5 top-ranked ETFs that outperformed in August


August has been an encouraging month for investors. Highlights such as coronavirus vaccine news, speculation about the Federal Reserve’s upcoming move, increasing cases of the highly contagious delta variant of the coronavirus, an impressive second-quarter earnings season, concerns about inflation levels and geopolitical tensions with the Taliban taking control of Afghanistan and the return of the US military after 20 years of war has had an impact on the investing world.

The S&P 500 and Nasdaq Composite indexes posted gains of 2.9% and 4%, respectively, in August. The Dow Jones Industrial Average also rose 1.2% over the same period. In fact, the S&P 500 Index had its seventh consecutive month of gains.

Notably, the Fed is not looking to raise short-term interest rates. In addition, Fed Chairman Jerome Powell appears to have prepared the market to cut its $ 120 billion in monthly bond purchases this year. The second quarter earnings season performed better than expected, boosting equity market recovery. According to a CNBC article, the S&P 500 is on track to record the largest increase since the fourth quarter of 2009 with a profit growth rate of 95.4%.

The United States is seeing a dramatic increase in the number of COVID-19 cases. According to data from Johns Hopkins University, the United States witnesses an average of 160,000 new cases of COVID-19 per day, according to a CNN report. In view of the current situation, Dr Rochelle Walensky, director of the United States Centers for Disease Control and Prevention (CDC), urged unvaccinated Americans to avoid travel during the Labor Day holiday weekend, according to a CNN report.

FDA granting first full U.S. approval to Pfizer’s PFE / BioNTech (BNTX) coronavirus vaccine, Comirnaty (BNT162b), has boosted investor confidence in some reopening bets like airlines, travel and retailers. recreation and casino players.

Full FDA approval is expected to increase confidence in enforcing vaccine warrants. In addition, the unvaccinated population is now more likely to opt for vaccination. According to a CNBC article, the Kaiser Family Foundation survey found that three in 10 unvaccinated adults were more likely to get stung if any of the vaccines were fully approved. Market participants are also optimistic about the chances of reaching a peak of delta variant cases.

According to CDC data, about 38.6% of Americans (including 12 years and older) are not yet fully vaccinated, as mentioned in a CNN report. The data also reflect a 16 times higher hospitalization rate in the unvaccinated population than in the vaccinated.

In context, let’s take a look at a few top-ranked ETFs holding a Zacks Rank # 2 (Buy) ETF that outperformed Wall Street in August:

ETF SPDR S&P Semiconductors XSD – up 6.7% over the past month

The semiconductor space has benefited from the expansion of digitization and increasing dependence on the internet due to normal new trends such as online shopping, working from home, digital payments, the digitization of healthcare, the growing demand for video games and many more. In fact, the growing adoption of cloud computing and the continued infusion of AI, machine learning, and IoT are expected to keep the industry booming in 2021.

The fund seeks to provide investment results which, before fees and expenses, generally correspond to the total return of the S&P Semiconductor Select Industry Index. It charges an expense ratio of 35 basis points (bps) (read: 4 chip ETFs you shouldn’t ignore).

Invesco S&P 500 Pure Growth ETF RPG – up 5.4%

The Wall Street rally, marked by the S&P 500 index reaching new highs, emphasizes growth investments. The second quarter earnings season saw better than expected results, boosting the stock market rally. Investors are also relieved at the Fed’s intention not to raise short-term interest rates. The FDA has granted the first full US approval for Pfizer / BioNTech’s COVID-19 vaccine, Comirnaty has also boosted investor confidence. As growth stocks tend to outperform in a trending market (that is, a market characterized by a prolonged uptrend), investors are more interested in growth investments.

The fund is based on the S&P 500 Pure Growth Index. It charges an expense ratio of 0.35% (read: A spread from top S&P 500 ETFs to enjoy strong second quarter earnings growth).

VanEck Biotech FNB BBH – up 5.3%

The pandemic has sparked a race to introduce vaccines and treatment options, opening up investment opportunities in the biotech sector. Space gained on positive COVID-19 vaccine updates. The first full US FDA approval for Comirnaty has brought optimism to the space. Additionally, a Reuters report said the U.S. government recently announced its intention to make COVID-19 vaccine boosts available starting September 20.

The fund seeks to replicate as faithfully as possible, before fees and expenses, the price and yield performance of the MVIS US Listed Biotech 25 index, which is intended to track the overall performance of companies involved in development and production, the marketing and sale of drugs based on genetic analysis and diagnostic equipment. It charges an expense ratio of 35 basis points (read: Pfizer vaccine approval sparks rise in biotech ETFs).

First Trust Nasdaq Bank ETF FTXO – 5.1%

The banking industry has had an impressive run so far in 2021 after a difficult 2020. Notably, the improving outlook for the space amid the rebound in the US economy is attracting investor attention. It is a well-known fact that an improving US economy can continue to stimulate demand for loans. In addition, the steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a large part of bank income, was likely supported by the steepening of the yield curve and a modest increase in demand for credit.

The investment objective of the fund is to seek investment results which generally correspond to the price and return, before fees and expenses of the fund, of an index called the Nasdaq US Smart Banks Index. It charges an expense ratio of 60 basis points.

IShares US Technology ETF IYW – up 4.9%

Technology continues to play a pivotal role in COVID-19 uncertainty by helping people maintain safe distance standards. Some other “normal news” trends have also emerged in the midst of the health crisis, such as working from home, increasing digital payments, growth in video streaming as well as surging video game sales. The pandemic is also a boon for the e-commerce industry, as people continue to stay indoors and buy all essentials online, especially food items.

The fund seeks to provide investment results which, before fees, generally correspond to the price and performance of the Dow Jones US Technology Capped Index. It charges investors 41 basis points in annual fees as stated in the prospectus (read: 5 tech ETFs outperforming the market this year).

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Pfizer Inc. (PFE): Free Inventory Analysis Report

ETF VanEck Biotech (BBH): ETF Research Reports

SPDR S&P Semiconductor ETF (XSD): ETF Research Reports

iShares US Technology ETF (IYW): ETF Research Reports

ETF Invesco S&P 500 Pure Growth (RPG): ETF Research Reports

First Trust NASDAQ Bank ETFs (FTXO): 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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