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4 Sector ETFs That Survived the Market Rout in April

·5 min read

The month of April was a dismal for Wall Street, thanks to the technology rout. The S&P 500 lost 8.8%, its worst monthly slide since March 2020, while the tech-heavy Nasdaq Composite Index saw the biggest monthly decline since the 2008 financial crisis, plunging 13.3%. The Dow Jones Industrial Average slumped 2.8%.

Despite the broad indices’ losses, a few sector ETFs survived last month’s turmoil. These include Credit Suisse S&P MLP ETN MLPO, Invesco S&P 500 Equal Weight Consumer Staples ETF RHS, VanEck Vectors Oil Refiners ETF CRAK and U.S. Global Jets ETF JETS.

How Market Fared in April

The decline was led by soaring inflation and rising interest rates that have sparked worries of a recession, resulting in a sharp-sell-off in high-growth stocks. Additionally, supply chain issues stemming from the spike in COVID-19 case in China and the ongoing war in Ukraine are weighing on investor sentiment. Shares of Amazon AMZN and Google parent Alphabet GOOGL logged their steepest monthly drops since the 2008 financial crisis (read: Should You Short Nasdaq ETFs as Index Hits New Low for 2022?).

Additionally, investors have been betting on the steepest Fed tightening in almost three decades. The central bank is expected to follow a more aggressive path to fight the 40-year high inflation after raising rates by 25 bps in the latest FOMC meeting. The tapering of government spending has been hitting consumers and businessess.

Further, the earnings season has not been impressive so far and the U.S. economy shrank for the first time since the outbreak of the pandemic. GDP dropped 1.4% annually in the first quarter of 2022, marking a sharp reversal from 6.9% annual growth in the fourth quarter.

With the April decline, the S&P 500 is down 13.8% in 2022, representing the worst year-to-date performance since World War II.

We have highlighted the ETFs in detail below:

Credit Suisse S&P MLP ETN (MLPO) – Up 9.1%

Amid huge tensions in the stock market, this overlooked corner of the market is making great strides. MLPs have relatively consistent and predictable cash flows, making them safer and less risky than the other plays in the broader energy space. These represent an attractive investment option for income-focused investors as MLPs pay out substantially all of their income to investors on a regular basis. In addition to high yields and the potential for capital appreciation, MLPs also have lower volatility and provide diversification benefits to the portfolio.

Credit Suisse S&P MLP ETN is linked to the S&P MLP Index, which includes both master limited partnerships and publicly traded limited liability companies having a similar legal structure to MLPs and sharing the same tax benefits. It is unpopular and illiquid in the MLP space, with AUM of $27.3 million and an average daily volume of under 500 shares. The note charges 95 bps in annual fees.

Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS) - Up 4%

Being defensive in nature, the consumer staples sector gained amid the declining stock market. This is because the sector is home to a variety of items like food & beverages, non-durable household goods, hypermarkets and consumer supercenters that are essential for daily needs. These products see steady demand even during an economic downturn due to their low level of correlation with economic cycles.

Invesco S&P 500 Equal Weight Consumer Staples ETF tracks the S&P Equal Weight Consumer Staples Index, holding 33 stocks in equal weights. Food products takes the largest share at 41%, while beverages, household products and food & staples retailing round off the next three spots with double-digit exposure each. Invesco S&P 500 Equal Weight Consumer Staples ETF has amassed $589.2 million in its asset base and trades in an average daily volume of 24,000 shares. It charges 40 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.

VanEck Vectors Oil Refiners ETF (CRAK) – Up 2.2%

Oil refiners gained momentum with the decline in oil price as the players in this industry use oil as an input for processing refined petroleum products. Hence, lower oil prices expand margins for refiners, leading to higher stock prices (read: Time to Tap Oil Refiners’ ETF Ahead of Earnings Season?).

With AUM of $21 million, VanEck Vectors Oil Refiners ETF is a one-stop shop for investors to play the oil refining market. It measures the performance of companies involved in crude oil refining, which may include: gasoline, diesel, jet fuel, fuel oil, naphtha, and other petrochemicals. VanEck Vectors Oil Refiners ETF follows the MVIS Global Oil Refiners Index, holding 25 stocks. The product charges 59 bps in annual fees and trades in an average daily volume of 12,000 shares.

U.S. Global Jets ETF (JETS) – Up 2.1%

Travel stocks and ETFs surged on optimism that consumers will continue flying this year despite higher fares. U.S. Global Jets ETF 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. The product holds 51 securities and charges 60 bps in annual fees.

U.S. Global Jets ETF has gathered $3.5 billion in its asset base while seeing a heavy trading volume of nearly 9.7 million shares a day. JETS has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Should You Buy Travel Stocks & ETFs Now?).


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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS): ETF Research Reports
 
U.S. Global Jets ETF (JETS): ETF Research Reports
 
VanEck Oil Refiners ETF (CRAK): ETF Research Reports
 
Credit Suisse S&P MLP Index ETN (MLPO): ETF Research Reports
 
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