Sweta Killa: The overall Q2 2015 earnings season appears weak especially with companies struggling to meet even low top-line estimates. Total earnings for 89.4% of the S&P 500 companies that have reported so far are down 2.5% on an annual basis with a beat ratio of 70.6% while revenues have decreased 4.2% with a beat ratio of 50.1%.
However, excluding the dull energy sector, the S&P 500 index is on track for a new all-time quarterly record earnings figure. This is primarily thanks to a number of sectors that stood out in a challenging environment. In particular, the medical sector is the star performer so far, having delivered the highest earnings surprise of 85.7% and highest revenue surprise of 67.3%. Consumer discretionary, autos and aerospace also came up with impressive earnings surprises of 82.4%, 80% and 77.8%, respectively.
When it comes to stronger earnings growth rates, autos and medical are the largest contributors with 25.3% and 14.8%, respectively. The other three sectors – transportation, finance and business services – recorded upper single-digit earnings growth in Q2. With respect to revenues, retail has been trending up so far with growth of 12.6%, though results from about half of the retailers are still awaiting.
Considering all the key metrics, several equity ETFs have impressed with their performances and have generated handsome returns over the trailing one month. While there are winners in many corners of the space, below are four ETFs that buoyed up on robust earnings results and crushed the broad market fund (SPY) in the same period:
U.S. Global Jets ETF (NYSEARCA:JETS)
This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 33 securities with double-digit allocations going to Southwest Airlines (LUV), Delta Air Lines (DAL), United Continental (UAL) and American Airlines (AAL). Other firms hold less than 5% share. The ETF has a certain tilt toward large cap stocks at 59% while small and mid caps account for 23% and 17% share, respectively, in the basket.
The fund has gathered $48.7 million in its asset base since its debut three and half months ago while sees moderate trading volume of nearly 78,000 shares a day. It charges investors 60 bps in annual fees and surged nearly 9% over the trailing one-month period.
First Trust Dow Jones Internet Index (NYSEARCA:FDN)
This is one of the popular and liquid ETFs in the technology space with AUM of $3.5 billion and average daily volume of more than 324,000 shares. The fund targets the Internet corner of the broad tech space by tracking the Dow Jones Internet Composite Index and charges 54 bps in fees per year. Holding 43 stocks in its basket, the fund is heavily concentrated on the top two firms – Amazon.com (AMZN) and Facebook (FB) – with over 10% share each. Other firms do not hold more than 6% of assets.
Large caps account for 70% share while the rest are evenly split between mid and small caps. From an industrial look, Internet mobile applications account for 54% share, closely followed by Internet retail (27%). The ETF has gained 7.8% from a one-month look.
PowerShares DWA Consumer Staples Momentum Portfolio (NYSEARCA:PSL)
This ETF provides exposure to 32 stocks having positive relative strength (momentum) characteristics by tracking the DWA Consumer Staples Technical Leaders Index. It has amassed $154.6 million in AUM and trades in lower volume of 42,000 shares a day on average. Expense ratio came in at 0.60%.
The product is pretty spread out across securities with each holding less than 4.4% of assets. It has a definite tilt toward mid cap stocks while the other two market cap levels take the remainder. Food products, beverages, and household durables are the key industries in the ETF having double-digit exposure each. The fund is up 7.2% over the past one-month.