5 Best-Performing Sector ETFs of August

The S&P 500 logged its fourth successive month of gains to close out August. Even after the late last week retreat, stocks managed to post gains for August. The S&P 500 advanced 1.5% during the month, while the Dow Jones rose 3.2%, marking the fourth successive monthly increase for both indexes, as quoted on Yahoo Finance.

The Nasdaq capped the month with a 1.6% gain, notching its fifth consecutive monthly rise and its longest winning streak in nearly a year and a half, as quoted on Yahoo Finance. Small-cap stocks also thrived, with the Russell 2000 surging about 7% for August — its fourth consecutive monthly gain and strongest streak in over four years, as mentioned in the same Yahoo Finance article.

Inflation Data Above Fed’s Target

The personal consumption expenditures price index showed that core inflation was a seasonally adjusted 2.9% in July, meeting estimates but higher than June, as quoted on CNBC. The persistence of inflation above the Fed’s 2% target is worrisome. The annual pace also marked the highest increase since February, as quoted on CNBC.

Consumer Sentiment Weakens

Consumer sentiment fell to a three-month low in August as tariff-related concerns about the economic outlook and inflation overpowered the sentiment, according to the University of Michigan’s closely watched survey. Respondents signaled expectations for faster inflation over the coming year.

Fed Rate Cut Bets Heighten

Despite the firmer inflation reading, bets on a rate cut in September remained strong. Traders continued to price in an 86.4% chance of a quarter-point reduction (at the time of writing), reflecting confidence that the Fed will ease monetary policy to counter a slowing labor market.

Inside Ethereum Rally

Ethereum prices jumped about 26% over the past month (as of Sept. 1, 2025). ETFs like Bitwise Ethereum Strategy ETF AETH and VanEck Ethereum ETF ETHV hovered around a 52-week high in August. Strong institutional demand mainly led to the surge. Staking yields and Layer 2 scaling are the other factors that kept Ethereum prices high in August, as quoted on tradingnews.com.

Tech Sector on Edge in August

The late part of August saw a volatile phase for the tech stocks, although the earlier part was steady. Talks of an AI bubble fear were prevalent in the market in August. OpenAI’s Sam Altman floated the talks, as quoted on CNBC. On the final day of the month, the tech-heavy Nasdaq Composite led the Wall Street pullback, due to a Big Tech rout.

NVIDIA Corp. NVDA lost over 3.3% on Aug. 29, 2025. Tesla TSLA shares retreated 3.5% on the day while Meta Platforms Inc. META shares were down 1.7% and Amazon.com, Inc. AMZN dived over 1.1%.

Marijuana

Roundhill Cannabis ETF WEED – Up 83.9% Past Month

AdvisorShares Pure US Cannabis ETF MSOS – Up 80.8%

Cannabis stocks and ETFs soared in August after reports that President Donald Trump gave hints of considering reclassifying marijuana (as quoted on the Wall Street Journal) to a less restrictive drug category. The likely move would shift marijuana from Schedule I, where it currently sits alongside heroin and cocaine, to Schedule III (as quoted on abcnews.com). This would be a beneficial step for the cannabis industry.

Digital Economy

CoinShares Bitcoin Mining ETF WGMI – Up 30.7%

Bitwise Ethereum ETF ETHW – Up 23.7%

While the Ethereum ETF surged, bitcoin mining stocks gained immensely last month. Overall, the crypto space gained attention in August.

Materials

VanEck Rare Earth and Strategic Metals ETF REMX – Up 27.8%

Sprott Lithium Miners ETF LITP – Up 25.7%

Sprott Active Gold & Silver Miners ETF GBUG – Up 25%

Sprott Junior Uranium Miners ETF URNJ – Up 19.9%

Materials ETFs surged in August. Be it rare earth, lithium, gold, silver or uranium, prices of most materials gained last month.  Gold and silver gained on safe-haven demand and higher industrial usage. Uranium prices have been gaining on higher nuclear demand, which is being driven by the AI boom, which requires a huge level of energy to keep the operation running. Rare Earth is also in high demand.   

Healthcare

iShares US Healthcare Providers ETF IHF – Up 15.7%

This ETF probably rallied on the strength of UnitedHealth Group Inc UNH shares in the month. UNH gained about 29% over the past month. Berkshire acquired over 5 million UnitedHealth shares worth $1.57 billion as of June 30 (per Reuters). This piece of information boosted the stock last month and helped this UNH-heavy ETF surge. The UNH stock takes about 22.85% of the ETF.

Industrials

Procure Space ETF UFO – Up 15%

SpaceX achieved a major milestone on Aug. 26, 2025, with the launch of its massive Starship rocket. With SpaceX’s progress, fresh IPOs, and initiatives from the several corners for the space boom, the space sector is drawing investors’ attention.

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This article originally published on Zacks Investment Research (zacks.com).

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