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Highlights

  • Sector-specific ETFs allow investors to capitalise on trends and opportunities within targeted industries.
  • The SPDR® S&P® Homebuilders ETF, focused primarily on the homebuilding sector, has delivered a 42.03% return over the past year (as of August 31, 2024).
  • First Trust RBA American Industrial Renaissance® ETF is heavily weighted toward the industrial sector, providing a 33.73% return in the past year (as of August 30, 2024).

An exchange-traded fund (ETF) is a collection of securities designed to mirror or outperform the performance of a specific underlying index. Investing in sector-specific ETFs allows investors to gain targeted exposure to particular industries, enhancing diversification and risk management. These ETFs enable investors to capitalise on sector trends and opportunities, providing a strategic approach to aligning portfolios with market developments. In this article, we’ve compiled a selection of U.S. ETFs that have achieved over 15% return in the past year.

MSCI Argentina ETF (ARGT)

The Global X MSCI Argentina ETF (ARGT) provides targeted exposure to some of Argentina's largest and most liquid securities. By tracking the MSCI All Argentina 25/50 Index, the ETF aims to deliver investment results closely aligning with the index's price and yield performance, before accounting for fees and expenses.

As of August 31, 2024, sector allocation reveals a significant emphasis on consumer discretionary at 41.8%, followed by financials at 18.6% and energy at 14.8%.

The ETF's top three holdings include MercadoLibre Inc., Grupo Galicia-ADR, and YPF S.A.-Sponsored ADR, as of September 20, 2024.

As of August 31, 2024, the fund has provided an average annualised return of 38.47% in the past year and 23.33% in the past three years.

SPDR® S&P® Homebuilders ETF (XHB)

The SPDR® S&P® Homebuilders ETF is designed to provide targeted exposure to the homebuilder segment of the S&P Total Market Index (TMI), focusing on the homebuilding sub-industry. This ETF not only encompasses homebuilders but may also provide exposure to related sectors such as building products and home furnishings.

As of September 19, 2024, in terms of sector allocation, the ETF predominantly emphasises homebuilding, which constitutes 54.83% of its holdings, the building products sector accounts for 33.55%, and it has smaller allocations to home improvement retail at 8.94% and home furnishing retail at 2.68%.

As of August 31, 2024, the fund has delivered a return of 16.04% for the current quarter and 22.94% year-to-date, with a 42.03% return over the past year.

Invesco Building & Construction ETF (PKB)

The Invesco Building & Construction ETF tracks the Dynamic Building & Construction Intellidex℠ Index, which consists of 30 U.S. companies involved in the building and construction sector. This index focuses on firms providing construction and related engineering services.

As of September 20, 2024, the fund allocates 40.97% to the consumer discretionary sector, followed by 35.04% in industrials. Its top three holdings include PulteGroup Inc., NVR Inc., and Lennar Corp.

As of August 31, 2024, the fund has provided a return of 18.42% on a year-to-date and 34.53% on a one-year basis.

First Trust RBA American Industrial Renaissance® ETF (AIRR)

The AIRR fund aims to achieve results closely aligned with the performance of the Richard Bernstein Advisors American Industrial Renaissance® Index. It typically invests at least 90% of its net assets in U.S. equity securities that comprise the index. It focuses on small and mid-cap U.S. companies in the industrial and community banking sectors.

The fund's allocation is heavily weighted towards the industrial sector (90.32%) and financial sector (9.68%), as of September 20, 2024. Its top three holdings include Granite Construction Incorporated, Mueller Industries, Inc., and EMCOR Group, Inc.

As of August 30, 2024, the fund has provided a return of 26.56% on a year-to-date basis and 33.73% in the past year.

iShares U.S. Home Construction ETF (ITB)

The iShares U.S. Home Construction ETF (ITB) aims to track the performance of an index that includes U.S. equities in the home construction sector, focusing on companies involved in the residential home manufacturing.

The fund emphasises homebuilding (66.96%), with allocations of 15.10% in building products and 9.93% in home improvement retail, as of September 19, 2024. The top three holdings include D.R. Horton Inc., Lennar A Corp Class A, and PulteGroup Inc.

As of June 30, 2024, the fund has provided an average annual return of 19.01% in the past year, 14.24% in the past three years, and 22.22% in the past five years.

By adopting a sector-specific strategy, the ETFs mentioned above may offer potential opportunities in essential areas such as housing and consumer staples. However, it's important to note that past performance does not guarantee future results.

Note 1: Past performance is not a reliable indicator of future performance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 23, 2024. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

AUD: Australian Dollar

RSI: Relative Strength Index