Best ETF Areas of January Up At Least 25%
Wall Street was superbly upbeat in 2023, with the S&P 500 (up 6%), the Dow Jones (up 2.5%), the Nasdaq (up 11%) and the Russell 2000 (up 8.5%) offering handsome returns in the past month (as of Jan 27, 2023). The Nasdaq composite has witnessed its fastest start to a new year since 2019 as rates dived to start the New Year (read: ETFs to Play Nasdaq's Fastest Start Since 2019).
Gains in the stock market were realized amid talks of a soft landing and the Federal Reserve slowing the pace of rate hikes this year and probably starting rate cuts from next year. Rising rate worries have dampened the appeal of the stocks that rely on easy borrowing for superior growth last year. Hence, shares of high-growth technology companies remained in a tight spot. However, with rates falling this year, technology and growth sectors started outperforming.
The benchmark U.S. treasury yield started the year at 3.79% and stood at 3.52% on Jan 27, 2023, having hit a monthly high of 3.71%. Notably, in the fourth quarter of 2022, the benchmark U.S. treasury yield touched 4.25%. Several U.S. economic indicators came in decent in January, which triggered the expectations that higher rates probably have not hurt the economy as much as many expected. The ongoing earnings season has also come in at modest.
Against this backdrop, below, we highlight a few ETF areas that stood winners in January.
Cryptocurrency
Valkyrie Bitcoin Miners ETF WGMI – Up 107.7%
VanEck Digital Assets Mining ETF DAM – Up 79.9%
Bitcoin prices surged in January amid optimism that it may have bottomed. Talks that inflation has peaked and will exhibit a downtrend in 2023 are doing rounds. This has bolstered risk-on trade sentiments and favored the beaten-down asset cryptocurrency.
Internet
ARK Next Generation Internet ETF ARKW – Up 33.0%
As rates dived considerably in January from the highs of 2022, growth stocks gained. Internet stocks were heavily beaten-down last year but bucked the losing trend to start 2023 as these perform better in a low-rate environment.
Tin
iPath Series B Bloomberg Tin Subindex Total Return ETN JJT – Up 28.5%
Tin futures were trading around the $30,000 per ton mark, a level not seen since June 2022, as top consumer China made re-opened its economy and also launched fiscal stimulus in support for the ailing real estate sector, thus boosting the outlook for demand.
Online Retail
ProShares Online Retail ETF ONLN – Up 28.2%
Global X E-commerce ETF EBIZ – Up 26.4%
Online retail ETFs have been gaining momentum to start the New Year. Despite high inflation, the holiday shopping season of 2022 turned out decent. Online sales during the holiday season increased 3.5% year over year to $211.7 billion, according to Adobe Analytics, as record-high discounts and promotions led shoppers to indulge on shopping.
E-commerce made up 21.6% of total retail sales over the holidays this year, according to Mastercard SpendingPulse. The figure marked a decent jump from the same period in 2019, when e-Commerce made up 14.6% of total sales (read: 4 Sectors & Their ETFs Returning Double-Digits to Start 2023).
Meme Stocks
Roundhill MEME ETF MEME – Up 26%
Companies that were the instigators of the meme-stock mania that started at the start of 2021 have raised a total of $4.7 billion, according to calculations by the Financial Times. While the trend occasionally fizzled in 2021 and 2022 due to rising rate worries and the share market crash, the sheer return of risk-on sentiments this year has boosted the meme stocks once again in January.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ARK Next Generation Internet ETF (ARKW): ETF Research Reports
iPath Series B Bloomberg Tin Subindex Total Return ETN (JJT): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
Global X E-commerce ETF (EBIZ): ETF Research Reports
Roundhill MEME ETF (MEME): ETF Research Reports
Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports
VanEck Digital Assets Mining ETF (DAM): ETF Research Reports
