5 Top ETF Zones Beating the Market to Start 2023

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After the biggest annual loss since 2008, Wall Street staged a strong rally at the start of 2023 on hopes of easing inflation and the Fed’s slower rate hike path.

A few corners of the stock market are outperforming. Valkyrie Bitcoin Miners ETF WGMI, Online Retail ETF ONLN, U.S. Global Jets ETF JETS, Global X Copper Miners ETF COPX and Invesco WilderHill Clean Energy ETF PBW have gained in double digits in the first couple of weeks of the New Year.

Inflation is easing and consumer confidence is rising, reflecting that the stock market will likely move higher. U.S. consumer prices unexpectedly fell for the first time in more than two-and-a half years in December. The consumer price index dipped 0.1% in December after gaining 0.1% in November. It rose 6.5% year over year in December, down from a 7.1% year-over-year increase in November and a recent peak of 9.1% in June. The annual inflation growth was the smallest rise since October 2021 and has put the Federal Reserve on track to again slow the pace of interest-rate hikes.

Americans are regaining confidence in the U.S. economy, with sentiment bouncing back in December and January and reversing consecutive declines in October and November. The US Michigan consumer sentiment survey hit a nine-month high of 64.6 in January, up from 59.7 in December.

The latest job report has added to the strength. The United States added 223,000 jobs in December and the unemployment rate fell to 3.5%, matching a 50-decade low. However, wage growth lost momentum, which gave investors hope that the Fed can ease off on its interest-rate increases. All these factors have boosted investors’ risk appetite (read: 6 Sector ETFs That Show Promise After December Jobs Data).

ETFs in Focus

We have profiled the above-mentioned ETFs in detail below:

Technology

Tech sector is outperforming at the start of 2023. Hopes of the Fed soon wrapping up its inflation-fighting campaign and cooling inflation has compelled investors to buy beaten-up technology stocks. Valkyrie Bitcoin Miners ETF is leading the way, gaining 74.3%. It is an actively managed ETF that will invest at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 25 stocks in its basket with an expense ratio of 0.75% (read: 5 Tech ETFs Riding High on Sectors’ Comeback to Start 2023).

Valkyrie Bitcoin Miners ETF has amassed $2 million in its asset base while trading in an average daily volume of 8,000 shares.

Retail

The Retail sector has been rising as online holiday sales hit a record high buoyed by heavy discounts, which persuaded shoppers to spend on everything from toys to electronics amid the rising inflation environment. ProShares Online Retail ETF has risen 18%. It offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. ProShares Online Retail ETF tracks the ProShares Online Retail Index, holding 25 stocks in its basket. ONLN is highly concentrated on the top two firms, while the other firms hold no more than 6.5% of the assets. American firms make up 69.6% of the portfolio, while Chinese firms account for 21.2% share.

ProShares Online Retail ETF has accumulated $144.8 million in its asset base and charges 58 bps in annual fees. ONLN trades in an average daily volume of 73,000 shares (read: Online Holiday Sales Hit Record High: 5 ETFs to Tap).

Airline

Airline ETF got a boost following earnings releases from Delta Airlines DAL and American Airlines AAL. Both air carriers are optimistic about the company’s growth prospects, given robust demand and high airfares. U.S. Global Jets ETF climbed 18.1% in the first two weeks. It 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. U.S. Global Jets ETF holds 50 securities and charges 60 bps in annual fees.

U.S. Global Jets ETF has gathered $2.1 billion in its asset base while seeing a heavy trading volume of nearly 3 million shares a day. JETS has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Copper

Copper has been regaining momentum fueled by hopes of a rebound in demand from China and weakness in the U.S. dollar. The red metal has surged past $9,000 per metric ton for the first time since June 2022. Global X Copper Miners ETF offers global access to a broad range of copper mining companies. It tracks the Solactive Global Copper Miners Total Return Index and holds 48 stocks in its basket. Canadian firms take the largest share at 28.8%, while Australia and the United States round off the next two spots (read: ETFs to Buy as Copper Price Rises).

Global X Copper Miners ETF has managed $1.9 billion in its asset base while charging 65 bps in fees per year. It trades in a good volume of 482,000 shares a day on average and has gained 15.9%.

Clean Energy

Optimism surrounding the stock market has raised the appeal for this high beta sector. The Inflation Reduction Act passed last year will infuse billions into incentivizing clean energy technology development and deployment in the United States. This, in turn, will benefit solar panel makers, fuel cell manufacturers and energy storage companies. Invesco WilderHill Clean Energy ETF offers exposure to companies that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds 76 stocks in its basket.

Invesco WilderHill Clean Energy ETF has amassed $821.8 million in its asset base and trades in a solid volume of around 368,000 shares a day. It charges investors 62 bps in fees per year and is up about 16% in the initial days of 2023.

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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

American Airlines Group Inc. (AAL) : Free Stock Analysis Report

Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports

U.S. Global Jets ETF (JETS): ETF Research Reports

Global X Copper Miners ETF (COPX): ETF Research Reports

ProShares Online Retail ETF (ONLN): ETF Research Reports

Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports

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