As we all (supposedly) know, chasing performance generally isn’t a wise investment strategy, and that past performance doesn’t guarantee future results. Still, it’s instructive—and fun—to see which exchange-traded funds are kicking butt and which ones are getting their butts kicked. Regarding the former, the top-10 performing funds year-to-date through September 20, as compiled by ETF researcher XTF.com, reveal that cutting-edge technology, the internet, China and Brazilian small caps have been the most successful investment themes so far in 2017. Many of the very best performing funds are those that employ inverse or leveraged strategies, which can magnify gains (and losses). The top-10 ETFs listed below in ascending order of YTD performance exclude those types of funds, and instead focus on ETFs that play it straight, so to speak:
10. First Trust China AlphaDEX Fund (FCA) – 59.34%
According to First Trust, this fund tracks an index that ranks the eligible stocks from the NASDAQ China Index on growth factors including 3-, 6- and 12- month price appreciation, sales to price and one year sales growth; and separately on value factors including book value to price, cash flow to price and return on assets. All stocks are ranked on the sum of ranks for the growth factors and, separately, all stocks are ranked on the sum of ranks for the value factors. A stock must have data for all growth and/or value factors to receive a rank for that style. The entire package costs 0.80 percent.
9. Global X Lithium ETF (LIT) – 61.12%
Lithium batteries are powering the mobile device revolution, as well as the electric vehicle near-revolution. This product from Global X, which charges 0.76 percent, invests in the full lithium cycle from mining and refining to battery production.
8. VanEck Vectors Brazil Small-Cap ETF (BRF) – 61.42%
This fund, which charges 0.60 percent, likewise has a strong consumer discretionary bent (roughly 33 percent of the portfolio).
7. iShares MSCI Brazil Small-Cap ETF (EWZS) – 62.05%
Despite negative news headlines that continue to paint a picture of Brazil being gripped by Murphy’s Law, investors seem to be paying little heed. A focus on small-cap, consumer discretionary companies has helped this fund tap into Brazil’s growing middle class. It also has helped it avoid the big companies embroiled in the country’s massive corporate-and-political infused scandals. The expense ratio is 0.61 percent.
6. ARK Web x.0 ETF (ARKW) – 63.62%
Cloud computing and cyber security, big data and machine learning, and e-commerce were the three largest sectors within this actively managed fund (as of June 30). Both Ark funds on this list are the only ones that are actively managed. ARKW sports an expense ratio of 0.75 percent.
5. Emerging Markets Internet & Ecommerce ETF (EMQQ) – 64.89%
EMQQ’s underlying index takes a broad view across the emerging-markets landscape, but four of its top five holdings are Chinese companies: Alibaba, Tencent, Baidu and JD.com. The fund’s expense ratio is 0.86 percent.
4. Guggenheim China Technology ETF (CQQQ) – 66.03%
As per its fact sheet, CQQQ, which charges 0.70 percent, tracks an index tied to the performance of stocks of publicly traded companies that are open to foreign ownership and derive a majority of their revenues from the information technology sector in China, Hong Kong and Macau.
3. WisdomTree China ex-State-Owned Enterprises Fund (CXSE) – 66.96%
CXSE follows an index that seeks to track the investment results of Chinese companies that are not state-owned enterprises, which is defined as government ownership of greater than 20 percent. The net expense ratio is 0.32 percent.
2. KraneShares CSI China Internet ETF (KWEB) – 69.71%
This fund has benefitted greatly from the high-flying Chinese internet sector, led by leading holdings Tencent, Alibaba, Baidu and JD.com. The fund charges 0.72 percent.
1. ARK Innovation ETF (ARKK) - 70.62%
Based in New York City, Ark Investment Management’s M.O. is identifying disruptive companies in such fields as robotics, big data, machine learning, blockchain, cloud computing, energy storage, and DNA sequencing. This actively managed fund, which charges an expense ratio of 0.75 percent, had been a ho-hum performer since it launched in late 2014. But it’s had full wind in its sails so far in 2017.
