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Top Sector ETFs of 1H

Now that we are about to draw the curtain on the first half of 2017, a flashback of these six months sounds like a good idea. The start of the year was buoyant with Trump taking the presidential chair in the U.S. and the broader market continuing to cheer his pro-growth promises. The behavior of the oil patch was also decent with the OPEC output cut deal.

However, risk-off sentiments showed up to finish the first half thanks to Trump’s policy uncertainty on political disagreement, an oil price slide on rising U.S. crude and overvaluation concerns.

All these developments led the Dow Jones Industrial Average-based DIA to a 9.7% YTD gain, the Nasdaq 100-based QQQ to a 18.8% YTD advancement and the S&P 500-based SPY to about 9.9% YTD returns (as of June 28, 2017).

Needless to say, there were some sectors that offered a stellar show in the first half. Below we highlight three sectors that outperformed and their top-performing ETFs.

Technology

The space has been red hot this year with the biggest tech ETF Technology Select Sector SPDR Fund XLK returning over 16% on a year-to-date basis. The technology sector is said to be a cyclical one and performs well in a growing economy. Investors should note that the earnings picture of the technology sector has lately been reassuring (read: Is the Tech Rout Overstated? Buy 3 Stocks & ETFs on the Dip).

Analysts like Goldman Sachs stated that Facebook FB, Apple AAPL, Amazon AMZN, Microsoft MSFT and Google-Alphabet GOOGL or the FAAMG stocks have lower valuations and better cash balances. Canaccord expects FANGs to continue capitalizing on “digital advertising, digital video consumption, e-commerce and cloud services.”

All these factors made the sector a winner in 1H17. And the winning ETFs were ARK Innovation ETF ARKK (up 48.6%), PureFunds Video Game Tech ETF GAMR (up 38.3%) and Global X Social Media ETF SOCL (up 32.9%).

Biotech & Healthcare

This segment also caught investors’ attention in the first half. The pharma and biotech industry has been hit hard in recent times on the price gouging issue. The issue was first raised by Hillary Clinton in September 2015 and since then the space has been battered by increasing political and media focus on high prices for some drugs. Even President Trump occasionally bothered the sector on this issue.

However, the stringent approach is easing, allowing investors to enter the space all over again. Also, President Trump’s pledges to reduce FDA regulations and removal of taxes and fees on pharmaceutical and medical-device manufacturers may prove to be a boon to the space (read: 5 Reasons Why Biotech ETFs are Soaring).

Successful clinical trials for new drugs has acted as another catalyst to the space. Plus, mergers and acquisitions have worked wonders for biotech companies. These also gave funds like BioShares Biotechnology Clinical Trials BBC (up 34.6%), SPDR S&P Biotech ETF XBI (up 34.1%) and PowerShares DWA Healthcare Momentum ETF PTH (up 32%) a boost in the first half.

Homebuilders

The housing sector has been in good shape lately. If we go by the latest data points, new home sales rebounded in May after a downbeat April. Existing home sales for the month of May also increased to the third highest monthly level in a decade.  Favorable mortgage rates and a solid labor market helped the sector to put up a decent show. iShares US Home Construction ITB (up 24%) and SPDR S&P Homebuilders ETF XHB (up 14.5%) were the two beneficiaries of the pickup in homebuilding activity (read: Surprise ETF Winners Post Fed Hike).

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
SPDR-TECH SELS (XLK): ETF Research Reports
 
SPDR-DJ IND AVG (DIA): ETF Research Reports
 
NASDAQ-100 SHRS (QQQ): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
SPDR-SP HOMEBLD (XHB): ETF Research Reports
 
ISHARS-US HO CO (ITB): ETF Research Reports
 
GLBL-X SOCL MDA (SOCL): ETF Research Reports
 
PWRSH-DW HLT MO (PTH): ETF Research Reports
 
BIOSH-BIO CLNCL (BBC): ETF Research Reports
 
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