This year, financial markets experienced a calm that was perhaps never seen before. Volatility readings for equities were at or near record lows throughout 2017, something nobody predicted heading into the year after Trump’s presidential victory.
Encouraged by the lack of risk in the market, investors bid equities higher—much higher. The SPDR S&P 500 ETF Trust (SPY) is closing out 2017 with a gain of nearly 22%, the best total return since 2013.
In other words, a lack of volatility doesn’t mean a lack of gains. Quite the contrary. You could have thrown a dart and made out with a winning ETF. Out of the 2,100 ETFs on the market, almost 90% of them are on track to finish the year in the green.
With so many ETFs doing well, the threshold to join the list of top-performing funds is naturally quite high. We have put together two lists; one that excludes leveraged/inverse products and another that includes them. There’s only slight overlap between the two lists.
Disruptive Innovation ETFs Nearly Double
The narrower list, which excludes leveraged/inverse products, is topped by two actively managed funds issued by ARK, a company that focuses on thematic ETFs with a “disruptive innovation” bent. The Nos. 1 and 2 ETFs on the list, the ARK Web x.0 ETF (ARKW) and the ARK Innovation ETF (ARKK), both nearly doubled this year, with gains of 96.7% and 95%, respectively, in the year-to-date period through Dec. 19.
ARKK holds companies that work in fields related to genomics, next-generation internet and industrial innovation, while ARKW focuses solely on next-generation internet.
Both ETFs share the same top holding, the Bitcoin Investment Trust (GBTC), an over-the-counter traded bitcoin-tracking security that is up a stunning 2,700% this year. GBTC currently represents more than 11% of both ETF portfolios.
Aside from ARKW and ARKK, three other ETFs targeting next-generation themes also performed exceptionally well this year. The Global X Lithium & Battery Tech ETF (LIT) rallied 63.7%; the ARK Industrial Innovation ETF (ARKQ) jumped 58.8%; and the Global X Robotics & Artificial Intelligence ETF (BOTZ) climbed 57%.
Top-Performing ETFs Of 2017 (excluding leveraged/inverse)
|Ticker||Fund||YTD Return (%)|
|ARKW||ARK Web x.0 ETF||96.73|
|ARKK||ARK Innovation ETF||94.96|
|CXSE||WisdomTree China ex-State-Owned Enterprises Fund||77.02|
|KWEB||KraneShares CSI China Internet ETF||69.16|
|REMX||VanEck Vectors Rare Earth/Strategic Metals ETF||69.01|
|CQQQ||Guggenheim China Technology ETF||68.90|
|EMQQ||Emerging Markets Internet & Ecommerce ETF||66.75|
|LIT||Global X Lithium & Battery Tech ETF||63.70|
|CHIQ||Global X China Consumer ETF||60.80|
|PGJ||PowerShares Golden Dragon China Portfolio||59.83|
|SCIN||Columbia India Small Cap ETF||58.86|
|ARKQ||ARK Industrial Innovation ETF||58.77|
|GAMR||ETFMG Video Game Tech ETF||58.46|
|SCIF||VanEck Vectors India Small-Cap Index ETF||57.94|
|SOCL||Global X Social Media ETF||57.91|
|SMIN||iShares MSCI India Small Cap ETF||57.89|
|BOTZ||Global X Robotics & Artificial Intelligence ETF||57.00|
|ITB||iShares U.S. Home Construction ETF||56.25|
|EWGS||iShares MSCI Germany Small Cap ETF||55.24|
|ARGT||Global X MSCI Argentina ETF||53.63|
Note: Data measures the total return for the year-to-date period through Dec. 19.
China & India Back In Vogue
The next group of ETFs to see outstanding gains this year are tied to emerging markets—China and India in particular. Emerging markets broadly have performed well in 2017 thanks to strengthening commodity prices, a more robust global economy and accelerating earnings growth.
The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard FTSE Emerging Markets ETF (VWO) surged 33.2% and 27.6% this year, respectively. But ETFs focused on China and India returned two or three times those amounts.
The WisdomTree China ex-State-Owned Enterprises Fund (CXSE), for example, gained 77% this year. The KraneShares CSI China Internet ETF (KWEB) added 69.2% in the period; the Columbia India Small Cap ETF (SCIN) rose by 58.9%; and the VanEck Vectors India Small-Cap Index ETF (SCIF) leapt 57.9%.
China’s economy has grown at an annualized rate of 6.9% through the first three quarters of 2017, above the government’s 6.5% target and 2016’s 6.7% growth rate. This marks the first time China’s economic growth has accelerated since 2010.