Wall Street has lost momentum since the start of August, triggered by the series of bank downgrades and fears of higher rates for a longer-than-expected period. With just a couple of days of trading left, the tech-heavy Nasdaq Composite Index is poised to end the month 2.8% lower, while the Dow Jones and S&P 500 are both likely to see a decline of around 2%.

Despite the weak fundamentals, a few sectors are still in green, with their ETFs being the top performers. Some of these include Sprott Junior Uranium Miners ETF URNJ, Simplify Interest Rate Hedge ETF PFIX, Invesco Dynamic Energy Exploration & Production ETF PXE, iShares U.S. Pharmaceuticals ETF IHE and SPDR S&P Telecom ETF XTL.

A raft of strong economic data kept alive fears of higher interest rates for a longer period. U.S. retail sales came in better than expected, rising 0.7% in July. Additionally, inflation rose for the first time in July after 12 straight months of decline.

The Federal Reserve Chair Jerome Powell, at the Jackson Hole Economic Symposium, expressed confidence in continued economic growth in the United States, citing “robust” consumer spending and early signs of a recovery in the housing market. However, the Fed warned that inflation is still too high and that the central bank is prepared to raise interest rates further and keep the borrowing costs high until inflation comes down to the target range of 2%.

ETFs in Focus

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

Sprott Junior Uranium Miners ETF (URNJ) – Up 15.8%

Interest in nuclear power is on the rise, with uranium prices hitting their highest in over a year. This surge presents a promising opportunity for investors who anticipate global concerns about climate change to drive increased demand for this energy source. Sprott Junior Uranium Miners ETF is the only pure-play ETF focused on small uranium miners, selected for their potential for significant revenue and asset growth. It tracks the Nasdaq Sprott Junior Uranium Miners Index, which is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. Sprott Junior Uranium Miners ETF holds 29 stocks in its basket and charges 80 bps in annual fees.

Sprott Junior Uranium Miners ETF has accumulated $49.3 million in its asset base and trades in an average daily volume of 65,000 shares.

Simplify Interest Rate Hedge ETF (PFIX) – Up 12.5%

Interest rate hedge ETFs are once again rising on speculations over continued higher rates. Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge. It seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases while providing the potential for income.

Simplify Interest Rate Hedge ETF holds a large position in over-the-counter interest rate options intended to provide a direct and transparent convex exposure to large upward moves in interest rates and interest rate volatility. It invests in long-dated put options on 20-year US Treasury bonds to offer the most liquid and the most cost-efficient way of getting interest rate protection. PFIX has accumulated $209.7 million in its asset base and trades in an average daily volume of 153,000 shares. It charges 50 bps in annual fees.

Invesco Dynamic Energy Exploration & Production ETF (PXE) – Up 5.9%

Oil price has shown a nice comeback this month, driven by a tightening oil market fueled by surging crude demand and supply reductions by major OPEC+ players — Saudi Arabia and Russia. This has provided a boost to energy ETFs. Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value.

Holding 30 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $162.3 million in its asset base and charges 63 bps in annual fees. It trades in a volume of 56,000 shares and has a Zacks ETF Rank #3.

iShares U.S. Pharmaceuticals ETF (IHE) – Up 3.8%

This pharma ETF gained on a stronger-than-expected earnings season and the defensive nature of the sector. iShares U.S. Pharmaceuticals ETF provides exposure to 39 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index.

iShares U.S. Pharmaceuticals ETF has $389.5 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 6,000 shares a day. The fund carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.

SPDR S&P Telecom ETF (XTL) – Up 2.7%

Telecom ETFs got a boost from the booming AI technology. SPDR S&P Telecom ETF provides exposure to the telecommunications segment and follows the S&P Telecom Select Industry Index. It holds 40 stocks in its basket, with communications equipment making up 54.8% of the assets, while alternative carriers and integrated telecommunication services round off the next two spots with double-digit exposure each.

SPDR S&P Telecom ETF has amassed $56.5 million in its asset base and charges 35 bps in annual fees. It trades in a lower average daily volume of 8,000 shares and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports

SPDR S&P Telecom ETF (XTL): ETF Research Reports

Invesco Energy Exploration & P (PXE): ETF Research Reports

Simplify Interest Rate Hedge ETF (PFIX): ETF Research Reports

Sprott Junior Uranium Miners ETF (URNJ): ETF Research Reports

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Zacks Investment Research

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