The third quarter was quite eventful for markets. In the U.S., the S&P 500 went from being barely in the green for the year at the end of June to record highs in September. In contrast, emerging markets, which were already down substantially midyear, sagged even more during Q3.
Meanwhile, on the interest rate front, U.S. Treasury yields clawed their way up from close to their low point of 2018 in June to nearly their highest level of the year in September. The 10-year U.S. Treasury has been holding above 3% and stands at 3.06%
With a quarter to go in 2018, the year thus far can best be characterized as uneven for markets. Strong economic fundamentals underpin stocks in the U.S., while trade and rising interest rate jitters keep international equities in check.
We’ll take a look at the top-performing ETFs of the year for 2018. Unsurprisingly, U.S. equity ETFs make up a large chunk of the list. But ETFs tied to one particular commodity have also been blazing hot.
Here we provide two lists. One that selects from the entire U.S.-listed ETF universe, including leveraged/inverse products, and another that excludes leveraged/inverse products.
Internet ETF Takes No. 1 Spot
Starting with the narrower, more “investable” list reveals a list of 20 products with gains ranging from 30% to 42%. At the top spot is the SPDR S&P Internet ETF (XWEB), with $68 million in assets under management (AUM).
Top-Performing ETFs Of The Year (excluding inverse/leveraged)
|Ticker||Fund||YTD Return (%)|
|XWEB||SPDR S&P Internet ETF||41.83|
|PSCH||Invesco S&P SmallCap Health Care ETF||40.37|
|OLO||DB Crude Oil Long ETN||38.95|
|DBO||Invesco DB Oil Fund||36.95|
|PSJ||Invesco Dynamic Software ETF||35.46|
|XHE||SPDR S&P Health Care Equipment ETF||35.09|
|PTH||Invesco DWA Healthcare Momentum ETF||34.87|
|USL||United States 12 Month Oil Fund LP||33.89|
|ARKG||ARK Genomic Revolution Multi-Sector ETF||33.16|
|USO||United States Oil Fund LP||32.81|
|FBGX||UBS AG FI Enhanced Large Cap Growth ETN||32.42|
|IGV||iShares North American Tech-Software ETF||32.31|
|BNO||United States Brent Oil Fund LP||32.27|
|OILB||iPath Series B S&P GSCI Crude Oil ETN||32.12|
|OILK||ProShares K-1 Free Crude Oil Strategy ETF||31.55|
|FLGE||Credit Suisse FI Large Cap Growth Enhanced ETN||31.54|
|IHI||iShares U.S. Medical Devices ETF||31.39|
|XITK||SPDR FactSet Innovative Technology ETF||31.01|
|FINX||Global X FinTech ETF||30.52|
|OLEM||iPath Pure Beta Crude Oil ETN||30.30|
Data measures total returns for the year-to-date period through October 1, 2018.
XWEB holds an equal-weighted basket of U.S. internet retail, software and services stocks. This area has been on fire in 2018, with high-profile internet stocks like Amazon and Alphabet leading the charge higher.
Because it equal-weights it holdings, XWEB gives as much weight to internet giants like Amazon and Alphabet as it does to much smaller companies like Yelp and Tripadvisor, but that hasn’t hurt returns one bit this year.
XWEB isn’t the only tech-focused ETF to soar in 2018. The Invesco Dynamic Software ETF (PSJ), the iShares North American Tech-Software ETF (IGV), the SPDR FactSet Innovative Technology ETF (XITK) and the Global X FinTech ETF (FINX) all made the top-performers list as well.
FINX is one of the more interesting of the bunch. It’s attracted $324 million of inflows this year thanks to strong performance and its focus on financial technology stocks. Mobile payments, crowd funding, blockchain and personal finance software are a few of the themes that FINX hones in on—all currently hot areas for investors.
Oil ETFs Surge
Earlier, we hinted that ETFs tied to a particular commodity were surging this year. Anyone keeping up with the financial headlines probably knows that commodity is oil.
Indeed, oil-tracking exchange-traded products have come out of nowhere to dominate the top-performers list. A total of eight such products are among the 20 top-performing ETFs, with gains of 30% or more.