Best-Performing ETF Areas of September

Contrary to its odd reputation, Wall Street delivered an upbeat performance in September. The S&P 500 added 1.6%, the Dow Jones advanced 1.8%, the Nasdaq Composite gained 2.3% and the Russell 2000 ticked up 0.3% last month. The month can be easily marked by the first Fed rate cut in four years, ECB’s second rate cut and Chinese stimulus.

U.S. Economy Grows Faster Than Expected in Q2

The U.S. economy grew at an annualized rate of 3% in the second quarter of the year, surpassing Wall Street's expectations. According to the Bureau of Economic Analysis's third estimate, this growth rate remained unchanged from the previous estimate.

Economists had estimated the reading to show an annualized growth of 2.9%. The second-quarter growth marks a significant improvement from the 1.4% annualized growth seen in the first quarter (read: 4 Reasons to Buy Small-Cap ETFs Now).

Fed Rate Cut

The Federal Reserve kicked off the easing monetary era by slashing key interest rates by 50 bps to 4.75-5% after holding it at a 23-year high for 14 consecutive months since July 2023. This marked the first rate cut since 2020 to address slowing economic growth and showed greater confidence in the fact that inflation is moving sustainably toward the 2% target level.

Chinese Stimulus

On Sept. 24, 2024, China's central bank, the People’s Bank of China (PBOC), announced a broad range of monetary stimulus measures aimed at boosting the world's second-largest economy. This move indicates growing concerns within Xi Jinping's administration over the nation’s slowing growth and declining investor confidence.

ECB Rate Cut

European Central Bank (ECB) slashed rates for the second time in three months in September. The reduction, from 3.75% to 3.5%, came on the heels of slowing inflation.  The bank also intends to bolster the region's sagging economy.

Best-Performing ETFs of September

Against this backdrop, below we highlight a few winning exchange-traded funds (ETFs) for the month of September.

China ETFs

Global X MSCI China Consumer Discretionary ETF CHIQ – Up 35%

KraneShares Hang Seng TECH Index ETF KTEC – Up 33.7%

China's stimulus efforts boosted global markets, with mainland stocks notching their biggest weekly win since 2008. Shares of Alibaba BABA, JD.com (JD), and Meituan jumped as investors showed renewed interest in Chinese equities (read: A Few Reasons to Buy China ETFs Now).

Technology ETFs

First Trust Dow Jones International Internet ETF FDNI – Up 24%

EMQQ The Emerging Markets Internet ETF EMQQ – Up 16.7%

International tech stocks have been in fine fettle due to global monetary policy easing. Since low rates are beneficial for growth sectors like technology, such an environment bodes well for international Internet stocks and ETFs. In general, Chinese stimulus and a Fed rate cut have favored the broader emerging market investing (read: Emerging Market ETFs Roar Back to New Heights).

Natural Gas

United States Natural Gas Fund LP UNG – Up 22.8%

The natural gas markets have rallied as traders worry that the refining and extraction of natural gas in the Gulf of Mexico could be hampered due to hurricanes. Total U.S. consumption of natural gas rose by 2.5% (1.7 Bcf/d) in the week ending Sept. 25, 2024 from the previous week, according to data from S&P Global Commodity Insights.

Lithium

iShares Lithium Miners and Producers ETF ILIT – Up 14.7%

Electric vehicle (EV) stocks gained momentum this month on speculation of higher EV sales. Electric car sales in the United States are on track for a record quarter, according to forecasts out Wednesday from Cox Automotive, as quoted on insideevs.com. Lithium-ion batteries are the most common type of battery used in electric vehicles. This fact explains the rally in ILIT ETF.

Airlines

U.S. Global Jets ETF JETS – Up 14.3%

Airlines stocks soared on strong demand, decelerating capacity and lower oil prices. The Airports Council International (ACI) World projects that global passenger volume will reach 9.5 billion in 2024, which is 104% of the 2019 level and a 10% increase from 2023, per Airport Council International.

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 60 securities and charges 60 bps on an annual basis.

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