If you’re interested in investing in several stocks related to a specific theme or thesis about where the market is headed but don’t have the time to cherry-pick stocks and pile them into a unique portfolio yourself, then exchange-traded funds offer an ideal solution. Each ETF follows a grouping of stocks related to a specific concept, and, therefore, removes much of the pressure from investors to make superb tactical decisions.
That’s not to say, however, that all ETFs are created equal. And here at InvestorPlace, we had several of our experts choose what they think might be the best ETFs for 2019.
So far, the race for first place in InvestorPlace’s Best ETFs of 2019 contest has been fairly tight with three core themes battling it out for supremacy: Vince Martin’s home construction play, James Brumley’s water focused fund and my own 5G real estate pick have all been at the top of the heap for most of the first half of 2019. On the other hand, some of the other themes, such as emerging markets, have had a much more difficult time rising to the top thanks to trade war headlines and other concerns.
But whatever the case may be, there’s still plenty of time for any of the downtrodden ETFs on this list to make it to the top and there’s always a chance that one of the main contenders could see a dramatic fall by the end of 2019.
With all of that said, here are InvestorPlace’s best ETFs of 2019, in ascending order of year-to-date gains through the end of June.
iShares U.S. Healthcare Providers ETF (IHF)
Investor: Todd Shriber
Expense Ratio: 0.43%, or $43 annually per $10,000 invested
Year-to-Date Gains Through Q2: 3%
Todd Shriber based his pick for the contest, the iShares U.S. Healthcare Providers ETF (NYSEARCA:IHF), on the idea that the healthcare sector would continue its 2018 bullishness — it was the S&P 500’s highest performing sector last year. And while the thesis behind his selection was sound, the perceived political boost it would get this year from a Democrat-dominated House of Representatives has actually turned into a roadblock.
In Shriber’s words, “the fact that so many of the Democrat contenders for that party’s 2020 presidential nomination favor Medicare For All has been a significant drag on IHF.” A big part of this drag on IHF has to do with UnitedHealth (NYSE:UNH), which is one of IHF’s largest holding allocations: “The impact of Medicare For All speculation has been palpable, particularly for UnitedHealth,” Shriber wrote.
While the case for IHF isn’t closed completely yet, Shriber recommends monitoring the action in UNH as an indicator for where the fund might go in the near term.
iShares Mexico MSCI ETF (EWW)
Investor: Ian Bezek
Expense Ratio: 0.47%
YTD Gains: 5%
The primary idea behind Ian Bezek’s selection for the contest — the iShares MSCI Mexico Capped ETF(NYSEARCA:EWW) — is that while Mexican stocks took a hit in 2018, as trade relations between the U.S. and Mexico improve, so too will the stocks, which comprise EWW’s holdings.
And so far, things have indeed begun to cheer up for this Mexican stocks ETF. “With the tariff issue out of the way, the skies are looking brighter for Mexico-U.S. relations, and thus EWW, for the second half of 2019,” Bezek wrote. “[I]nvestors in EWW and other Mexican assets should be reassured to know that … [d]espite the change in government, which led to a great deal of concern last year, economic numbers have been acceptable.”
While Bezek asserts that the road to the top won’t be easy (if at all possible), he’s confident that there is still some upside potential left in EWW and Mexican stocks this year … along with the inevitable possibility for continued volatility.
iShares Emerging Markets ETF (IEMG)
Investor: Jim Woods
Expense Ratio: 0.14%
YTD Gains: 9%
Although Jim Woods’ pick, the iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG), had a rough run at the start of 2019 amid trade war headlines and other economic concerns, there is still some hope left for the emerging markets fund.
As Woods points out: “[W]ith the trade situation now back in “truce” mode, and with the Fed now likely to begin rate cuts that should bring down the value of the dollar vs. rival foreign currencies, we could be looking at an extension of the June gains for emerging markets.”
Woods is confident that although IEMG still retains its unavoidable speculative tune — all emerging markets themes are prone to unpredictability and volatility — there are strong signs that the ETF could make a run for the top place at the end of this year if trade conditions between the U.S. and China continue to improve.
iShares MSCI Emerging Markets ETF (EEM)
Investor: Readers’ Choice
Expense Ratio: 0.67%
YTD Gains: 10%
Next up is our Reader’s Choice for the best ETF of 2019: iShares MSCI Emerging Markets ETF (NYSEARCA:EEM). Somewhat similar to Woods’ IEMG selection, the primary thesis behind this pick was likely the easing of tensions between China and the U.S. The relationship between the two countries got uglier in 2018, which sent many Chinese stocks down the gutter, along with the general stalling of the Chinese economy.
Although “trade negotiations between the two nations [have been] constantly ping-ponging from seemingly positive to negative throughout the first half of 2019,” the longer-term case behind EEM still holds weight. Given that “29% of the ETF’s portfolio is comprised of Chinese stocks, with the remaining big-time allocations based in South Korea (12%), Taiwan (11.7%) and India (9.4%)” it’s possible that if the trade war comes to an end or, at the very least, if the dynamic between the U.S. and China improves, then EEM could start to rise even higher.
While it’s too soon to determine if it can make a strong comeback this year, EEM still might be a solid choice for investors with a longer-term perspective.
Best ETFs for 2019: SPDR Gold Trust (GLD)
Investor: Kent Thune
Expense Ratio: 0.40%
YTD Gains: 10%
Originally at the No. 10 spot to end Q1, Kent Thune’s pick, the SPDR Gold Trust (NYSEARCA:GLD), has managed to make solid progress at the half way mark of 2019. Now in the No. 6 spot, Thune expects GLD to continue its success as the year comes to an end.
“In the first half of 2019, investors were rewarded for taking market risk. But the second half could be a completely different story,” Thune wrote. “If Q2 2019 is any indication, gold has the momentum as GLD was up 9% and the SPDR S&P 500 (NYSEARCA:SPY) was up 3% for the quarter, coming into the final week of June.”
As Thune explains, investors are demonstrating general positivity in the markets, while gold hoarders see things differently, making both gold and stocks seem strong right now. But given that gold is considered a reliable safe haven in difficult times, we can expect the GLD ETF to rise higher if markets do indeed take an ugly turn at the end of the year.
Financial Select Sector SPDR Fund (XLF)
Investor: Dana Blankenhorn
Expense Ratio: 0.13%
YTD Gains: 16%
So far this year, the Financial Sector Spider ETF (NYSEARCA:XLF) — Dana Blankenhorn’s pick for the best ETFs of 2019 contest — has been a solid performer. While the bank ETF might not have made it to the No. 1 spot yet, Blankenhorn is content with the fund’s success so far and expects more good things to come as the year goes by.
“Hope for a comeback lies in consolidation,” Blankenhorn wrote. “It all comes down to a new sobering reality. Banks are about to become the new stock market casino. But casinos make good money.”
While Blankenhorn acknowledges that some bank stocks face growing pains as they struggle to come to terms with general developments in technology and the new ways we spend/handle money, a part of this necessary growth will be acquisitions, which in turn, will lead to speculation of more takeovers. As such, Blankenhorn believes it’s only a matter of time before the growing hype in bank stocks will make XLF owners a lot more money.
Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ)
Investor: Tom Taulli
Expense Ratio: 0.68%
YTD Gains: 24%
The ride for the Global X Robotics & Artificial Intelligence Thematic ETF (NASDAQ:BOTZ) — Tom Taulli’s selection for best ETF in 2019 — hasn’t gone as smooth as anticipated. But regardless of a few roadblocks, the AI/Robotics ETF is still up more than 20% YTD and the high-tech theme still holds plenty of long-term promise.
While pointing out some of the headwinds BOTZ has faced this year, such as “disrupted global supply chains” thanks to the trade war between China and the U.S. and increasing challenges in “introducing new products,” Taulli maintains that he’s still optimistic about BOTZ.
“I’m still bullish on AI/Robotics. These technologies are likely to lead to leaps in progress across many industries. For example, IDC predicts that spending on AI will jump from $24 billion in 2018 to $77.6 billion by 2022 and the spending on robotics/drones will go from $115.7 billion to $210.3 billion,” he wrote. “[W]hile the BOTZ ETF might not win the best ETFs competition, I still wouldn’t call it a complete loser despite its disappointments.”
Invesco Water Resources ETF (PHO)
Investor: James Brumley
Expense Ratio: 0.62%
YTD Gains: 26%
According to James Brumley, water is “the trade no one saw coming.”
So far, his pick, the Invesco Water Resources ETF (NASDAQ:PHO), has been a top performer among the other ETFs in this contest. Up 26% since the end of June, the concept behind this fund is that as America strives to improve its water infrastructure amid a constant decrease in water quality, its holdings will see a boost.
In Brumley’s words: “Some the country’s biggest and most-established cities … are running out of water as natural, treatable sources of it are literally and figuratively drying up,” which has led to an estimated $1 trillion worth needed to help solve the problem over the next couple of decades. And many of PHO’s holdings will be the companies that “are well-positioned to capture more than their fair share of that spending.”
Although it took some time for PHO to start flowing well into the green (Brumley picked PHO for last year’s best ETFs contest but it didn’t win), it now has a clear shot to be one of the best ETFs to buy this year. And in Brumley’s assessment, the “the ebbs [in PHO] are hurting a little less than they do the broad market, and the flows are helping a little more.”
Pacer Benchmark Data & Infrastructure Real Estate ETF (SRVR)
Investor: Robert Waldo
Expense Ratio: 0.60%
YTD Gains: 27%
My pick for InvestorPlace’s ETF contest, the Pacer Benchmark Data & Infrastructure Real Estate ETF (NYSEARCA:SRVR), has consistently been at the top this year, and I expect it to continue this success.
While I don’t necessarily see another 30% or so increase in the books over the next six months for SRVR, I still think the 5G infrastructure ETF has plenty of remaining strength to help it take the throne. As I pointed out recently, SRVR is “a real-estate play on the 5G catalyst with holdings that will mostly succeed over the long-term, even without the inevitable 5G boost.”
It can continue to run higher based on the roll out of 5G, but many of its holdings are also needed to help our technologically advanced world operate efficiently. And that’s precisely why I think it has what it takes to come out on top this year: “It’s a win-win scenario at a time when we are facing countless uncertainties.”
iShares US Home Construction ETF (ITB)
Investor: Vince Martin
Expense Ratio: 0.43%
YTD Gains: 27%
At the midpoint of 2019, Vince Martin’s choice of iShares Dow Jones US Home Const. ETF (BATS:ITB) has taken the No. 1 spot, still neck and neck with the SRVR ETF. His choice of the home construction ETF was based on the fact that housing stocks took a massive hit in 2018, despite the headline buzz not justifying the devastating investor reaction.
Although Martin doesn’t anticipate that ITB can run significantly higher this year, and he cites several challenges bearing down on the home-building space now, he still believes there’s reason to be bullish: “With some help from lower interest rates, which would lower mortgage costs, and economic strength, it could re-take … [its 2018] highs, suggesting another 20% or so in upside.”
While the end-year success of Thune’s pick in GLD relies heavily on market conditions worsening, much of the enduring strength of Martin’s ITB relies on the continuation of a healthy U.S. economy.
Ultimately, a clearer victor might be in sight as we reach the end of this quarter, but for now, ITB is still holding strong as one of the best ETFs in 2019.
Robert Waldo has been a web editor for InvestorPlace since 2016. As of this writing, he did not hold a position in any of the aforementioned securities.