Exchange-traded funds (ETFs) hold a collection of securities—such as stocks—that often track an underlying index. While they are similar to mutual funds in some ways, ETFs are different in that they are listed on exchanges and can be traded throughout the day like traditional stocks. In recent years, ETFs have become immensely popular with investors for two major reasons. They provide an easy access point to a wide variety of sectors, industries, and strategies. And they tend to minimize many of the risks inherent in investing in individual stocks.
- The market benchmark SPDR S&P 500 ETF Trust has provided total returns of 17.2% over the past year.
- The ETFs with the best 1-year trailing total return are ARKG, TAN, and PBW.
- The top holdings of these ETFs are CRISPR Therapeutics AG, Enphase Energy Inc., and FuelCell Energy Inc., respectively.
There are 1,393 ETFs that trade in the U.S., excluding leveraged or inverse funds and those with under $50 million in assets under management (AUM). The S&P 500, represented by the SPDR S&P 500 ETF Trust (SPY), has provided a total return of 17.2% over the past 12 months, as of December 14, 2020. SPY is by far the largest U.S. ETF and is a favored benchmark against which to compare an ETF's performance to the broader market. The best performing ETF for Q1 2021 is the ARK Genomic Revolution ETF (ARKG). Below, we’ll look at the top 3 ETFs as measured by 1-year trailing total returns. All statistics in the tables below are as of December 15.
- 1-Year Trailing Total Return: 194.1%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 2.20%
- 3-Month Average Daily Volume: 1,541,802
- Assets Under Management: $4.5 billion
- Inception Date: October 31, 2014
- Issuer: ARK Investment Management
ARKG is an actively-managed fund that aims to invest in companies best positioned to profit from major advancements in areas such as energy, automation, manufacturing, materials and medicine. A special focus is buying shares of emerging technological and scientific leaders in genetic therapy, molecular diagnostics, gene-editing, and stem cell research. The fund invests in biotech stocks with various market capitalizations but tends toward smaller firms. The top holdings of ARKG include CRISPR Therapeutics AG (CRSP), the Switzerland-based gene-editing medical company; Arcturus Therapeutics Holdings Inc. (ARCT), the biotech company specializing in RNA therapeutics; and Pacific Biosciences of California Inc. (PACB), the gene sequencing and biological observation company.
- 1-Year Trailing Total Return: 190.5%
- Expense Ratio: 0.71%
- Annual Dividend Yield: 0.11%
- 3-Month Average Daily Volume: 1,712,875
- Assets Under Management: $2.7 billion
- Inception Date: April 15, 2008
- Issuer: Invesco
TAN is a multi-cap blended ETF that tracks the MAC Global Solar Energy Index, which is comprised of companies focused on the solar energy industry. The fund invests in both growth and value stocks of solar energy companies across developed markets. It holds a relatively focused portfolio of 27 holdings, with more than 60% of invested assets concentrated in the 10 largest positions. The fund's top three holdings include Enphase Energy Inc. (ENPH), the manufacturer of home solar power systems and equipment; SolarEdge Technologies Inc. (SEDG), the Israel-based smart energy technology company; and Xinyi Solar Holdings Ltd. (968:HKG), the China-based company that manufactures and distributes solar glass products.
- 1-Year Trailing Total Returns: 179.2%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 0.21%
- 3-Month Average Daily Volume: 449,334
- Assets Under Management: $1.6 billion
- Inception Date: March 3, 2005
- Issuing Company: Invesco
PBW tracks the WilderHill Clean Energy Index, offering exposure to multi-cap U.S. companies that focus on greener and largely renewable sources of energy and technologies that facilitate cleaner energy. PBW includes tech companies as well as industrials, materials, utilities, and stocks from other sectors. The fund holds about 48 unique equities, with roughly one third of invested assets concentrated in the top 10 positions. PBW's top holdings include FuelCell Energy, Inc. (FCEL), a company which designs, builds, and operates fuel cell power plants; Blink Charging Co. (BLNK), the electric vehicle charging equipment company; and sponsored ADR class A shares of NIO Inc. (NIO), the China-based electric vehicle company.