Last week was all about Wall Street rally on signs of slowdown in coronavirus cases in some of the global hotspots like Italy and New York as well as another round of Fed stimulus. The S&P 500, the Dow Jones and the Nasdaq Composite jumped 12.1%, 12.7% and 10.6%, respectively. In fact, S&P 500 logged its best weekly gains since 1974, while the Nasdaq saw the best week since 2009, per CNN.
The Fed’s latest easing policy included an investment of “up to $2.3 trillion in loans to aid small and mid-sized businesses and state and local governments as well as fund the purchases of some types of high-yield bonds, collateralized loan obligations and commercial mortgage-backed securities.” Before this, the Fed had enacted zero rates in the United States, launched an infinite QE as well as announced the buying of highly-rated corporate debt.
Against this backdrop, we highlight a few ETF areas that gained at least 30% last week.
Mortgage REIT
VanEck Vectors Mortgage REIT Income ETF MORT (up 38.3%) and iShares Mortgage Real Estate Capped ETF REM (up 37.5%) were the toppers last week. Mortgage rates are now near historic lows and benefited massively from the Fed’s latest announcement.
Preferred Stocks
Virtus InfraCap U.S. Preferred Stock ETF PFFA added 39.7% last week. It yields as high as 13.77% annually. An extremely low-rate environment and the Fed’s assurance for the high-yield space have probably boosted the segment.
Real Estate
There was a rally in the real estate sector on Apr 9.The sector has suffered on a torrent of missed rent payments caused by the steep rise in unemployed Americans and shop closures in America. However, the Fed’s effort to save Main Street should result in a recovery in rents. Thus, Pacer Benchmark Retail Real Estate SCTR ETF RTL advanced 31.1% last week. It yields about 7.8% annually.
Business Development
VanEck Vectors BDC Income ETF BIZD added about 31% last week. The underlying MVIS US Business Development Companies Index tracks the overall performance of publicly-traded business development companies. The fund yields about 14.02% annually.
A business development company, or BDC, is a closed-end investment company that helps small companies meet their capital needs and grow. Such companies offer high yields. The Fed’s efforts to save small-cap companies benefited the segment.
High-Dividend
Global X SuperDividend REIT ETF SRET (up 32.9%), Reality Shares DIVS ETF DIVY (up 36.9%) and Invesco KBW High Dividend Yield Financial ETF KBWD (up 29.2%) were the winners in the high-dividend ETF areas. The Fed’s decision to tap the high-yield corporate bond market probably has the entire high-dividend area in the market.
Consumer Discretionary
Invesco S&P SmallCap Consumer Discretionary ETF PSCD gained 27.9% last week. This area looks to be a clear gainer from the Fed’s Main Street saving program.
Home Building
iShares U.S. Home Construction ETF ITB added 27.1% last week on low rates and a rally in the stock market.Lower-than-expected decline in mortgage rates, likelihood of labor shortage and reduced wealth effect have wreaked havoc on the sector in the past month. But the new Fed stimulus, near record-low mortgage rates and current market recovery aided the fund (read: Is the 'Worst Behind Us'? ETFs to Buy).
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iShares U.S. Home Construction ETF (ITB): ETF Research Reports
VanEck Vectors Mortgage REIT Income ETF (MORT): ETF Research Reports
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD): ETF Research Reports
Invesco KBW High Dividend Yield Financial ETF (KBWD): ETF Research Reports
Global X SuperDividend REIT ETF (SRET): ETF Research Reports
iShares Mortgage Real Estate ETF (REM): ETF Research Reports
Reality Shares DIVS ETF (DIVY): ETF Research Reports
VanEck Vectors BDC Income ETF (BIZD): ETF Research Reports
Pacer Benchmark Retail Real Estate SCTR ETF (RTL): ETF Research Reports
Virtus InfraCap U.S. Preferred Stock ETF (PFFA): ETF Research Reports
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Zacks Investment Research
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