For ETFs, 2019 was the best of times, it was the worst—actually, no, it was pretty much just the best of times. Between the fee wars, the long-awaited ETF Rule and more than 200 new products hitting the market, this was yet another banner year for ETF issuers and investors alike.
As 2019 comes to a wrap, we thought it might be fun to look back on which fund reports got the most traffic in searches and talk about why they spark investor curiosity.
No. 1: QQQ
With roughly $84 billion in assets under management (AUM), QQQ trades like a dream, making it by far investors' favorite proxy on the tech sector. QQQ is far from a pure play, however. Under the hood is a quirky mash-up of Nasdaq's biggest names, with more than one-third in nontech, nonfinancial securities.
Year to date, QQQ is up 35.1%.
No. 2: MJ
Marijuana had an exciting 2019, with seven new ETFs launched (including the first leveraged take) and more than a half-billion in new net inflows. So it's no wonder that the ETFMG Alternative Harvest ETF (MJ) remains a top draw for traders and retail investors alike fascinated by the promise of this budding new sector. (Read: "The Year In Marijuana ETFs.")
As the largest cannabis ETF, as well as the first to market, MJ has become something of a proxy for the marijuana industry writ large, even though the fund itself isn't precisely a pure play. (Its portfolio includes forward-looking stocks, such as alcohol, tobacco and fertilizer companies.) MJ is also no stranger to controversy or poor performance.
Still, with $702 million in AUM, MJ remains the go-to in the space; and while its seven competitors have tried to chip away at its dominance, so far none has been particularly successful.
MJ is down 28.4% year to date.
No. 3: SPY; No. 4: VOO; No. 9: IVV
It's telling that in a year that saw a deluge of new smart beta, thematic, active and even multifactor ETFs, the funds that attracted the most investor interest were those offering low-cost market beta—the same core equity exposure that has always made up the building blocks of any portfolio.
They're also among the cheapest, with VOO costing 3 basis points and IVV costing 4 bps. (SPY costs 0.09%.) As the ETF fee wars rage on, we expect these three funds to remain top of mind for readers. (Read: "Fund Fee Wars Save Investors Billions.")
Year to date, SPY, VOO and IVV are up 28.7%, 28.8% and 28.7%, respectively.
No. 5: VYM
The Vanguard High Dividend Yield ETF (VYM) is one of two high dividend ETFs to end up on this list, which makes a lot of sense in context: Interest rates may be rising, but still they remain at historical lows, leaving investors scrambling for any sort of income they can find. (Read: "Using Dividend ETFs For Income.")
VYM takes a smart-beta-lite approach toward security selection: Firms in its selection universe are ranked by their forecasted dividends over the next 12-month period, then the top half of those are included in the index. Securities are then weighted by market cap, rather than by dividend.
That leads to a diverse, yet relatively cheap, dividend-oriented portfolio. Currently, VYM offers a distribution yield of 3.01%. While higher yields can be found elsewhere, at 0.06% in expenses, VYM is the cheapest game in town.
VYM is up 22.1%, year to date.
No. 6: XLK
Tech stocks continue to be the engine driving U.S. equity markets higher, which explains why readers keep coming back to the Technology Select Sector SPDR Fund (XLK).
Like QQQ, XLK is a tech sector proxy, but the State Street fund is far more of a pure play. All the biggest S&P 500 tech names can be found within, though Microsoft (MSFT) and Apple (AAPL) together comprise almost 40% of XLK's portfolio.
But as with the other SPDR sector funds, XLK's greatest asset is its deep, robust liquidity. Almost $712 million in shares trade daily, at pennywide spreads or better, making XLK an ideal choice for sector rotation strategies or tactical allocations.
Year to date, XLK is up 45.8%. (Read: "Best Performing Tech ETFs Of The Year.")
For much the same reasons driving SPY, VOO and IVV's popularity, the Vanguard Total Stock Market ETF (VTI) continues to be one of the most popular funds on our site—and one of Vanguard's most popular funds, too. VTI alone accounts for over 12% of Vanguard's $1.11 trillion in AUM. (Read: "Vanguard Crosses $1 Trillion In ETF Assets.")
It's obvious why: VTI offers one-stop shopping for the U.S. equity market, offering exposure to a jaw-dropping 3,575 securities for just 3 bps. You want low-cost beta? VTI has it in spades.
In fact, it's hard to say anything exciting about VTI, but we'd argue that's part of its charm: The fund is truly a no-muss, no-fuss U.S. stock exposure.
VTI is up 28.2% year to date.
No. 8: SPHD
As the second dividend-focused ETF on this list, the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is also the only truly smart beta fund among our readers' favorites.
SPHD selects the 50 least volatile names from the 75 highest-dividend yielding stocks in the S&P 500 Index. That gives SPHD a narrower portfolio than VYM, but also a higher distribution yield of 4.11%.
Funds have been steadily rolling into SPHD all year, with the fund seeing roughly $825 million in net inflows year to date. As such, SPHD has been a dark horse that has slipped under most people's radar, but we spotted the uptick in inflows all the way back in March. (Read: "Money Pours Into Multifactor US ETFs.")
Year to date, SPHD has returned 17.8%.
No. 10: VNQ
Real estate was 2019's stealth performance standout: Buoyed by ultra-low interest rates, the sector had the year's second-highest returns, just behind technology. (Read: "Best Performing Real Estate ETFs.")
Many investors looking to ride the real estate train looked no further than the Vanguard Real Estate ETF (VNQ), by far the largest real estate fund around. (It's six times larger than its nearest competitor, which is also a Vanguard fund.)
VNQ is diverse and cheap, with massive liquidity and pennywide (or better) spreads. Without being too broad, the fund covers all the major real estate bases: commercial, specialty, residential and more. It's a great proxy for real estate, and a perennial favorite with our readership.
VNQ has returned 24.2% year to date.
Contact Lara Crigger at [email protected]