as of Oct. 5 included Fairmount Santrol Holdings ( FMSA ), Ensco ( ESV ) and Transocean ( RIG ). The top five names represented 19% of assets.
Up next is iShares U.S. Oil Equipment & Services (IEZ), with a 15.4% one-month return. Its price action looks similar to XES. The 11-year-old fund, which tracks the Dow Jones U.S. Select Oil Equipment & Services Index, has gathered $196.4 million.
IBD'S TAKE:On the hunt for ETF ideas that may be worth a closer look? Check out IBD's weekly ETF Leaders column for a featured fund and a list of highly rated ETFs.
IEZ's top names were Schlumberger (SLB), at 16% of assets, Halliburton (HAL) 10%, and Baker Hughes (BHGE) and National Oilwell Varco (NOV) at about 6% each. The portfolio contained 34 stocks; the top five holdings accounted for 43% of assets. IEZ offers a hefty annualized dividend: 3.4% vs. the S&P 500's 1.9%.
VanEck Vectors Oil Services (OIH), with $1.3 billion in assets, and $2.3 billion SPDR S&P Oil & Gas Exploration & Production (XOP) came in third and fourth with respective one-month returns of 14.3% and 12.2%. These two are among the biggest energy sector ETFs. Further down the list are $16.7 billion Energy Select Sector SPDR (XLE) and $3.9 billion Vanguard Energy (VDE).
LIT, mentioned above, came in fifth with a one-month return of 12%. The $760.9 million fund, which tracks the Solactive Global Lithium Index, is also a top year-to-date performer with a 57% gain. It invests in the lithium cycle, from mining and refining through battery production.
Top holdings included FMC (FMC), Chile's Sociedad Quimica Y Minera (SQM), South Korea's Samsung SDI and Tesla (TSLA). The top five names made up nearly 58% of assets as of Oct. 4.