Investors have enjoyed bull market returns in 2017 with the S&P 500 gaining 19.75% and the Dow Jones Industrial Average gaining 25.33% year-to-date (YTD) through December 21, 2017. After a bit of a rollercoaster for Wall Street in 2016, stocks appear to be stabilizing and showing further signs of upside ahead. In the U.S., projections are showing positive economic growth prospects with confidence in President Donald Trump’s political agenda and the passing of U.S. tax reform.
In 2018, numerous opportunities exist as investors more closely consider equities for generating additional return. Many market watchers think sector investing is the most promising place to park your cash. Lower corporate taxes are fueling expectations for growth companies with tax savings likely to be channeled towards growth and development. Overall, catalysts are likely to provide even greater momentum for technology, housing construction and health care stocks which have all showed significant gains in 2017.
With many of the market’s current themes and trends offering targeted equity investment opportunities in specific sectors, exchange-traded funds may be the way to go. Below we highlight four promising sector ETFs that have been building momentum in 2017 and could be poised for continued gains.
Note: Funds were chosen on the basis of U.S. sector opportunity and performance. All performance figures are year-to-date total returns as of December 21, 2017 unless otherwise noted. Funds do not include leveraged ETFs.
- YTD Return: 91.19%
- Price: $47.48
- Yield: N/A
- Average Volume: 157,744
- Assets under Management: $253.8 million
- Fee: 0.75%
The ARK Web x.0 ETF was a top performer in 2017, reporting a year-to-date return of 91.19%. The ETF invests in the growing internet sector with a focus on internet companies across multiple categories. Allocations in the portfolio include: cloud computing, cyber security, big data, machine learning, e-commerce, digital media, blockchain, peer-to-peer, internet of things, mobile, and social platforms.
The Fund is actively managed and holds 35 to 50 domestic equities and U.S.-listed ADRs. Top holdings in the portfolio are Bitcoin Investment Trust, Amazon.com and Twitter.
- YTD Return: 57.46%
- Price: $43.04
- Yield: 0.29%
- Average Volume: 2,433,178
- Assets under Management: $2.47 billion
- Fee: 0.44%
The iShares U.S. Home Construction ETF reported a year-to-date return of 57.46% as of December 21, 2017, topping the sector performance list for the year. This Fund has been gaining as the environment for home construction improves.
The Fund seeks to track the holding and return of the Dow Jones U.S. Select Home Construction Index. This Index includes 47 companies across the entire home construction sector. Top holdings in the Fund are D R Horton, Lennar Corp., NVR Inc., Pulte Group Inc., Toll Brothers Inc., Home Depot Inc. and Lowes Companies Inc.
- YTD Return: 50.39%.
- Price: $27.75
- Yield: N/A
- Average Volume: 4,560
- Assets under Management: $30.2 million
- Fee: 0.79%
The Virtus Life Sciences Biotech Clinical Trials ETF is a fund that seeks to invest in biotech growth stocks. Companies in this sector fund are working on research and development for genomic and lifesaving biotech drugs. Companies are in the clinical trials phase of research for antivirals, antibiotics, cancer-fighting medicines, gene therapies, cell-based therapies and enzyme replacement therapies.
As of December 21, 2017, this sector fund had a year-to-date return of 50.39%. Top holdings in the fund were Madrigal Pharmaceuticals, Novavax, Assembly Biosciences, Melinta Therapeutics and Immunomedics
- YTD Return: 46.27%
- Price: $70.35
- Yield: N/A
- Average Volume: 2,559
- Assets under Management: $125.8 million
- Fee: 0.60%
The PowerShares DWA Healthcare Momentum Portfolio is another healthcare sector stock that has shown significant gains in 2017. Its year-to-date return through December 21, 2017 was 46.27%.
This Fund seeks to track the Dorsey Wright Healthcare Technical Leaders Index. This Index includes 30 healthcare stocks from the NASDAQ U.S. Benchmark Index screened for momentum characteristics. Top holdings in the fund are Exact Sciences, Align Technology, Exelixis, Bluebird Bio, Dynavax Technologies and UnitedHealth Group.