Soaring inflation, Russia’s war on Ukraine, sanctions, uncertainty over global economic contraction and a pandemic that still hasn’t disappeared have investors playing a dubious guessing game as to what sector is going to come out on top.
That volatility and uncertainty now seems to be leading money into exchange-traded funds (ETFs) as one of the key hedges.
No one’s been scared away. Instead, they’re just shifting. And big money is still pouring into stocks:
ETFs performed well throughout, in specific categories. Energy, of course, won the quarter, but even that is still a guessing game going forward, with a complete lack of consensus as to where it’s headed. The market can’t get a handle on the full impact of the Russian war on Ukraine and the sanctions that have been put in place.
Out of the 30 top performing ETFs for Q1 2022, 26 of them were from the energy sector.
For Q2, investors are having a bit of a rethink, and the top performing ETFs might not be dominated by energy–at least so thoroughly.
One ETF segment that we expect to emerge as a major winner is in the area of semiconductor chips, where long-running shortages have been wreaking havoc in the auto industry, where inventories are extremely low and prices are soaring.
This is a bet, according to Bloomberg, on the semiconductor industry recovering from its supply chain problems. Shortages haven’t meant huge riches for the semiconductor sector because that only works when you can actually race to meet soaring demand. The money is made in the balance.
Investors are now…