3 Hot Sector ETFs to Tide Over the Coronavirus Crisis in Q3

The coronavirus crisis continues to be acute in the United States as the death toll has now crossed 130,000. The infectious diseases expert, Dr. Anthony Fauci has said that United States is “knee-deep” in the first wave of the pandemic even as the number of coronavirus cases has doubled within a week and a half, per a CNN report. The rate of coronavirus infection is being observed to rise in around 32 states with only four states (Connecticut, Kentucky, Massachusetts and New Hampshire) seeing subsiding infection rates, according to Johns Hopkins University data. Given the current situation, at least 24 states have paused or rolled back reopening efforts for some time.

Against this backdrop, we highlight three sectors that make great investment choices:

Biotech ETFs

The race to introduce vaccine and treatment for coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. From vaccine-related positive news related to vaccine to progress in development of cell therapies for the treatment of coronavirus, all kept the sector surging. Positive development in coronavirus vaccine research recently fuelled the Wall Street rally. Pfizer (PFE), which is working with its Germany-based partner BioNTech, informed that one of its four candidates for the coronavirus vaccine has successfully generated neutralizing antibodies in all participants, who were given two of the 10 or 30 microgram doses after 28 days (per a CNBC article).

Fauci is mildly expecting scientists to develop a safe and effective COVID-19 vaccine by early 2021, per a CNBC article. According to the World Health Organization, more than 100 vaccines are currently under development.

Notably, a few ETFs with considerable exposure to the biotech space are iShares Nasdaq Biotechnology ETF IBB, SPDR S&P Biotech ETF XBI, First Trust Amex Biotechnology Index FBT, ARK Genomic Revolution ETF (ARKG) and VanEck Vectors Biotech ETF (BBH) (read: Biotech ETFs to Gain as Coronavirus Vaccine Hopes Strengthen).

Technology ETFs

The third quarter of 2020 is expected to keep facing the brunt of the pandemic as the second wave of the outbreak is gathering steam.In the current scenario, the rising work-from-home and online shopping trend, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With the new trends making way, these major technology companies are expected to continue to gain on rising demand for their products and services.

In fact, it is being widely believed that the major technology companies’ resilience to the coronavirus crisis have been supporting the Nasdaq Composite index. Major technology stocks like Facebook (FB), Microsoft (MSFT), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOGL) are all positive in 2020 so far. Moreover, Amazon (AMZN) has supported the Nasdaq by gaining more than 45% in the year.

Going on, even as the U.S. economy is reopening in phases and social-distancing restrictions are being eased, people are trying to minimize human-to-human contact. It’s largely because the pandemic has resulted in some changes in the lifestyle and preferences of Americans. Most of the surveys have found that people are more interested in online shopping rather than visiting a brick-and-mortar store for their purchases of essential food items and supplies now.

Investors seeking to ride the big tech rally could consider the Vanguard Information Technology ETF VGT, Technology Select Sector SPDR Fund XLK, iShares U.S. Technology ETF IYW and Fidelity MSCI Information Technology Index ETF FTEC (read: Make the Most of the Big Tech Rally With These ETFs).

Housing ETFs

The momentum in the U.S. housing market seems to be returning and some encouraging data sets are emerging from the sector. The May data on U.S. housing starts and building permits reflect improvement in U.S. homebuilding. The latest data on the U.S. homebuilder confidence seems encouraging even as the number of coronavirus cases continues to spike in the United States.

Also, per the Commerce Department data, new home sales surged 16.6% to a seasonally adjusted annual rate of 676,000 units in the month. The metric also rose 12.7% year over year and beat the consensus forecast by 7.3%. Notably, new home sales are generally considered a dependable metric for housing market health as it is calculated at the signing of a contract.

Low interest rates are boosting demand in the housing market, resultantly, an increase in mortgage applications is being observed. Going by a Reuters article, data suggests that applications for loans to purchase a home rose to a near 11-1/2-year high in the week ending Jun 12. Mortgage applications are also believed to have risen above the pre-pandemic levels (per a CNBC report).

Per a MarketWatch article, a Realtor.com report reflects that price gains have rebounded to their pre-coronavirus levels, which is also an indicator of improving housing market conditions. Meanwhile, scarcity of inventories persists, which might lead to further price increases.

In such a scenario, here are a few housing ETFs that investors can keep an eye on — iShares U.S. Home Construction ETF ITB, SPDR S&P Homebuilders ETF XHB and Invesco Dynamic Building & Construction ETF PKB (read: Are Housing ETFs Recovering From Coronavirus Injuries? Let’s See).

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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
SPDR SP Homebuilders ETF (XHB): ETF Research Reports
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
SPDR SP Biotech ETF (XBI): ETF Research Reports
First Trust NYSE Arca Biotechnology ETF (FBT): ETF Research Reports
Invesco Dynamic Building Construction ETF (PKB): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
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