3 ETFs Helping The S&P 500 Gain 30% – IHE, IAI, XAR
The S&P 500 finished November 30% higher than it was a year ago.
Needless to say, that’s an impressive gain for the large cap index. But here’s something that’s even better…
According to paststat, over the last 18 years whenever the S&P 500 has a 30% year-over-year gain (like it did from November 2013 to November 2014), the index has been up 100% of the time over the next 12 months.
And get this… the average gain has been 17.7%.
Let’s take a look at three ETFs that helped lift the S&P 500 to a 30% gain…
iShares US Pharmaceuticals ETF (IHE)
IHE’s 7% gain over the last month provided a nice boost to the S&P 500.
This ETF holds a number of pharmaceutical stocks that are in the S&P 500 index like Johnson & Johnson (JNJ), Merck (MRK), and Allergan (AGN).
It currently holds 39 stocks that are weighted according to market capitalization. It has a dividend yield of 1.22% and an expense ratio of 0.45%.
Pharmaceutical stocks are pegged to be one of the biggest beneficiaries of the Affordable Healthcare Act. The influx of new people with health insurance is expected to drive sales of prescription drugs in the US.
Worldwide pharmaceutical sales are expected to reach $1.1 trillion in 2014… and continue to grow at 5% to 8% over the next five years.
iShares US Broker-Dealers ETF (IAI)
IAI’s 8% gain over the last month also contributed to the S&P 500 gains.
Several of IAI’s top holdings like IntercontinentalExchage (ICE), Goldman Sachs (GS), and Morgan Stanley (MS) are part of the S&P 500. In total, it holds 22 stocks. It has an expense ratio of 0.70% and a dividend yield of 1.83%.
Investment services companies have been one of the strongest components of the financial services sector. These companies are benefiting from higher brokerage fees as individuals and institutions trade more.
This is one ETF that is directly benefiting from investors bullish sentiment. And it should continue to see business boom as the markets move higher and more investors put money to work in the markets.
SPDR S&P Aerospace & Defense ETF (XAR)
XAR’s 6.6% gain in November also provided a nice lift to the S&P 500.
This ETF tracks an index of 35 companies in the aerospace and defense industry. It uses a modified market capitalization-weighted methodology. It has an expense ratio of 0.60% and a dividend yield of 1.64%.
Among the holdings, you’ll find Boeing (BA), Northrop Grumman (NOC), Textron (TXT), and several others that are part of the S&P 500.
Aerospace ETFs are performing well because of strong demand out of the private sector and because cuts to the US defense budget haven’t had as big of an impact as initially expected.
Here’s the upshot…
A wide range of sectors and industries have helped lift the S&P 500 to a 30% year-over-year gain. And if history holds true, we should see solid gains over the next 12 months as well.
Good Investing,
Corey Williams
Category: ETFs, Sector ETFs
