Treasury yields have been surging lately on the back of strong economic data and hawkish Fed comments. The 10-year yield jumped above 3.25% for the first time since 2011, sparking fears of inflationary pressure, which would increase the cost of products and dampen consumer spending. This, in turn, would hurt economic growth, making investors cautious about the longevity of the longest bull run in U.S. equities.

However, there are some corners of the market which thrive when interest rates rise if history is any guide. Based on analytics tool Kensho, we have highlighted a few ETFs that have outshined and lagged when the 10-year Treasury note yield rose 25 basis points or more over a span of 30 days. There have been 18 instances of such a rate move happening since 2008. Notably, the 10-year yield surged about 18 basis points to above 3.2% last week.

Winners

VanEck Vectors Oil Services ETF (OIH – Free Report)

OIH has been the biggest winner, climbing 6.5% in the month of the rising rate environment per Kensho. Rising yield reflects inflationary pressures and thus rise in commodity prices, including oil. Higher oil price is a boon for energy stocks, which derive most of their revenues from selling the crude that they extract. This is because the cost of oil production or extraction remains low as companies look to lock in supply contracts at higher prices. The gap between production cost and selling price keeps on rising when oil price surges even higher, leading to fat profit margins and higher share price.

This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. With AUM of $1.3 billion, it holds 25 stocks in its basket and charges 35 bps in annual fees. The product trades in an average daily volume of 6.4 million shares and has a Zacks ETF Rank #3 (Hold) with a High-risk outlook.

SPDR S&P Regional Banking ETF (KRE – Free Report)