Wall Street has been on a tough ride this year, with all the three major indices slipping into a bear market (a drop of 20% or more from a recent high). Russia’s invasion of Ukraine, aggressive rate hikes by the Fed and global growth concern have roiled the stock market badly.

While most corners of the market were in deep red, a few have performed well. Simplify Interest Rate Hedge ETF (PFIX Quick QuotePFIX - Free Report) , KFA Mount Lucas Index Strategy ETF (KMLM Quick QuoteKMLM - Free Report) , Invesco Dynamic Energy Exploration & Production ETF (PXE Quick QuotePXE - Free Report) , iMGP DBi Managed Futures Strategy ETF (DBMF Quick QuoteDBMF - Free Report) and Invesco DB US Dollar Index Bullish Fund (UUP Quick QuoteUUP - Free Report) from various corner of the stock market gained in double digits in the first nine months.

These funds have been this year’s star performers and could also be winners for the reminder of 2022 if the current trends continue.

Market Trends

The Federal Reserve has been on an aggressive tightening policy to fight skyrocketing inflation, which is near its highest levels since the early 1980s. Inflation is hovering near a 40-year high, dashing investors’ hopes with the possibility that price pressures would weaken (read: Guide to Interest Rates Hike and ETFs).

Fed Chair Jerome Powell raised interest rates by another three-quarters of a percentage point in the meeting last week. This marks the third consecutive interest rate hike of 0.75% and brings the benchmark interest rate to 3.0-3.25%, the highest level since 2008. The increase in interest rates will make borrowing expensive, driving up the cost of buying a new car or house or push up the cost of carrying credit card debt and thus slow down economic growth. The central bank also signaled that additional large rate hikes were likely at the upcoming meetings as it combats inflation that remains near a 40-year high.

Fed officials now expect the federal funds rate in a range of 4.25% to 4.5%, a full percentage point above 3.25% to 3.5% to end 2022, projected in June. This suggests that the central bank could approve another three-quarter point hike at its November meeting and then a half-point rate rise in December. The rapid pace of tightening has bolstered the case for the economy falling into recession.

Further, bouts of weak economic data across the globe added to global slowdown fears. Economic activity in China, the world's second-largest economy, has been declining and the property sector is also suffering. Euro zone inflation also rose to another record high.

Simplify Interest Rate Hedge ETF (PFIX Quick QuotePFIX - Free Report) – Up 74.6%

Simplify Interest Rate Hedge ETF seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases, while providing the potential for income. It buys put options on longer-term Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection.” Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge.

PFIX has accumulated $342.4 million in its asset base and trades in an average daily volume of 150,000 shares. It charges 50 bps in annual fees.

KFA Mount Lucas Index Strategy ETF (KMLM Quick QuoteKMLM - Free Report) – Up 47.4%

KFA Mount Lucas Index Strategy ETF is benchmarked to the KFA MLM Index, which consists of a portfolio of 22 liquid futures contracts traded on U.S. and foreign exchanges. The Index includes futures contracts on 11 commodities, six currencies, and five global bond markets. These three baskets are weighted by their relative historical volatility, and within each basket, the constituent markets are equal-dollar weighted.

KFA Mount Lucas Index Strategy ETF has amassed $244.5 million in its asset base and trades in average daily volume of 65,000 shares. It charges 92 bps in annual fees.

Invesco Dynamic Energy Exploration & Production ETF (PXE Quick QuotePXE - Free Report) – Up 33.9%

Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (read: Should You Buy Energy ETFs On Dip?).

Holding 32 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $266.5 million in its asset base and charges 63 bps in annual fees. It trades in a volume of 163,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

iMGP DBi Managed Futures Strategy ETF (DBMF Quick QuoteDBMF - Free Report) – Up 33%

iMGP DBi Managed Futures Strategy ETF seeks long-term capital appreciation. It will employ long and short positions in derivatives, primarily futures contracts and forward contracts, across the broad asset classes of equities, fixed income, currencies and commodities.

iMGP DBi Managed Futures Strategy ETF has AUM of $820.7 million and charges 85 bps in annual fees. It trades in a moderate volume of 499,000 shares a day on average (read: 5 ETFs Hitting 52-Week High Amid Market Turmoil).

Invesco DB US Dollar Index Bullish Fund (UUP Quick QuoteUUP - Free Report) – Up 19.6%

Invesco DB US Dollar Index Bullish Fund is the prime beneficiary of a rising dollar as it offers exposure against a basket of six world currencies — euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. This is done by tracking the Deutsche Bank Long US Dollar Index Futures Index Excess Return plus the interest income from the fund’s holdings of U.S. Treasury securities.

Invesco DB US Dollar Index Bullish Fund has so far managed an asset base of $2 billion while seeing an average daily volume of around 4 million shares. It charges 77 bps in total fees and expenses and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.