What Slump? 4 Sector ETFs Up At Least 14% in Q3
The third quarter of 2022 has just wrapped up. The broader market posted a muted performance during this time frame mainly due to red-hot inflation, a super-hawkish Fed and the resultant rising-rate worries. Central banks around the world have been on this path in recent days to tame inflation.
The Fed has hiked interest rates this year by 300 bps. Last week, Fed officials raised interest rates by 75 basis points for three times in a row, and Chairman Jerome Powell indicated that policymakers were ready to digest the economic recession in order to tame inflation.
The S&P 500, the Dow Jones and the Nasdaq Composite have lost about 6.3%, 7.6% and 5%, respectively, in the past three months (as of Sep 30, 2022). The small-cap index Russell 2000 has lost 3.7%.
Against this backdrop, below, we highlight a few sector ETFs that won in the third quarter.
Clean Energy
Alps Clean Energy ETF ACES – Up 14.2%
Proshares S&P Kensho Cleantech ETF CTEX – Up 14%
Clean-energy shares received a boost from the Inflation Reduction Act of 2022. The framework provided $370 billion to combat climate change and would be the biggest climate spending package in U.S. history. It included tax credits for wind, solar, hydrogen, and nuclear energy, and battery storage, among other things.
Biotech
Strategic Crispr & Gene Editing Technology ETF XDNA – Up 15%
Bioshares Biotech Clinical Trial BBC – Up 14%
The rally in biotech stocks in Q3 was a pronounced one. Per FT, hedge funds have started buying beaten-down biotech stocks since they believe that ultra-cheap valuations could revive M&A activity in the space. Many big pharma companies are looking to boost their drug pipelines through acquisitions. Biotech stocks were huge beneficiaries of the pandemic as many of these companies were developing new vaccines and treatments for COVID-19, leading to a surge in IPOs and venture capital investments.
Uranium Miners
Sprott Uranium Miners ETF URNM – Up 14.0%
The war in Ukraine has accelerated the transition to alternative sources of energy, particularly in view of surging natural gas prices. Nuclear power is back in prominence as governments try to tackle climate change and reduce dependence on Russian fossil fuels. Uranium, used mainly in nuclear power plants, is one of the cleanest ways to produce electricity. However, nuclear energy currently makes up about 10% of the world’s electricity production.
Cryptocurrency
FT Skybridge Crypto Industry and Digital Economy CRPT – Up 20.5%
iShares Blockchain and Tech ETF IBLC – Up 16.6%
Tech ETFs made a solid comeback in July. The crypto space especially gained in August after the announcement of a partnership with BlackRock Inc. to help institutional investors manage and trade Bitcoin, per Business Standard. The very news bodes well for the entire crypto and fintech space.
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
Virtus LifeSci Biotech Clinical Trials ETF (BBC): ETF Research Reports
ALPS Clean Energy ETF (ACES): ETF Research Reports
Sprott Uranium Miners ETF (URNM): ETF Research Reports
First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT): ETF Research Reports
ProShares S&P Kensho Cleantech ETF (CTEX): ETF Research Reports
Kelly CRISPR & Gene Editing Technology ETF (XDNA): ETF Research Reports
iShares Blockchain and Tech ETF (IBLC): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
