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Market Outlook

ETF watch: the best performing funds in 2019

Exchange traded funds (ETFs) have had a successful 2019 with the amount of global assets being held under management reaching $6trn, according to research from ETFGI. That’s double the amount held four years ago, with forecasts suggesting that it will hit $12trn as early as the end of 2023.

Read our analysis on the European ETF market 

So, which ETFs have shone this year?

 

Funds with large-cap stocks

Vanguard S&P 500 ETF [VOO]

Setup by the largest mutual fund company, Vanguard, the ETF gives investors exposure to 500 of the largest publicly traded companies in the US, including tech giants Microsoft [MSFT] and Apple [AAPL]. Its YTD return is 25.83% (as of 6 December). Historically, the S&P 500 returns about 10% per year over a longer-time frame.

SPDF S&P 500 ETF [SPY]

This ETF also has holdings in most of the large-cap stocks in the S&P 500 but because it tracks the blue-chip index in real-time, it is particularly attractive to traders. In fact, it is one of the most-heavily traded ETFs out there, with an YTD return of 25.98% (through 6 December). 

INVESCO [QQQ]

Tracking the NASDAQ 100 index, this fund is made up of the 100 largest stocks on the tech-heavy index. It mainly consists of tech firms such as Apple, Amazon [AMZN] and Facebook [FB]. As of 6 December, its share price climbed 32.89% YTD, from around $154 to $205. 

 

Funds with small-cap stocks

iShares Russell 2000 ETF [IWM]

With holdings in 2,000 small-cap stocks on the US market, this fund has risen 21.59% YTD (through 6 December) from $137 to $162 this year. Its best performing stocks include online insurance firm EverQuote [EVER] and Achillion Pharmaceuticals [ACHN], which have climbed from $4 to $37 and from $1.60 to $6.17 respectively in the same period of time.


Funds with international exposure

Vanguard FTSE Developed Markets [VEA]

This follows the FTSE Developed All Cap ex US Index, which includes stocks from Canada, Europe and Pacific Nations. This encompasses names such as Nestle [NSRGY], Roche [RHHBY], Samsung [005930] and HSBC [0005]. The ETF has gained 19.37% YTD, rising from $36 to $43 as of 6 December.

Global X MSCI China Consumer Disc [CHIQ]

For this ETF the Chinese consumer is the focus as it aims to benefit from the more affluent middle class in the world’s most populous country, who are looking to spend on luxury goods. The top 10 stocks account for more than 52% of its total assets and include companies such as Alibaba [BABA], JD.com [JD], Trip.com [TCOM] and Yum China Holdings [YUMC]. It has a YTD return of 38.90% and its shares, despite wobbles from the China/US trade war, have climbed from $12 to $17.

iShares MSCI Emerging Markets ETF [EEM]

Again, this fund is heavily weighted with Chinese stocks such as Alibaba and Tencent [TCEHY], and also includes Korean electronics giant Samsung. It aims to benefit from the development of emerging economies and consumer spending power across Asia Pacific. It has a YTD return of 11.11%, amid a backdrop of trade war volatility, which has seen its share price climb from $38 to $43. “[The EEM fund] has been sideways, basically, for nine to 12 months, but looks like it’s starting to break out,” says Tim Seymour, founder and chief executive officer of Seymour Asset Management.

 

Environmental, social and corporate governance funds

Invesco Solar ETF [TAN]

The fund includes 22 stocks related to solar technology such as smart energy tech provider SolarEdge Technologies [SEDG] – the share price of which is up 139% YTD from $35 to $83 (through 6 December) – First Solar [FSLR] and Sunrun [RUN]. The ETF, benefiting from growing investor interest in sustainability, has a YTD return of 55% and has seen its share price rise from $18 to $28. 

ALPS Clean Energy ETF [ACES]

Buoyed by governments, businesses and individuals switching to clean energy investments in order to cut carbon emissions and tackle climate change, this fund’s share price has risen from $22 at the start of the year to $32, giving it a YTD return of 44%. It contains stocks such as electric carmaker Tesla [TSLA] and Itron [ITRI], which helps utilities and cities better manage water and energy. 

 

Technology-focused funds

VanEck Vectors Semiconductor ETF [SMH]

This ETF has holdings in 25 stocks, mainly made up of chipmakers such as Taiwan Semiconductor [TSM] Intel [INTC], Nvidia [NVDA] and Texas Instruments [TXN] – which are benefiting from the growing demand for 5G, autonomous cars and computer games. The ETF has a YTD return of 53.51%, with its share price increasing from $87 to $133 by 6 December. 

 

Utility-focused funds

Utilities Select Sector SPDR Fund [XLU]

Following companies such as NextEra Energy [NEE] and Dominion Energy [D], this ETF has been seen as more of a defensive play. It has done well so far in 2019 – shares are up from $51 to $63 (through 6 December) – as fears gather around a global recession.

 

Industry-focused funds

iShares US Home Construction ETF [ITB]

This fund has benefited from the strong performance of house builders – two of the main holdings are D.R.Horton [DHI] and Lennar Corp [LEN] – which have been buoyed by low interest rates, a resilient housing sector and strong employment numbers. It has a YTD return of 51.48%, with shares rising from $29 to $45 as of 6 December. 

Pacer Benchmark Industrial Real Estate SCTR [INDS]

The ETF offers investors exposure to US firms like Prologis [PLD], who are benefiting from demand for real estate in the industrial sector such as ecommerce warehousing. Its YTD return is 42.60%, as shares have accelerated from $23 to $34 (through 6 December). 

 

Health-focused funds

SPDR S&P Bio ETF [XBI]

The biotechnology sector has had a healthy 2019 with major acquisitions – such as Bristol-Myers Squibb [BMY] recently bought Celegene Corporation – as well as medical breakthroughs, particularly in oncology. This ETF aims to benefit from the growth of the sector and firms such as Arrowhead Pharmaceuticals [ARWR] and Seattle Genetics [SGEN], which are both in developed and emerging markets. The fund’s YTD return is 31.60%, after its share perked up from $71 to $94 as of 6 December.

To find out more about trading ETFs on leverage, read our overview.

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