The month of December has been one of the strongest periods of the year for equities, and some areas of market and sector-related exchange traded funds may stand out during the Santa Claus rally.
Over the past month, the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO) have gained 0.4%. Year-to-date, the S&P 500 ETFs rose 3.0%.
After a weak November, the S&P 500 may enjoy a better run this month. According to Kensho data, over the past 25 years, the S&P 500 has been positive 80% of the time for an average gain of 1.78%, reports Bob Pisani for CNBC.
According to the Stock Trader’s Almanac, since 1950, December has been the best month for the S&P 500, with an average gain of 1.7%.
Looking at a sector-by-sector basis, industrials have been the best performing area in December for the past 25 years, showing a positive return 84% of the time for an average 2.93% gain.
For ETF investors, that could be a good sign for industrial sector-specific funds, including the Industrial Select Sector SPDR (NYSEArca: XLI), Vanguard Industrials ETF (NYSEArca: VIS), iShares U.S. Industrials ETF (NYSEArca: IYJ) and Fidelity MSCI Industrials Index ETF (NYSEArca: FIDU).
Additionally, utilities have been the second best sector in December with a 2.74% gain. However, utility-sector ETFs like the Utilities Select Sector SPDR (NYSEArca: XLU), Vanguard Utilities ETF (NYSEArca: VPU) and iShares U.S. Utilities ETF (NYSEArca: IDU) have weakened 2.0% over the past month ahead of a mid-December Federal Open Market Committee meeting where the Fed could announce its first interest rate hike in almost a decade.
Surprisingly, the growth-oriented tech sector has been the weakest link in the stock market over the December month. Technology stocks only posted a positive return 52% of the time for an average 0.6% gain. Consequently, investors who have exposure to tech sector ETFs, like the Technology Select Sector SPDR (NYSEArca: XLK), iShares U.S. Technology ETF (NYSEArca: IYW) and Vanguard Information Technology ETF (NYSEArca: VGT), may want to be vigilant for any short-term turns.
For more information on the market sectors, visit our sector ETFs category.
Max Chen contributed to this article.