4 Sector ETFs That Crushed S&P 500 In 9-Year Bull Run

The S&P 500’s bull market has just turned nine. On this very day, nine years ago, stocks bottomed out only to log an amazing recovery from the deepest recession since the Great Depression.

The collapse of Lehman Brothers in September 2008 wreaked havoc on Wall Street. And on March 9, 2009, the broader S&P 500 was below 700 for the first time in 13 years. But all this is history today as the S&P 500 is now trading at $2,726.80 (as of Mar 7, 2018). This marks the second-longest bullish phase in the history of the U.S. equity market, which needs 1200 more days without a 20% decline to be crowned as the best.

The total market capitalization of the S&P 500 is now about $24 trillion compared with $5.89 trillion nine years ago. The Fed’s quantitative easing and rock-bottom interest rate policy in order to boost a struggling took Wall Street to this height.

While several sectors performed overwhelmingly, some shone like jewels. If we look at the ETF world, we’ll see that the S&P 500-based fund SPDR S&P 500 ETF (NYSE:SPY) (AX:SPY) returned about 382% in this nine-year bull market while the Technology and Consumer Discretionary sector proved far more gainful.

What Was Behind the Rise?

The unemployment rate at the start of the bull market was 8.3% while it was 4.1% in January 2018. Wage growth in the United States has also picked up in recent times while the global economy has gathered steam thanks to easy money policies in most developed economies, resulting in greater affordability.

As per Reuters, the final GDP reading in March 2009 came up with a year-on-year contraction of 5.7%. In contrast, GDP grew 2.50% year over year in Q4 of 2017.

And who can forget Trump trade – the reason behind the monstrous rally in the U.S. market since late 2016? His promises of solid fiscal reflation, deregulation, further job creation and the passing of the tax reform took Wall Street on cloud nine (read: Tax Bill: What ETF Investors Need to Know).

Sector ETF Winners

Technology

The emergence of cutting-edge technology such as cloud computing, big data, Internet of Things, virtual reality devices, and artificial intelligence as well as strong corporate earnings are acting as a key catalyst for the sector. Additionally, the dual tailwinds of a rising rate environment and Trump’s tax reform are driving the tech stocks higher (read: 4 Sector ETFs to Ride on Strong Beat Ratios).

First Trust Dow Jones Internet ETF FDN – Up 908%

First Trust NASDAQ-100-Tech Sector ETF QTEC – Up712.5%

iShares PHLX Semiconductor ETF SOXX – Up 704.7%

PowerShares Dynamic Software ETF PSJ – Up 543%

Consumer Discretionary

After years of stagnation, the U.S. job market is finally strengthening, giving many lower income consumers some extra cash. The still-low fuel price is another positive for the fund.

Vanguard Consumer Discretionary ETF (HN:VCR) – Up 653.3%

Consumer Discretionary Select Sector SPDR ETF XLY – Up 642.2%

Biotech

Tax reform, successful clinical trials for new drugs & FDA approvals, stronger merger and acquisition activity have held the key to the success of this sector in recent times (read: Value Biotech ETFs to Buy Now).

First Trust NYSE Arca Biotech ETF (LON:FBT) – Up 751%

SPDR S&P Biotech (MX:XBI) ETF XBI – Up 572%

Healthcare

This sector is a bit defensive in nature. The aging population, growing demand in emerging markets and product launches are the positives of the sector. Also, the industry may see the possible deregulation of the FDA which would, presumably, push drugs to the market faster.

First Trust Health Care AlphaDEX ETF FXH – Up 495%

PowerShares Dynamic Pharmaceuticals ETF (WA:PJP) – Up 475%

Guggenheim S&P 500 Equal Weight HealthCare ETF RYH – Up 471.1%

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