Sector ETFs At The Midpoint In Q1: Hits & Misses

The first quarter of 2020 so far has been plagued with the Middle East tensions and the coronavirus outbreak. However, Wall Street rallied despite all odds as global central banks continued being dovish with China (the epicenter of coronavirus) rolling out fiscal and monetary stimulus to keep the economy as well as the market upsurge going.

U.S. equity funds like SPDR S&P 500 ETF Trust (ASX:SPY) , Invesco QQQ Trust (QQQ) and SPDR Dow Jones Industrial Average (NYSE:DIA) ETF Trust (TSXV:DIA) have advanced about 3.7%, 8.6% and 1.5%, respectively, in the period. U.S. stocks stayed quite steady amid coronavirus-induced safety trades. Particularly, big tech names with solid cash cushion have gained a lot despite the troubled times (read: Are U.S. Assets Acting as Safe Havens? ETFs in Focus).

Against this backdrop, below we highlight the top and the flop sector ETFs so far this quarter.

Top-Performers

Alternative Energy

Alternative energy as a whole has been in a safe spot. Among the bunch, solar stocks are on a stupendous rally. Per Deloitte, there has been a decline in wind and solar construction costs as in weighted project costs dropped 13% and 37%, respectively, between 2013 and 2017. This is a good reason for expansion in the industry.

Further, a rebound in global solar demand is noticed. The sector has every reason to gain this election year as most democrat candidates including Bloomberg are pledging to end the fossil-fuel era, going completely against President Donald Trump’s call. Electric car maker Tesla’s solar venture is another positive for the space.

Evidently, Invesco Solar ETF (LON:TAN) (up 21.8%), Invesco WilderHill Clean Energy ETF (NYSE:XLE) PBW (up 20.2%) and First Trust NASDAQ Clean Edge Green Energy ETF QCLN (up 16.8%)have been winners so far this year (read: 2 ETF Areas to Gain From Michael Bloomberg's Campaign).

Technology

Technology stocks have mainly been driving the broader market of late. The phase-one U.S.-China trade deal and increasing demand for emerging technology have been acting as the tailwind. Cloud computing and AI are two areas that are consistently ruling the technology sector currently (read: These 4 Sector ETFs Look Attractive in February).

ARK Next Generation Internet ETF ARKW (up 21.6%), WisdomTree Cloud Computing ETF WCLD (up 15.8%) and MicroSectors FANG+ ETN (NYSE:FN) (up 20.3%) are some of the winners (read: Sign In to Social Media ETFs as Twitter Rallies on User Growth).

Homebuilding

The housing sector appears in good shape if we go by the recently-released earnings reports.Not only earnings, the recent volley of data points also paints a rosy picture about the industry. Existing-home sales in the United States (which makes up the main part of the whole industry) jumped in December to the best clip since early 2018. Low mortgage rates have also been aiding the space. iShares U.S. Home Construction ETF (WA:ITB) added about 12.3% this year (read: Housing ETFs Soar on Upbeat Earnings With More Room to Run).

Worst Performers

Energy

China is the world's second-largest oil consumer. Needless to say, the virus outbreak softened travel demand and shook the oil market. Traveling is affected globally too as is evident from the drop in jet and diesel fuel demand.

Consequently, United States Oil Fund (NYSE:USO), LP USO has lost 14.5% this year. Worst-performing energy ETFs were Invesco S&P SmallCap Energy ETF PSCE (down 24.2%), SPDR S&P Oil & Gas Exploration & Production (NYSE:XOP) ETF (CSE:XOP) (down 20.8%) and iShares U.S. Oil Equipment & Services ETF (IEZ) (down 15.2%) are the losers (read: Virus Scare Weighs on Oil ETFs: Go Short for the Near Term).

Metals & Mining

China is a huge consumer of the material. Since several cities are on lockdown following the epidemic, factories have been closed for long. Understandably, demand for materials and metals was dented.. SPDR S&P Metals & Mining (NYSE:XME) ETF XME has lost 12.5% in the year-to-date frame (read: Wining & Losing ETF Areas on Coronavirus Outbreak).

Cannabis

It’s been a volatile journey for marijuana stocks in the past year. Earnings weakness, regulatory issues, “longer-than-anticipated product rollouts and overly enthusiastic forward estimates” hit the space hard. Global X Cannabis ETF (BO:POTX) (down 7.4%) and Amplify Seymour Cannabis ETF CNBS (down 5.2%) were some of the worst-hit marijuana ETFs.

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