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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.
As of September 2023, these are the 5 best ETFs based on year-to-date performance.
Best-performing ETFs over the past 1 year
Symbol
ETF name
1Y returns
Expense ratio
Net assets
KOLD
ProShares UltraShort Bloomberg Natural Gas
335.21%
0.95%
177M
SVIX
-1x Short VIX Futures ETF
90.48%
1.47%
63M
FNGU
MicroSectors FANG+â„¢ Index 3X Leveraged ETN
67.28%
0.95%
2.05B
FNGO
MicroSectors FANG+ Index 2X Leveraged ETNs
62.88%
0.95%
170M
TUR
iShares MSCI Turkey ETF
48.89%
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
Symbol
ETF name
3Y returns
Expense ratio
Net assets
MEXX
Direxion Daily MSCI Mexico Bull 3X Shares
67.87%
1.23%
18M
UCO
ProShares Ultra Bloomberg Crude Oil
55.54%
1.62%
746M
GRN
iPath Series B Carbon ETN
53.66%
0.75%
49M
NRGU
MicroSectors U.S. Big Oil Index 3X Leveraged ETN
52.95%
0.95%
1.17B
UGA
United States Gasoline Fund LP
50.58%
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
Symbol
ETF name
5Y returns
Expense ratio
Net assets
TECL
Direxion Daily Technology Bull 3X Shares
28.86%
0.97%
2.28B
USD
ProShares Ultra Semiconductors
26.23%
0.95%
219M
ROM
ProShares Ultra Technology
25.80%
0.95%
532M
SMH
VanEck Semiconductor ETF
23.69%
0.35%
9.54B
XSD
SPDR S&P Semiconductor ETF
23.44%
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:
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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Here’s what happens to your securities if your brokerage fails, and how your assets are protected by SIPC and FDIC.
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Several ETFs have exposure to Silicon Valley Bank, but it appears minimal.
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Treasury Bills are fixed-income assets with maturities of less than one year. Here’s what to know before investing.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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