Top Performing ETFs Of 2018

January 03, 2019

The final figures are in: 2018 was the worst year for the U.S. stock market since the financial crisis. For the first time since 2008, the S&P 500 provided a negative return for investors when including dividends—a loss of 4.6%.

The index briefly fell more than 20% below its all-time high in December amid relentless year-end selling. Trade war, global growth, interest rate and Brexit concerns all weighed on investors’ minds throughout the year

Nine of the 11 stock market sectors finished 2018 in the red; only health care and utilities managed to eke out gains.

As poorly as U.S stocks performed in 2018, international equities fell even more. The Vanguard FTSE All-World ex-US ETF (VEU) tumbled 14.2% and the Vanguard FTSE Emerging Markets ETF (VWO) sagged 14.7%.

Bonds Eke Out Gain

Even bonds, typically a haven during times of market turmoil, didn’t provide in 2018 the safety that investors are accustomed to. The iShares Core U.S. Aggregate Bond ETF (AGG) eked out a slim 0.1% return, barely escaping with its fifth-straight year of gains after trading in the red for much of 2018.

The iShares U.S. Treasury Bond ETF (GOVT) returned 0.3%; the iShares National Muni Bond ETF (MUB) gained 0.9%; the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) slipped 3.8%; the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) fell by 2%; and the iShares JP Morgan USD Emerging Markets Bond ETF (EMB) shed 5.5%.

Dollar Up, Commodities Down

One of the few bright spots in 2018’s tumultuous market was the U.S. dollar. It rallied 4.4%, pushing the Invesco DB U.S. Dollar Index Bullish Fund (UUP) higher by 7.1%.

However, the greenback’s ascent weighed on commodities like gold and oil. The SPDR Gold Trust (GLD) and the United States Oil Fund LP (USO) lost 1.9% and 19.6%, respectively.

The broader Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) dropped by 12.8% during the year.

VIX ETPs Surge

As poorly as financial markets performed in 2018, as in any year, there were some ETFs that managed to buck the trend. The biggest winners were ETFs that either bet against the areas of the market that did badly, or ETFs that went long VIX futures.

The Cboe Volatility Index (VIX) ended the year at 25.4, up substantially from where it started the year, near 11.

In turn, VIX ETPs like the iPath Series B S&P 500 VIX Short Term Futures ETN (VXXB) leapt 72.4%.

Other leveraged and inverse products that did well were those that short stocks of oil and gas producers, regional banks, metals and international equities.

Going long the U.S. dollar against the Australian dollar also paid off. The VelocityShares Daily 4x Long USD vs AUD ETN (DAUD) jumped 55.3% in 2018.


Top-Performing ETFs Of 2018 (all-encompassing)

Ticker Fund % Return
GASX  Direxion Daily Natural Gas Related Bear 3x Shares 127.80
VXXB iPath Series B S&P 500 VIX Short Term Futures ETN 72.38
VIIX  VelocityShares Daily Long VIX Short-Term ETN 68.59
VXX iPath S&P 500 VIX Short-Term Futures ETN 67.91
VIXY  ProShares VIX Short-Term Futures ETF 66.78
UVXY  ProShares Ultra VIX Short-Term Futures ETF 60.10
WDRW Direxion Daily Regional Banks Bear 3X Shares 56.46
DAUD  VelocityShares Daily 4x Long USD vs AUD ETN 55.30
DRIP  Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares 49.65
DPK Direxion Daily MSCI Developed Markets Bear 3x Shares 48.59
ERY  Direxion Daily Energy Bear 3X Shares 45.55
DGBP VelocityShares Daily 4x Long USD vs GBP ETN 38.90
DUG  ProShares UltraShort Oil & Gas 36.18
SZK  ProShares UltraShort Consumer Goods 33.69
SMDD  ProShares UltraPro Short MidCap400 33.51

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