Market participants appear pleased with the U.S. government’s stimulus measures and improving economic data, despite rising inflationary pressure. Consequently, the stock market is continuing its incredible rally, with the exception of a few short-term pullbacks. ETFs iShares Core S&P Small-Cap ETF (IJR), Financial Select Sector SPDR Fund (XLF), Vanguard Small-Cap Value ETF (VBR), and Industrial Select Sector SPDR Fund (XLI) have delivered exceptional returns over the past year. So, are they still worth a closer look? Read on.The stock market has raced ahead since its major correction in March 2020. The U.S. economy has recovered steadily and has been delivering positive data over the past three quarters. In fact, domestic GDP registered a 6.4% annual growth in the first quarter of 2021, marking its second-fastest pace for growth since 2003. Among other favorable economic data, consumer spending is steadily returning to pre-pandemic levels, thanks to the fiscal stimulus packages, a better-than-anticipated mass vaccination drive, and steady job growth.
This improving economic health has translated into solid market momentum. All three major indexes have hit multiple highs over the past year and have continued to rise this year. Notably, the S&P 500 has returned 38.5% over the period. However, Wall Street has also been subjected to extreme volatility over the past few months. Amid this environment, many investors have turned to exchange traded funds (ETFs) because their broad and diversified exposure to securities helps them mitigate risk related to volatility and generate stable returns.
As such, iShares Core S&P Small-Cap ETF (IJR), Financial Select Sector SPDR Fund (XLF), Vanguard Small-Cap Value ETF (VBR) and Industrial Select Sector SPDR Fund (XLI) have delivered market-beating returns over the past year. So, let us review if these popular ETFs can maintain their momentum going forward because the market is expected to remain under pressure in the coming months due to the rising inflation concerns.