ETFs
5 Sector ETFs That Beat the Market in Q2
After the worst monthly decline in many months in April, Wall Street staged a nice comeback thanks to new Fed rate cut bets, ongoing developments in artificial intelligence (AI) and strong corporate earnings. With just one trading day left to close the second quarter, the tech-heavy Nasdaq Composite Index outperformed, up 9%, while the Dow Jones underperformed, losing nearly by 1.6%. The broad market index S&P 500 gained 4.3%.
Technology remained the second quarter’s best-performing sector in terms of AI, while energy lagged. In particular, the Magnificent Seven have been the main driver of growth in the S&P 500, accounting for 31% of the weighting in the index (read: Here’s why tech ETFs will continue their uptrend).
We have highlighted five top-performing ETFs from different market sectors that led the way higher in the second quarter. These are: SonicShares Global Expedition ETF BOAT, FNB Valkyrie Bitcoin Miners (WGMI), iShares MSCI Global Silver and Metals Miners ETF SLVP, Roundhill Magnificent Seven ETF MAGS and Fidelity Disruptive Communications ETF FDCF.
Three stocks from the “Magnificent Seven” group – NVIDIA (NVDA), Apple (AAPL) and Microsoft (MSFT) – are in the race to become the world’s most valuable company and have reached a market capitalization of $4 trillion on the back of growing enthusiasm for AI capabilities. The expansion of AI applications promises to open up new growth opportunities. E-commerce giant Amazon.com Inc. (AMZN) also surpassed $2 trillion in market capitalization for the first time in the last trading session (read: Tech ETFs Faceoff: Apple Vs. Microsoft).
At the last FOMC meeting, US policymakers only forecast one rate cut this year and indicated four cuts by 2025. Lower interest rates typically lead to lower borrowing costs, helping companies expand their operations more easily and leading to higher profitability. This in turn will boost economic growth and boost the stock market.
Focus on ETFs
Let’s look at the details of the ETFs mentioned above:
SonicShares Global Shipping ETF (BOAT) – Up 22.5%
Global shipping stocks have surged amid global geopolitical tensions and strong corporate earnings that have pushed up ocean freight rates. The SonicShares Global Shipping ETF provides pure exposure to the global shipping sector by tracking the Solactive Global Shipping Index. The index consists of global shipping companies engaged in the maritime transportation of goods and commodities, including consumer and industrial products, vehicles, dry bulk, crude oil and liquefied natural gas (read: Top 5 ETFs of Q2).
The SonicShares Global Shipping ETF holds 49 stocks in its basket and has accumulated $55 million in assets since then. The fund charges 69 bps in annual fees and trades on an average daily volume of 24,000 shares.
Valkyrie Bitcoin Miners ETF (WGMI) – Up 17.7%
Although the price of Bitcoin has fallen below $60,000, investor interest in the mining sector has surged following Core Scientific’s (CORZ) deal with artificial intelligence company CoreWeave in early June. Core Scientific signed a 200 megawatt (MW) artificial intelligence deal with the cloud computing company, sparking a surge in the Bitcoin mining sector.
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from Bitcoin mining operations and/or from providing specialized chips, hardware, software or other services to companies engaged in Bitcoin mining. The Valkyrie Bitcoin Miners ETF holds 21 stocks in its basket with a double-digit concentration on the top two companies. It has amassed $127.9 million in assets while trading an average daily volume of 358,000 shares. WGMI charges 75 basis points in annual fees.
iShares MSCI Global Silver and Metals Miners ETF (SLVP) – Up 17.4%
Last month, an ounce of silver crossed the $30 mark for the first time in decades, boosted by new bets on a Fed rate cut. A fourth expected annual market deficit, increased industrial demand, growing geopolitical tensions and uncertainties ahead of general elections in major economies contributed to the rise. In fact, silver miners are the biggest beneficiaries of rising silver prices. They act as leverage over the prices of the underlying metals and therefore tend to make more gains than their bullion cousins in a rising metals market.
The iShares MSCI Global Silver and Metals Miners ETF tracks the MSCI ACWI Select Silver Miners Investable Market Index, giving investors exposure to companies that derive the majority of their revenues from silver exploration or metal mining. Its basket consists of 29 stocks, with Canadian companies taking the lion’s share at 66.4%, while the U.S. and Mexico round out the next few spots. The iShares MSCI Global Silver and Metals Miners ETF has $216.9 million in assets under management and average daily volume of about 156,000 shares. It charges 39 basis points in annual fees.
Roundhill Magnificent Seven ETF (MAGS) – Up 16.4%
Roundhill Magnificent Seven ETF is the first-ever ETF to offer investors weighted exposure to Magnificent Seven stocks. It has accumulated $478.6 million in assets and charges 29bps in fees annually. MAGS trades in an average daily volume of 200,000 shares (read: 4 best performing active ETFs of the 1st half).
Fidelity Disruptive Communications ETF (FDCF) – Up 11.5%
The Fidelity Disruptive Communications ETF seeks exposure to disruptive communications companies active in social media, next-generation digital infrastructure and connected devices (e.g., 5G communications and cloud networks). It holds 42 stocks in its basket, with communications services taking the largest share at 46.5%, followed by information technology, which holds a share of 30.2%.
The Fidelity Disruptive Communications ETF has accumulated $53.5 million in assets and trades an average of 6,000 shares per day. It charges 50bps in annual fees.
The story continues
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iShares MSCI Global Silver and Metals Miners ETF (SLVP): ETF Research Reports
Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports
SonicShares Global Shipping ETF (BOAT): ETF Research Reports
Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports
Fidelity Disruptive Communications ETF (FDCF): ETF Research Reports