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The best ETFs for 2023

Check out the best ETFs based on their performance over the past 1, 3 and 5 years.

Best ETFs of 2023

  • GraniteShares 1.5x Long NVDA Daily ETF (NVDL)
  • MicroSectors FANG+ Index 3X Leveraged ETN (FNGU)
  • ProShares UltraShort Bloomberg Natural Gas (KOLD)
  • GraniteShares 1.5x Long Meta Daily ETF (FBL)
  • MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ)

Searching for the best exchange-traded funds (ETFs)? This guide will show you the best ETFs in terms of performance in the past year as well as across three-year and five-year time frames.

However, it’s worth noting that there’s no single ETF that’s the best choice for every investor. Different ETFs target different industries and are designed to suit a variety of investment strategies, so the best ETF for you depends on your investment time frame, financial goals and appetite for risk.

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Below are the 20 highest returning exchange-traded funds in the US, including all standard ETFs, synthetic ETFs and actively managed ETFs. This means some of them have higher risk than others. To understand more about what these terms mean, check out our comprehensive guide to ETFs.

It’s also worth noting that past performance is no guarantee of future success. If an ETF has performed well in the past, that doesn’t mean it will generate similar returns in the future.

That’s why performance is only one of several factors to consider when choosing an ETF. You should also look at fees, how risky the product is, your investment goals and how long you can afford to invest for.

The returns shown are net, meaning the management fees have already been deducted to offer a clearer view of performance.

Best-performing ETFs in 2023

SymbolETF nameYTD returnsExpense ratioNet assets
NVDLGraniteShares 1.5x Long NVDA Daily ETF314.19%1.15%60M
FNGUMicroSectors FANG+ Index 3X Leveraged ETN274.51%0.95%2.05B
KOLDProShares UltraShort Bloomberg Natural Gas228.30%0.95%177M
FBLGraniteShares 1.5x Long Meta Daily ETF219.80%1.15%6M
BULZMicroSectors Solactive FANG & Innovation 3X Leveraged ETN189.90%0.95%512M

As of September 2023, these are the 5 best ETFs based on year-to-date performance.

Best-performing ETFs over the past 1 year

SymbolETF name1Y returnsExpense ratioNet assets
KOLDProShares UltraShort Bloomberg Natural Gas335.21%0.95%177M
SVIX-1x Short VIX Futures ETF90.48%1.47%63M
FNGUMicroSectors FANG+™ Index 3X Leveraged ETN67.28%0.95%2.05B
FNGOMicroSectors FANG+ Index 2X Leveraged ETNs62.88%0.95%170M
TURiShares MSCI Turkey ETF48.89%0.57%194M

As of September 2023, these are the 5 best ETFs in the US based on 1-year performance.

Best-performing ETFs over the past 3 years

SymbolETF name3Y returnsExpense ratioNet assets
MEXXDirexion Daily MSCI Mexico Bull 3X Shares67.87%1.23%18M
UCOProShares Ultra Bloomberg Crude Oil55.54%1.62%746M
GRNiPath Series B Carbon ETN53.66%0.75%49M
NRGUMicroSectors U.S. Big Oil Index 3X Leveraged ETN52.95%0.95%1.17B
UGAUnited States Gasoline Fund LP50.58%0.93%70M

As of September 2023, these are the 5 best ETFs in the US based on 3-year performance.

Best-performing ETFs over the past 5 years

SymbolETF name5Y returnsExpense ratioNet assets
TECLDirexion Daily Technology Bull 3X Shares28.86%0.97%2.28B
USDProShares Ultra Semiconductors26.23%0.95%219M
ROMProShares Ultra Technology25.80%0.95%532M
SMHVanEck Semiconductor ETF23.69%0.35%9.54B
XSDSPDR S&P Semiconductor ETF23.44%0.35%1.49B

As of September 2023, these are the 5 best ETFs in the US based on 5-year performance.

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What’s currently affecting the market?

Skyrocketing inflation has been a key factor impacting global stock markets for much of the past year. Inflation reached a 40-year high in 2022, with the rising cost of living putting the pinch on consumers and increasing investor pessimism.

The Fed steadily increased interest rates throughout the year in an effort to combat rising prices, but inflation levels have continued to remain high. Fears of a recession still remain, with many economists predicting a global recession in 2023, and the uncertainty around future rate rises has driven plenty of market volatility.

The ongoing war in Ukraine has also affected financial markets, increasing energy and food costs and sparking Europe’s energy crisis. The Chinese government’s zero-Covid approach to managing the pandemic is another key factor, with protests against the strict policies fueling investor worry.

But while other major global currencies like the euro and the pound mostly fell in value throughout 2022, the US dollar continued to be a strong performer. The dollar reached a two-decade high in September 2022, but has steadily fallen since then. And what lies ahead for the greenback in 2023 remains to be seen.

How to pick the best ETFs for you

There are thousands of ETFs to choose from, so you’ll need to consider a wide range of factors when deciding where to invest your money. These include:

  • Your investment time frame. How long are you planning to invest your money? Some ETFs adopt a high-risk strategy to target high short-term growth, while others are designed for long-term growth to suit investors who plan to buy and hold for a long time.
  • Your investment strategy. What do you want to achieve by investing in an ETF? Will you take a conservative approach in the hope of earning steady long-term gains, or will you adopt a high-risk/high-reward strategy to target quick gains? If you prefer lower risk, you could also consider index funds.
  • How the fund works. Make sure you understand the nature of the product and the risks involved before you invest in an ETF. Download the fund’s prospectus and read through the details. Is it a passive ETF or is it actively managed? Which index, sector or industry is its core theme?
  • Check the returns. Look at the returns the ETF has provided, after fees, over different periods of time. How has it performed over a one-year period? How has it performed over several years? How does this performance compare to the competition?
  • Fees. Fees strongly influence your return on investment. Read the fine print to find out the management fee that applies to the ETF, and remember that you’ll also need to factor brokerage fees into your calculations when buying and selling ETFs.
  • Talk to a financial adviser. If you’re unclear about an investment, how it works or its returns, contact a licensed professional to help you learn more.
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ETF fees to consider

High fees can make a big dent in your overall investment returns. There are two main costs involved when investing in listed funds: brokerage and management fees.

  • Management fee. This is often displayed as the management expense ratio (MER), which is the percentage of your return charged as fees by the ETF’s fund manager. Normally, the more work a fund manager has to do to keep the ETF profitable, the higher the fee — though this won’t always be the case. This is why many active ETFs charge higher fees than index ETFs, which passively track an index. As a general guide, ETF management fees range from about 0.05% to 2.5%.
  • Brokerage fees. Like with stocks, your broker may charge a transaction fee every time you invest money into an ETF. This fee comes down to which trading platform or brokerage you use, and it could be a flat fee or calculated based on your trade value. As a general guide, expect brokerage fees to range from around $0 to $5 per transaction.

To find the trading platform that offers the lowest fees, you’ll first need to decide how much you want to invest and how many lump sums you’ll be investing over a year. If it’s just a single lump sum, finding a platform that doesn’t charge an inactivity fee will be key. If you plan on frequently buying small amounts, the brokerage fee itself will be more important.

What are the risks of investing in ETFs?

Before deciding whether ETFs are the best investment solution for you, make sure you’re fully aware of how they work and have an in-depth understanding of all the risks involved. These include:

  • You could lose money. The value of ETFs and other types of listed funds rise and fall like any listed stock, which means there are similar risks involved.
  • Single-asset ETFs. Some ETFs bundle together a diverse range of securities that protect the investor from market falls; others focus on one asset class. For example, a commodity ETF that invests in a particular metal will do well when that metal’s price goes up, but it will also fall quickly if prices don’t have the protection of other asset classes.
  • Tracking errors. Fees, taxes and other factors can sometimes mean that an ETF doesn’t accurately track the performance of an index.
  • Leveraged and inverse ETFs. Leveraged ETFs are designed to provide higher short-term returns than traditional ETFs, but they’re a high-risk option with higher fees. Inverse ETFs allow you to hedge against falling markets, but they can be confusing for novice investors and come with their own unique risks.
  • Currency risks and international taxes. If you invest in a global ETF, changes in the value of the US dollar will have a direct impact on the value of your investment. You may also need to pay foreign taxes, so make sure you’re aware of all tax implications of an ETF before you commit any funds.
  • Synthetic ETFs. These have all the same risks as physical ETFs, but they also expose you to other potential risks such as counterparty risks. There’s also the possibility that the price of futures will differ from the price of an underlying asset.

Where can I view ETF fund facts?

Basic details about a fund can be found in its prospectus, which (in most cases) must be filed with the US Securities and Exchange Commission (SEC) before an ETF can be publicly traded.
The prospectus breaks down key information about a fund including:

  • Fees and costs
  • Investment objectives
  • Risk level
  • Performance

View all public filings related to ETFs and other regulated US securities on the SEC website. You can also access an ETF’s prospectus by visiting the issuing company’s website.

How to invest in an ETF

Once you’ve considered the risks of investing in ETFs and worked out your financial goals, you can buy and sell units in an ETF like any stock on the stock market through a fund manager or an online trading platform.

To invest in ETFs through an online trading platform, you must do the following:

  1. Sign up with a trading platform that suits your investment needs.
  2. Sign up by providing personal details, proof of citizenship and proof of ID.
  3. Log in to your trading account.
  4. Deposit money into your trading account through a bank transfer.
  5. Search for the ETF on your platform and place a buy order.

Bottom line

  • Business cycles, demographic trends and bull or bear markets can often last for years, so ETFs with strong momentum sometimes continue to perform strongly — and vice versa.
  • Comparing recent performance of ETFs can help inform your investment planning and provide you with ideas for where to invest your money.
  • From there, continue to research your investment choices and be as thorough with the trading platforms and services you consider.

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