Concerns over the multi-decade high inflation, continued Russia-Ukraine crisis, rising energy and commodity prices, lingering supply chain disruptions, and the possibility of a recession are making investors pull money out of the stock market lately.
With inflation hitting a new 40-year high of 8.6% in May, the Federal Reserve hiked the benchmark interest rate by 75 basis points. Many analysts expect the Fed’s hawkish stance to tame the multi-decade high inflation to push the economy into a recession.
When the market has been witnessing a massive correction, ETFs ProShares UltraPro Short 20+ Year Treasury (TTT), Invesco DB Energy Fund (DBE), and Invesco DB US Dollar Index Bullish Fund (UUP) have performed strongly and are up year-to-date. Moreover, these ETFs are rated Strong Buy or Buy in our proprietary POWR Ratings system.
Since these ETFs are well-positioned to maintain their momentum in an uncertain market, it could be wise to invest in them now.
ProShares UltraPro Short 20+ Year Treasury (TTT)
TTT invests in the fixed income markets of the United States. It takes short positions and uses derivatives such as swap agreements and futures contracts to invest in U.S. dollar-denominated, investment-grade treasury securities that have a remaining maturity of 20 years or more and that are rated at least Baa3 by Moody’s or BBB- by S&P.
The fund seeks to track the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index thrice.
TTT has $466.80 million in assets under management (AUM). Its major holdings include U.S. Dollar, with a 61.71% weighting in the fund, followed by Treasury Issues (Short-Term) at 11.65%, and United States Treasury Bills 0.0% 08-SEP-2022 at 11.62%. It currently has five holdings in total.
Over the past three months, the ETF’s fund flow has been $33.30 million. The fund has gained 95.8% year-to-date to close the last trading session at $58.89.
TTT’s POWR Ratings reflect this promising outlook. The ETF has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
TTT has an A for Trade grade. Of the 20 ETFs in the A-rated Inverse Bonds ETFs group, TTT is ranked #7. Click here to see TTT’s Buy & Hold and Peer ratings.
Invesco DB Energy Fund (DBE)
DBE invests in the commodity markets. The fund uses derivatives such as exchange-traded futures contracts to invest in commodities in the energy sector such as light, sweet crude oil, heating oil, Brent crude oil, RBOB gasoline, and natural gas. It seeks to track the performance of the DBIQ Optimum Yield Energy Index Excess Return.
DBE has $310.60 million AUM. Its major holdings include Mutual Fund (Other) with a 58.77% weighting in the fund, followed by United States Treasury Bills 0.0% 01-DEC-2022 at 12.75%, and United States Treasury Bills 0.0% 08-DEC-2022 at 9.56%. It currently has eight holdings in total.
The ETF’s 0.77% expense ratio compares to the 0.83% category average. DBE has seen $110.56 million in net inflows over the past six months. DBE has gained 60.9% in price year-to-date to close the last trading session at $26.97.
It’s no surprise that DBE has an overall B rating, which equates to Buy in our proprietary POWR Ratings system.
In addition, DBE has an A for Trade and Peer grade and a B for Buy & Hold. Within the 117 ETFs in the B-rated Commodity ETFs group, DBE is ranked #16.
Invesco DB US Dollar Index Bullish Fund (UUP)
UUP invests in the currency markets. It uses derivatives and takes long positions in ICE U.S. Dollar Index futures contract to track the value of the US Dollar relative to the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. The fund replicates the performance of Deutsche Bank Long USD Currency Portfolio Index – Excess Return.
With $1.68 billion in AUM, UUP’s major holdings include Government & Agency Portfolio with a 73% weighting in the fund, followed by the United States Treasury Bill at 16.19%, and Invesco Treasury Collateral ETF (CLTL) at 10.80%. It currently has three holdings in total.
Over the past six months, the ETF’s fund flow has been $949.31 million. The fund has gained 8.5% year-to-date to close the last trading session at $27.84.
UUP’s POWR Ratings reflect solid prospects. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
In addition, UUP has an A for Trade, Buy & Hold, and Peer grades. Of the 16 ETFs in the A-rated Currency ETFs group, UUP is ranked first.
TTT shares were unchanged in premarket trading Friday. Year-to-date, TTT has gained 90.52%, versus a -19.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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