Two of the hottest concepts in exchange-traded funds have involved those focused on environmental, social and governance principles, and those issued by Ark Investment Management. So it’s no surprise that ESG-related funds, as well as products sponsored by Ark, both occupy three places on the list of the top 10 ETFs with the best three-year returns (as of April 29) among non-leveraged products, according to ETF Database.
ESG investing has gained a full head of steam with both institutional and individual investors in recent years as it went from fad to fixture on the investment front. As for Ark, the firm’s CEO and chief investment officer, Cathie Wood, has become a rock star in the investment management world as Ark’s actively managed funds have achieved incredible success both in asset gathering and performance. But high-flying Ark began to encounter turbulence in mid-February as rising rates, the flowering of the so-called re-opening trade and the new-found love of value investing put a hurt on the high-octane growth stocks that are Ark’s forte. Even though Ark’s funds have hit the skids in recent months, their track record before that provided sufficient padding to produce stellar three-year returns.
Amplify ETFs and Invesco both have two products on this list, which follows in ascending order:
10. SPDR S&P Semiconductor ETF (XSD) - 175.3% three-year share price return
The fund’s underlying index tracks the semiconductors segment of the broad-market S&P Total Market Index. Its expense ratio is 0.35%, and its top five holdings comprise Nvidia Corp., Lattice Semiconductor Corp., Qorvo Inc., Monolithic Power Systems Inc. and Skyworks Solutions Inc.
9. Amplify Transformational Data Sharing ETF (BLOK) - 181.7%
You wouldn’t know it by the name, but this is a blockchain fund. For regulatory reasons, this and other ETFs focused on this segment can’t use “blockchain” in their names. Regardless, this actively managed fund is by far the largest in the blockchain category, and it’s the leader in performance, too. Its fee is 0.71%.
8. Amplify Online Retail ETF (IBUY) - 185.1%
Amplify ETFs is far down on the leader board of the largest ETF sponsors, but its roster includes several distinctive products and some of its funds have delivered impressive results. That includes this index-tracking product which invests in companies with at least 70% or more of their revenue coming from online or virtual sales. Online retail comprised just 14% of U.S. retail sales in 2020, which means there’s much room for growth. This fund charges 0.65%
7. Aberdeen Standard Physical Palladium Shares ETF (PALL) - 199.1%
Palladium has benefitted from a classic supply-and-demand backdrop: Demand is up for palladium that’s used in catalytic converters to curb automobile emissions, but supply is tight. As the name suggest, this fund invests in physical palladium, which is stored in a London vault. The expense ratio is 0.60%
6. ARK Innovation ETF (ARKK) - 216.5%
This is Ark’s largest ETF (assets of $23.7 billion) and is considered its flagship product. The M.O. of this actively managed fund (all three Ark funds on this list are actively managed) is to invest in companies engaged in “disruptive innovation” that will change the way people live and work. Top holdings include Tesla Inc., Teladoc Health Inc. and Roku Inc., and it comes with a fee of 0.75%.
5. ARK Next Generation Internet ETF (ARKW) - 241.2%
There’s a lot in common between ARKW and ARKK. Namely, they share four of the same top-five portfolio holdings in Tesla (top position in both funds), Teladoc Health, Square Inc. and Shopify Inc. Their respective portfolios have a 60% overlap by weight, reflecting criticism that Ark’s funds tend to be overweight a relatively small number of names, leading to concentration risk. The expense ratio is 0.79%.
4. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) - 246.6%
This alternative energy fund tracks an index focused on solar power, wind power, advanced batteries, fuel cells and electric vehicles. Top positions are Tesla, Chinese electric vehicle maker NIO Inc., and Albemarle Corp., a specialty chemicals company involved in lithium production used in battery storage. The net expense ratio is 0.60%.
3. Invesco Solar ETF (TAN) - 247.4%
Solar energy has been on fire, and this fund invests across the value chain including equipment manufacturers, energy storage, installation and maintenance. The U.S. (46%) and China (21%) are the largest country positions by weight. It charges an investment fee of 0.69%.
2. Invesco WilderHill Clean Energy ETF (PBW) - 273.4%
Another clean/alternative energy fund from Invesco that has outperformed, PBW invests in companies involved in clean energy and conservation. Top holdings include wind blades maker TPI Composites Inc.; Daqo New Energy Corp., a Chinese provider of raw materials for solar panels; and solar panel maker First Solar Inc. This fund charges 0.70%.
1. ARK Genomic Revolution ETF (ARKG) - 274.3%
The fund focuses on companies engaged in CRISPR technology, targeted therapeutics, bioinformatics, molecular diagnostics, stem cells and agricultural biology. Teladoc Health, a top-five position in the other two Ark ETFs on this list, is the top holding in this fund. The expense ratio is 0.75%.
