November continued 2013’s strong rally, as investors breezed by concerns over political issues to push stocks higher. Both the major U.S. benchmarks – Dow Jones and the S&P 500 – broke milestones with the DJIA hitting 16,000 and S&P 500 crossing 1,800 for the first time in history.
The S&P 500 returned nearly 3% while the Dow generated a little more at 3.5%. This is largely thanks to Fed easing monetary policies, recovering housing fundamentals, healing job market and increasing consumer confidence. Further, improving conditions in Europe and China propelled the market higher.
Investors should note that a couple of equity funds were clearly the biggest beneficiaries of these trends in November. While there have been winners in every corner of the space, the following three ETFs were the largest gainers in their respective sectors.
The trio has top Zacks ETF Ranks, suggesting bullish trends in the coming months as well. Any of these could be better plays in the current market and may continue to outperform:
SPDR S&P Pharmaceuticals ETF (NYSEARCA:XPH)
Currently, pharma is leading the healthcare world thanks to strong Q3 earnings growth, new drug approvals, increasing merger & acquisition activities and an ageing population. This trend is expected to continue given the bullish outlook and estimates (read: 3 Pharma ETFs Leading the Healthcare Sector).
The best performing ETF in November in this corner of the space was State Street’s XPH. The fund tracks the S&P Pharmaceuticals Select Industry Index, holding 32 securities in its basket. The product has $695.4 million in AUM and trades nearly 94,000 shares a day, while its cost is just 35 basis points a year.
The product is well spread across each security as the top 10 holdings account for less than 42% of the total assets. Endo Health Solutions (ENDP), Santarus (SNTS) and Jazz Pharmaceuticals (JAZZ) occupy the top three positions in the basket with a combined 14% share. While large caps account for 43% of total assets, small and mid caps take the remainder.
The product generated a double-digit return of nearly 12% last month. The fund has a Zacks ETF Rank of 2 or ‘Buy’ rating with ‘Low’ risk outlook.
iShares Dow Jones US Broker-Dealers ETF (NYSEARCA:IAI)
Here again, the broker-dealer is leading the way higher in the broad financial sector as of late driven by a steepening yield curve, and greater volatility in the markets which has assisted exchanges.
This corner of the market has already suffered the Fed’s ‘no taper’ shocker but is again drawing interest as speculations of a stimulus cut anytime soon have resurfaced. This has led to a great month for the broker dealer ETF, as this fund rose 9.7% in the last four weeks.