February's 5 Best-Performing ETFs
With equity markets falling and the recently installed Trump administration producing a dizzying array of economic and financial policies, investors selected a wide range—and perhaps a surprising mix—of ETFs to bid up over the past month. With the broad stock-tracking fund Vanguard S&P 500 ETF (VOO) falling 1.7% last month, after gaining about 50% in the previous two calendar years, investors shied away from big equity exchange-traded funds..
Big bond and income funds like the iShares 20+ Year Treasury Bond ETF (TLT), were also not among the month's top performers. Still, TLT gained more than 5% last month, an unusually strong performance for a bond fund. The best performers were a grab bag, from retail to commodities to shipping, a reflection of the uncertainty that reigned last month. This list does not include leveraged ETFs, which are short-term trading vehicles specifically engineered to double or triple the performance of an underlying stock, index or other financial instrument.
No. 1: BABO
The YieldMax BABA Option Income Strategy ETF (BABO) topped the February chart with a 27% gain. The Alibaba Group Holding (BABA) covered call strategy ETF is also the year's best-performer, rewarding investors with a 38% gain as of Feb. 27. The Chinese e-commerce company’s stock was boosted by a solid earnings report last month, followed by the recent release of Wan 2.1, its AI tool that helps create video and images.
BABO aims to generate monthly income while providing exposure to the price returns of the ADR of Alibaba Group Holding Limited (BABA), subject to a cap on potential gains. It utilizes a synthetic covered call strategy via standardized exchange-traded and FLEX options.
No. 2: UNG
The United States Natural Gas (UNG) jumped 23% last month, the second-best ETF performance, as investors bet on rising prices and shrinking supplies. Natural gas-powered furnaces were running strong last month as much of the U.S. was slammed by cold temperatures.
The fund has also gained amid expectations that the Trump Administration would adopt friendlier fossil fuel policies and has already reversed previous pauses on liquefied natural gas (LNG) export permits. UNG holds near-month futures contracts in natural gas, as well as swap contracts.
No. 3: BDRY
The mercurial Breakwave Dry Bulk Shipping ETF (BDRY) jumped 23% last month, the third-best performer. While threats of tariffs would appear to dampen enthusiasm for global shipping, dry bulk shippers are boosting rates and freight futures are rising, according to a recent article from Lloyds List.
The dry bulk shipping market is estimated to grow at a 3.9% compounded annual growth rate through 2029, a recent survey said. BDRY tracks an index of long-only exposure to the nearest calendar quarter of dry bulk freight futures contracts on specified indexes.
No. 4: SMCY
An ETF that launched in October was the fourth-best performer. The YieldMax SMCI Option Income Strategy ETF (SMCY) rose 20%, while its underlying equity, Super Micro Computer Inc. (SMCI) rose 43%, the best performer in the S&P 500. SMCI fended off a potential delisting by Nasdaq and investors also be that it would benefit from rising AI demand.
SMCY seeks to provide current income and capped gains on the Super Micro stock through a synthetic covered call strategy, collateralized by cash and US Treasurys. The actively managed fund uses both standardized exchange-traded and FLEX options.
No. 5: KTEC
The KraneShares Hang Seng TECH Index ETF (KTEC) rose 26% last month, tracking the index of Hong Kong-traded tech stocks. According to Business Times, Hong Kong stocks were lifted by expected rising demand for AI chips and services, particularly following the success of China's DeepSeek tool. KTEC tracks a market-cap-weighted index of the 30 largest Chinese technology companies listed in Hong Kong.
