5 Sector ETFs That Beat the Market in June

Sweta Killa

The stock market was off to a solid start in June buoyed by optimism over accelerating economic activities, a booming technology sector, an unprecedented stimulus, and hopes of a potential coronavirus vaccine.

In particular, the Fed’s latest move to provide liquidity in markets and the Trump administration’s $1 trillion infrastructure spending package added to the strength. The central bank announced that it would begin purchasing individual corporate bonds as part of its emergency lending program to inject liquidity into the virus-stricken economy (read: Fed's New Stimulus Regains Confidence: 4 ETF Picks).

However, volatility flared up to end the month as the second wave of new coronavirus cases made investors’ jittery. This is because the rise in new infections sparked off worries that reopening of businesses and economies could be curtailed again, slowing down the current recovery, which, however, is faster than expected. Re-emergence of trade tension and International Monetary Fund’s downgrade of the economic growth outlook added to the chaos.

Amid volatility, some sector ETFs have outperformed the market. Below we have highlighted five such ETFs that have raked in substantial gains in June and could be better plays if the trend prevails.

Credit Suisse S&P MLP ETN MLPO – Up 30.8%

Master Limited Partnerships (MLPs) represent an attractive investment option for income-focused investors as these pay out almost all of their income to investors on a regular basis. These have relatively consistent and predictable cash flows, making them safer and less risky than the other plays in the broader energy space. In addition to high yields and the potential for capital appreciation, MLPs also have lower volatility and provide diversification benefits to the portfolio.

The ETN MLPO, linked to the S&P MLP Index, charges 95 bps in annual fees. It is unpopular and illiquid in the MLP space with AUM of $17.6 million and average daily volume of 8,000 shares.

Roundhill BITKRAFT Esports & Digital Entertainment ETF NERD – Up 15.3%

The coronavirus pandemic has resulted in a shift in consumer habits to a purely digital world with work and entertainment from home. It has boosted demand for gaming, e-sports and streaming services (read: Esports & Gaming Industry on a Tear: ETFs to Bet On).

This fund offers retail and institutional investors exposure to e-sports & digital entertainment by tracking the Roundhill BITKRAFT Esports Index. The index consists of a modified equal-weighted portfolio of globally listed companies actively involved in the competitive video gaming industry. Holding 31 stocks in its basket, the ETF is well spread across them with none making up for more than 6.5% of assets. From a country exposure, China and the United States take the largest share at 24.4% and 13.3%, respectively, while Japan, Singapore, Taiwan and South Korea round off the next four spots. NERD has accumulated $25.8 million in its asset base while trading in average daily volume of nearly 21,000 shares. It charges 25 bps in annual fees and expenses.

Invesco WilderHill Clean Energy ETF PBW – Up 10.2%

As renewable energy usage is expected to grow significantly globally in the coming decades, clean energy stocks showed strength. PBW provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds about 41 stocks in its basket. The fund has AUM of $357.4 million in its asset base and sees a good volume of nearly 124,000 shares a day. It charges 70 bps in annual fees.

U.S. Global Jets ETF JETS – Up 7.4%

Though airline stocks suffered from re-emergence of new coronavirus cases lately, it still showed its strength as reopening of the economy coupled with new safety measures resulted in a pick-up in travel demand. Additionally, most of the air carriers have added back flights ahead of the peak summer travel season, indicating that air travel will gain speed.

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 40 securities and charges investors 60 bps in annual fees. The fund has gathered $1.4 billion in its asset base while seeing solid trading volume of nearly 3.4 million shares a day. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Most Popular ETFs on Robinhood).

ProShares Online Retail ETF ONLN – Up 6.9%

With the rapid digital shift in consumer landscape, online shopping has surged. This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 24 stocks in its basket. The product has amassed $154.3 million in its asset base and trades in paltry volume of around 52,000 shares a day on average. It charges 58 bps in annual fees from investors.

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