The U.S. stock market has had a pretty good year this year, with the S&P 500 rallying upward of 13 percent and breaking through record levels—again and again—despite concerns about a sluggish global economy, and an unclear outlook for U.S. interest rates.
Still, there are pockets of the market that performed particularly well, and for various reasons. Here we outline the five best-performing ETFs year-to-date in a list that includes funds tapping into everything from commodities, to U.S. equities, to fixed-income, to emerging market stocks.
The funds are listed in ascending order of performance.
5. The iPath Dow Jones-UBS Coffee Total Return ETN (JO | B-67) is up 46 percent year-to-date.
JO’s stellar performance in 2014 came thanks to surging coffee prices in the face of dwindling supplies. Brazil, the world’s largest coffee producer, has battled a drought so severe that it not only trimmed production in 2014, but it’s likely to create output shortfalls in 2015.
JO invests in coffee futures, and tracks a single front-month coffee futures contract, making it highly sensitive to price movement in the near term. It has given back some of its gains—which exceeded 64 percent at one point in October—but it remains one of the best-performing funds this year. JO has about $67 million in assets.
4. The SPDR S&P Biotech (XBI | A-48) is up 46.5 percent year-to-date.
Health care has been the best-performing sector in the S&P 500 this year, rallying some 27 percent, while the broad benchmark gained about 13 percent in the same period. But within health care stocks, what’s really standing out is the performance of biotech names.
“The story in ‘health care’ isn’t about ‘health care’ at all—it’s about biotech—companies out there on the bleeding edge of medical science,” Nadig said in a recent blog. “And biotech ETFs have had a wild, wild ride this year.”
Our tally of top-performing ETFs year-to-date includes two biotech ETFs, XBI being the biggest of them, with nearly $1.5 billion in assets. The fund tracks an equal-weighted index of U.S. biotechnology stocks in a methodology that tilts toward smaller-cap names.
XBI is as pure-play is as it comes, with an allocation of more than 70 percent of the fund to true biotech companies—more than most benchmarks, according to ETF.com Analytics. The fund also allocates as much as 20 percent of the portfolio to pharmaceuticals.
XBI is also the cheapest biotech ETF, costing 0.35 percent in expense ratio, or $35 per $10,000 invested.