As measured by the SPDR S&P 500 ETF (NYSEARCA:SPY), the world’s largest exchange-traded fund (ETF), domestic stocks are off to fine starts this year. SPY is up nearly 11%. Of course, some of this year’s best-performing ETFs are delivering returns well in excess of basic benchmarks like the S&P 500.
There are over 2,300 exchange-traded products listed in the U.S., but when adding qualifiers in search of the best-performing ETFs, such as funds up at least 15%, the field significantly narrows.
Predictably, many of this year’s best-performing ETFs are thematic or niche funds that follow narrow investment segments.
This list of 2019’s best-performing ETFs so far excludes leveraged funds because leveraged ETFs, no matter how tantalizing the returns, are not designed to be held for more than a few days. Without further ado, here are 10 of the best-performing ETFs to this point in 2019.
Best-Performing ETFs: ETFMG Alternative Harvest ETF (MJ)
Expense Ratio: 0.75% per year, or $75 on a $10,000 investment.
The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) has recently pulled back in modest fashion, but still sports a year-to-date gain of 43%, more than enough to make the cannabis fund one of this year’s best-performing ETFs.
Even with its meteoric ascent to start 2019, MJ could have plenty of upside left because it resides more than 19% below its 52-week high, underscoring how badly the fund was drubbed last year. A variety of catalysts are propelling MJ, the only dedicated cannabis ETF in the U.S., higher this year. Those include increased state-level legalization and the expected boom in the cannabidoil (CBD) market.
“The CBD market could represent a $16-billion opportunity by 2025, according to a report issued Monday by a team of Cowen analysts,” reports ETF Daily News. “The findings are based on a roughly 40-percent increase in consumer incidence with the average user spending $640 — or less than $2 per day — each year.”
KraneShares Bosera MSCI China A ETF (KBA)
Expense Ratio: 0.6%
Chinese ETFs, including the KraneShares Bosera MSCI China A ETF (NYSEARCA:KBA) were already soaring, but got a major boost in late February when index provider MSCI said will increase the weight of A-shares in its international indexes, including the widely followed MSCI Emerging Markets Index.
That news helped KBA affirm its status as one of 2019’s best-performing ETFs, because the fund follows the MSCI China A Inclusion Index. That benchmark is chock full of the A-shares names MSCI is adding to its benchmarks. A-shares are the stocks trading on mainland China.
“MSCI is incrementally realigning China’s overall weight in their Global Standard Indexes through the inclusion process, and upon completion, China A-Shares are predicted to account for about 16% of the MSCI Emerging Market (EM) Index which is tracked by $1.8 trillion in assets,” according to KraneShares. “This will gradually increase China’s overall weight, including Hong Kong and US listed Chinese companies, from 30% to over 40% of the MSCI Emerging Market Index.”
Reality Shares Nasdaq NexGen Economy China ETF (BCNA)
Expense Ratio: 0.78%
Keeping with the theme of China funds being among this year’s best-performing ETFs, there is the Reality Shares Nasdaq NexGen Economy China ETF (NASDAQ:BCNA), which is up over 33% this year. BCNA follows the Reality Shares Nasdaq Blockchain China Index.
That index “is designed to measure the returns of companies in China that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology for their use or for use by others,” according to Reality Shares.
While there is still plenty of time left in 2019, BCNA’s start to the year affirms the notion that blockchain stocks and ETFs do not necessarily need bitcoin to move higher in order to notch gains themselves. Bitcoin, the largest cryptocurrency by market value, has traded only modestly higher this year.
ProShares Long Online/Short Stores ETF (CLIX)
Expense Ratio: 0.65%
The ProShares Long Online/Short Stores ETF (NYSEARCA:CLIX) is up 20% this year. Importantly, there are credible reasons why CLIX is one of this year’s best-performing ETFs.
“Short stores” is an operative phrase in the fund’s title, particularly at a time when more than 2,200 store closures have been announced barely more than two months into 2019. Other data points confirm the move to online shopping, the long component in CLIX.
“Consumers spent $517.36 billion online with U.S. merchants in 2018, up 15.0% from $449.88 billion spent the year prior,” according to a new Internet Retailer analysis of industry data and historical U.S. Commerce Department figures. “That’s a slight slowdown from 2017, when online sales grew 15.6% year over year, according to Commerce Department figures.”
Global X FinTech ETF (FINX)
Expense Ratio: 0.68%
The future of financial services is fintech and the Global X FinTech ETF (NASDAQ:FINX) proves as much. FINX is higher by almost 21% this year, making it one of the best-performing ETFs. Impressively, FINX is beating the largest traditional financial services ETF by a 2-to-1 margin this year.
Mobile payments, the move away from cash, industry consolidaiton and international growth opportunities are among the fundamental factors bolstering FINX.
“Recent M&A in the payments industry and growing retailer adoption of cashless transactions further confirms the U.S. payment industry’s growth prospects,” according to Fitch Ratings. “Strong demand for electronic payments capabilities and related technology should support industry fundamentals for merchant acquirers, card processors, network operators, and technology and gateway providers, but large-scale acquisitions may have credit implications.”
Global X MSCI Colombia ETF (GXG)
Expense Ratio: 0.61%
The Global X MSCI Colombia ETF (NYSEARCA:GXG), the original Colombia ETF, is one of this year’s best-performing ETFs tracking an international market and is higher by more than 23%. Rising commodities prices and strength in the broader emerging markets complex are among the forces at play with GXG.
This year, GXG is handily outperforming the major Argentina, Brazil, Mexico and Peru ETFs, underscoring its status as one of the best-performing ETFs. Colombia, one of South America’s largest economies, is decreasing its dependence on oil revenue.
Colombia’s “services sector, which comprises a majority of its GDP and labor market, are evidence of an economy that is well into a transition phase,” according to Global X research. “Oil revenues should continue to fuel growth, but consumption and non-traditional exports, which include services, renewable energy, and agriculture, are expected to become a greater source of growth as the country expands its infrastructure and increases productivity.”
iShares U.S. Oil Equipment & Services ETF (IEZ)
Expense Ratio: 0.43%
For believers in the energy sector’s 2019 resurgence, the iShares U.S. Oil Equipment & Services ETF(NYSEARCA:IEZ)is a solid ETF to consider. Up more than 18%, it is also one of 2019’s best-performing ETFs. IEZ follows the Dow Jones U.S. Select Oil Equipment & Services Index.
The reason this is one of this year’s best-performing ETFs is simple: oil services stocks and funds are usually highly correlated to oil prices, in both directions. Oil is among this year’s leading commodities. Hence, IEZ is one of this year’s best-performing ETFs.
The fund holds 40 stocks, but over 26% of its combined weight is allocated to just two names: Schlumberger (NYSE:SLB)and Halliburton (NYSE:HAL).
Invesco Solar ETF (TAN)
Expense Ratio: 0.7%
Seasoned solar investors know that the Invesco Solar ETF (NYSEARCA:TAN) historically gets it own boost from higher oil prices. Put simply, higher oil prices are seen as driving demand for alternative, cleaner, less-expensive energy sources, and solar checks those boxes.
In other words, with oil surging, it is not surprising that TAN is one of this year’s best-performing ETFs with a gain approaching 30%. The fund, however, is off more than 4% over the past week and could be vulnerable to a “sell the news” event if the U.S. and China finally reach a legitimate trade truce because China accounts for over 29% of TAN’s geographic weight.
SPDR S&P Software & Services ETF (XSW)
Expense Ratio: 0.35%
Tech funds are rebounding. Just look at the SPDR S&P Software & Services ETF (NYSEARCA:XSW), which is higher by almost 21% this year.
XSW “seeks to provide exposure to the software and services segment of the S&P TMI, which comprises the following sub-industries: Application Software, Data Processing & Outsourced Services, Home Entertainment Software, IT Consulting & Other Services, and Systems Software,” according to State Street.
XSW is an equal-weight ETF so its 153 holdings are not dominated by large- and mega-cap software makers. Those holdings have a weighted average market value of $22.48 billion, which is low compared to rival cap-weighted funds.
Global X E-commerce ETF (EBIZ)
Expense Ratio: 0.68%
Some new ETFs are not well-timed. The opposite is true of the Global X E-commerce ETF (NASDAQ:EBIZ), which debuted last November, making it the newest fund on this list. Rookie status aside, EBIZ is one of this year’s best-performing ETFs as highlighted by a gain of 23%.
Timing is not everything, but it is helping EBIZ.
“Ecommerce represented a growing share of the retail market in 2018, taking a 14.3% share of total retail sales last year, up from 12.9% in 2017 and 11.6% in 2016,” notes Digital Commerce 360. “More significant is that ecommerce sales represented more than half, or 51.9%, of all retail sales growth. This is the largest share of growth for purchases made online since 2008, when ecommerce accounted for 63.8% of all sales growth.”
As of this writing, Todd Shriber did not own any of the aforementioned securities.