Top Performing ETFs Of All Time

October 30, 2017

What does it take to be the top-performing ETF of all time? Hint: a good amount of leverage, a basket of tech stocks and a little bit of luck.

It's not a question that gets asked a lot. After all, why does it matter what the top-performing ETF of all time is? As the ubiquitous fund disclaimer notes, "past performance is no guarantee of future results."

So it might not matter, but it's still an interesting question. It's one I asked Eric Balchunas, senior ETF analyst and funds product specialist at Bloomberg. He told me what the top performer was, along with the next 14 ETFs with the best returns of all time.

They are:


Ticker Fund Name Inception Return % Since Inception
TECL  Direxion Daily Technology Bull 3x Shares 12/17/2008 3,259.93
TQQQ ProShares UltraPro QQQ 11/2/2010 2,203.23
SVXY  ProShares Short VIX Short-Term Futures ETF 4/10/2011 1,892.97
UPRO  ProShares UltraPro S&P 500 6/25/2009 1,624.63
MIDU  Direxion Daily Mid Cap Bull 3x Shares 8/1/2009 1,597.08
SOXL  Direxion Daily Semiconductor Bull 3x Shares 11/3/2010 1,329.83
DRN  Direxion Daily MSCI Real Estate Bull 3x Shares 7/16/2009 1,268.93
MDY SPDR S&P Midcap 400 ETF Trust 4/5/1995 1,130.79
UDOW  ProShares UltraPro Dow 30 11/2/2010 1,114.89
SPXL  Direxion Daily S&P 500 Bull 3x Shares 5/11/2008 1,021.55
CURE  Direxion Daily Healthcare Bull 3x Shares 6/15/2011 914.03
XIV  VelocityShares Daily Inverse VIX Short-Term ETN 11/29/2010 992
UMDD  ProShares UltraPro MidCap 400 11/2/2010 891.04
SPY  SPDR S&P 500 ETF Trust 1/22/1993 828.27
RETL  Direxion Daily Retail Bull 3x Shares 7/14/2010 848.3

Source: Bloomberg

Data measures the period from inception through Oct. 24, 2017


Leveraged Tech ETFs Sizzle

Easily taking the top spot is the Direxion Daily Technology Bull 3x Shares (TECL), which has a 3,260% return since its inception in 2008.

TECL provides aggressive, leveraged exposure to a group that has done exceedingly well over the past decade―large-cap tech stocks. As the Apples, Microsofts and Googles of the world have surged higher, TECL followed suit.

TECL isn't the only leveraged tech ETF on the all-time list. The ProShares UltraPro QQQ (TQQQ), which provides 3x exposure to the tech-heavy Nasdaq-100 index, and the Direxion Daily Semiconductor Bull 3x Shares (SOXL), which provides triple-leveraged exposure to semiconductor stocks, have rallied 2,203% and 1,330%, respectively, since their launches.

Compounding Effect

"Tech has had a nice path up," said Balchunas. "That's the key for leverage; if you have a nice climb up with very low volatility, that's what I call a 'full moon.' That's when the compounding effect kicks in and those leveraged ETFs will give you four or five times the index, not just two or three," he explained.

Balchunas contrasted that with what normally happens to leveraged ETFs. Usually, "the volatility drag makes you get less than two or three times over longer time periods," Balchunas noted.

Along with tech, leveraged ETFs tied to other strong-performing sectors made the cut. The Direxion Daily MSCI Real Estate Bull 3x Shares (DRN) and the Direxion Daily Retail Bull 3x Shares (RETL) and the Direxion Daily Healthcare Bull 3x Shares (CURE) all have lifetime gains in excess of 800%.

Even leveraged ETFs tied to broad market indices―like the ProShares UltraPro S&P500 (UPRO) and the Direxion Daily Mid Cap Bull 3x Shares (MIDU)―were beneficiaries of the compounding effect that Balchunas talked about.

Timing Is Everything
But it isn't enough to simply have leverage and track an index with strong returns and low volatility. All of the funds on the list also have the advantage of another key factor: timing.

Many of these funds were launched at or near market bottoms. TECL came to market in December 2008, after the stock market plunge associated with the financial crisis was already in full swing; UPRO began trading in June 2009, only three months after the absolute low of the bear market; and CURE launched in June 2011, when the eurozone sovereign debt crisis was raging.

"With ETF launches, timing is everything―in both an asset-gathering sense and a performance sense," Balchunas said.


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