The first half of 2019 was marked by investor jitters centered on slowing growth, trade wars and geopolitical risk, all of which led to a rush to safety in the form of fixed income ETFs. The first six months of the year were also marked by a healthy appetite for risk, with the S&P 500 penciling in new record highs, and its strongest start to a year in two decades.
This has been a market where just about everything seems to be working well. And ETF investors have put money to work across various asset classes and segments at a pace that now exceeds that of 2018’s.
Asset Classes (Year-to-Date)
|Net Flows ($, mm)||AUM ($, mm)||% of AUM|
|U.S. Fixed Income||66,813.19||686,404.03||9.73%|
|International Fixed Income||8,414.46||77,732.95||10.82%|
Even as the momentum tide lifts most boats, some ETFs have really delivered a performance punch year to date. The list of the top 10 best-performing ETFs couldn’t be more diverse.
Here are this year’s total return winners so far:
|Ticker||Fund||YTD Return||AUM (Millions)|
|TAN||Invesco Solar ETF||51.70%||$357|
|PBW||Invesco WilderHill Clean Energy ETF||39.20%||$170|
|GREK||Global X MSCI Greece ETF||38.00%||$378|
|ARKG||ARK Genomic Revolution ETF||37.65%||$429|
|PTF||Invesco DWA Technology Momentum ETF||37.60%||$210|
|AGT||iShares MSCI Argentina and Global Exposure ETF||36.70%||$26|
|UGA||United States Gasoline Fund LP||36.50%||$39|
|ARGT||Global X MSCI Argentina ETF||36.30%||$94|
|CHIS||Global X MSCI China Consumer Staples ETF||36.00%||$2|
|IPO||Renaissance IPO ETF||35.00%||$51|
Sources: FactSet, ETF.com; data as of July 1, 2019. ETNs and leverage, inverse ETFs excluded.
On this list, it’s not surprising to see the Invesco DWA Tech Momentum ETF (PTF) among the leaders. The tech sector has led the S&P 500 handily in 2019.
It’s also not too surprising to see the Renaissance IPO ETF (IPO) land on this list given how hot the initial public offering (IPO) market has been this year. IPO does a great job of capturing the top 80% of new IPO market cap by buying stocks within three months of their first listing.
But there are some more surprising winners here.
Renewable Energy Leads The Pack
The outlook for growing solar energy demand has buoyed the segment—recent legislation such as California’s new mandate for solar panels to be included in new homes beginning in 2020 is an example.
As my colleague Lara Crigger reported recently (see: “2019’s Top ETF Shines Bright”), companies like Enphase Energy (ENPH) and SolarEdge Technologies Corporation (SEDG) have rallied an impressive 291% and 80% year to date. For perspective, the S&P 500 is up about 19%. First Solar (FSLR) and SunRun (RUN) are up 56% and 86%, respectively.
[You can see what ETFs also invest in these stocks in our ETF Stock Finder Tool.]
Greece? Yes, Greece
The Global X MSCI Greece ETF (GREK) has been riding a price recovery wave from what was a massive downturn in 2018 that sent the ETF to lows not seen since the fall of 2017. Last month, the fund found technical momentum once it was able to pierce through resistance levels established last summer, and it has continued to gain ground.
Investors are buying into the economic recovery story. According to Global X data, Greek economic growth is at its fastest pace since 2007, with consumer confidence on the rise and falling unemployment rates. Earlier this year, Greece saw its credit rating boosted on the heels of reforms Moody’s says are “starting to bear fruit.”
Perhaps also helping GREK is the fact that if you are bullish on the outlook for Greece, GREK is your only choice in an ETF wrapper. The fund, which has $389 million in assets, costs 0.59% in expense ratio.
Argentina Shining Against Odds
Two Argentina ETFs make the top 10 list this year: the iShares MSCI Argentina and Global Exposure ETF (AGT) and the Global X MSCI Argentina ETF (ARGT).
Why? According to Global X, which manages one of these ETFs, Argentina seems to be at a “inflection point,” repeating a performance pattern it’s been known to deliver during election years—one that’s marked by volatility and stock gains depending on the outcome of the election. The firm said in a recent research note:
Rising debt, persistent inflation and a protracted recession in Argentina have driven market volatility higher over the last 18 months. In addition to these economic woes, currency weakness and political uncertainty related to the upcoming presidential elections have investors on edge. Yet despite these challenges, Argentina has surprised many as a standout performer against other emerging markets this year.
AGT owns companies headquartered in Argentina, or companies that have strong links to the country but that are headquartered and listed somewhere else. ARGT, too, includes companies listed outside of Argentina.
Both funds have less than 30 holdings each, are pretty narrow and don’t have significant assets, but they are both outperforming the broader emerging markets as measured by the iShares MSCI Emerging Markets ETF (EEM):
Health Care ETF Among Leaders?
Healthcare is the worst-performing S&P 500 sector this year. Investors have been concerned about Medicare-for-all and other types of sector reinvention are peppering presidential election debates.
But the Ark Genomic Revolution ETF (ARKG) is rallying sharply. The fund is bucking the downward trend in health care by focusing on companies that are supposed to help shape the sector’s future, including artificial intelligence, and companies on the forefront of clinical trials and diagnostics improvements. In a recent interview with ETF.com, Manisha Samy, genomics analyst at ARK, pinned the outperformance on stock choices.
“We seek to invest in biotech and genomics stocks focused on platform technologies that are decreasing costs of research while increasing novel scientific revelations,” she said. “We believe we’re in the early stages and are beginning to see proof that these treatment modalities are working.”
ARKG, with $448 million in assets and an expense ratio of 0.75%, has significantly outperformed the broader health care sector as measure by the Health Care Select Sector SPDR Fund (XLV):
Charts courtesy of StockCharts.com
Contact Cinthia Murphy at [email protected]