In this guide, we look at the best-performing exchange-traded funds (ETFs) that could generate good returns if the past performance is any indication of future prospects. Due to the inherent diversification, these ETFs might also add stability to your portfolio.
Where Can I Trade Best-Performing ETFs?
ETFs can be bought and sold during stock market trading hours as though they’re single stocks, even though each share of an ETF buys you a small slice of several companies. ETFs are more flexible than traditional mutual funds that can only be bought or sold once per day at that day’s valuation.
To buy and sell ETFs, you need a broker, so we have searched for the best brokers.
What is a Best-Performing ETF?
Exchange-traded funds (ETFs) are baskets of securities that can be traded during stock market trading hours in the same way that you would trade individual stocks. By buying the shares of an ETF, you are buying a small part of each of the companies included in the ETF.
As the name suggests, the best-performing ETFs are those that have shown the best share price performance. Most ETFs have performed well between March 2020 and June 2021, especially the index-tracking ETFs, because global stock markets have been in a bull trend.
Invest in Best-Performing ETFs in Three Steps
Open a Broker Account
Open an account with an online broker by filling out the application form with your name, address, email address, and other information. You will likely also have to upload some proof-of-identity documents.
Make a Deposit
Depositing money into your brokerage account can usually be done by bank wire transfer or credit/debit card, and the same methods can usually be used to make withdrawals. Many brokers support additional payment methods such as PayPal.
The broker’s online platform will list the ETFs that are available for you to buy. Find the ones from our list or choose your own, then enter a number of shares or monetary amount to invest and click the “buy” button.
Best-Performing ETFs to Buy Now
Here, we present our list of ten best-performing ETFs followed by our more detailed descriptions of five of them.
- Vanguard S&P 500 (VOO)
- Invesco QQQ (QQQ)
- Vanguard Information Technology (VGT)
- Schwab US Small-Cap (SCHA)
- Van Eck Vector Goldminers (GDX)
- iShares Core High Dividend (HDV)
- ProShares VIX Short-Term Futures (SVXY)
- Vanguard Small-Cap (VB)
- SPDR Gold Shares (GLD)
- ARK Innovation (ARKK)
1. Vanguard S&P 500 (VOO)
Founded in 2010, the Vanguard S&P 500 ETF lists the top five US companies that are publicly traded. Financial websites list the total market cap of this ETF as being in the $32 trillion region. VOO had a spectacular performance in the year 2020 despite the coronavirus pandemic, and it is perfect for beginners to invest in to diversify their overall risk.
As of June 2020, shares in this ETF are sitting at an all-time high price as the underlying S&P 500 index has been hitting all-time high prices. It has almost doubled in value since the March 2020 low point.
2. Invesco (QQQ)
This exchange-traded fund is based on the tech-heavy Nasdaq 100 index, which has risen by more than 40% in the year to June 2020 and has more than doubled since the March 2020 low point. Invesco QQQ doesn’t track the underlying index exactly (no ETF does) but it comes close.
This performance is hardly surprising because global stock markets have been in a bull trend since March 2020, and technology companies in particular have done well during the pandemic. On a longer timescale, the current bull run could be said to have begun way back in 2009.
3. Vanguard Information Technology (VGT)
This ETF could be the best one for those looking to invest in technology because it tracks companies such as Apple and Microsoft that did well during the coronavirus pandemic.
However, as veteran investors from the turn-of-the-millenium dot-com crash will know: technology shares can be volatile. Although the VGT ETF has experienced some volatility this year, its performance is still consistent with an uptrend (i.e., a series of higher highs and higher lows) and the price is near all-time highs in June 2021.
4. Schwab U.S. Small-Cap (SCHA)
The Schwab U.S. Small-Cap ETF holds 1800 small cap stocks that are related to the US domestic economy. The annual expense ratio for the ETF is super-low at 0.04%, which means that you only pay $4 annually for any $10,000 in play.
This ETF has more than doubled in value since its March 2020 low point.
5. Van Eck Vector Goldminers (GDX)
As a supposedly safe store of value, the price of Gold performed well during the first year of the coronavirus pandemic. It has since fallen back, which may be a bad sign or could be an opportunity for gold bulls to buy on a dip by investing in the Van Eck Vector Goldminers ETF. This gold ETF tracks the price of gold indirectly by investing in gold mining companies.
Expert Tip on Investing in Best-Performing ETFs“ While selecting an ETF to trade, always take a peek at the expense ratio, which you can treat as the fee for managing your funds. Since the expense ratio can eat into your returns, you should choose ETFs with the lowest expense ratio, providing you’re not choosing a poorly performing ETF purely for this reason. ”- Shams Ul Zoha
Why Trade the Best-Performing ETFs?
ETF investing is one of the best investment choices for beginners because of the inherent diversification that means your investment is not dependent on the performance of a single stock. If you believe in momentum — i.e., what goes up will continue to go up — then the best-performing ETFs could be good investments as long as you look after the downside by setting a stop-loss order that will automatically sell your investment if the price starts to fall too far. The ability to use pending order types such as stop-loss orders is one of the advantages of ETFs over traditional mutual funds.
Frequently Asked Questions
Just as you should diversify across several stocks, so it also makes sense not to invest all your funds in a single sector-specific ETF. For this reason, we’ve listed ten of the best-performing ETFs and have described five of them in detail.
It’s impossible to say if any particular investment is good at any particular time because no one can predict the future, but ETFs are generally considered to be good investments due to the inherent diversification and the ability to sell them easily like stocks (e.g., with a stop-loss order).
Anyone who is eligible for a brokerage account can invest in ETFs as long as the broker makes available the ETFs you wish to trade. Anyone who can invest in ETFs can invest in the best-performing ETFs if you can identify which ones they are.
A share represents part ownership of a single company. An ETF represents a basket of company stocks, so one share of an ETF notionally buys you a small slice of several companies.
ETFs are no more difficult to buy and sell than individual stocks but they are less risky than single stocks. In these respects, they may be suitable for beginners.
The size of ETFs surpasses $5 trillion in value.