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 best ETFs by 1-year trailing total return have dramatically outperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are BDRY, URNM, and COPX.
- The top holdings of these ETFs are freight futures contracts, Cameco Corp., and sponsored ADRs of Vedanta Ltd., respectively.
There are 1,540 ETFs that trade in the U.S., excluding leveraged or inverse funds as well as those with under $50 million in assets under management (AUM). The S&P 500 has provided a total return of 36.4% over the past 12 months, as of June 3, 2021. All three of the top ETFs by 1-year trailing total return dramatically outperformed the S&P 500 over the past year. It’s notable that all three are commodity ETFs, which reflects the surge in commodities prices as economies worldwide begin to recover from the shocks triggered by the COVID-19 pandemic. The best-performing ETF, based on performance over the past year, is the Breakwave Dry Bulk Shipping ETF (BDRY). We examine the best 3 ETFs below. All numbers below are as of June 3, 2021.
- Performance over 1-Year: 351.5%
- Expense Ratio: 3.09%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 469,152
- Assets Under Management: $102.8 million
- Inception Date: March 22, 2018
- Issuer: ETFMG
BDRY is structured as a commodity pool, combining investor contributions to invest in near-dated freight futures contracts on dry bulk indices. The fund holds freight futures that have a weighted average of approximately three months to expiration. It is designed to profit from increases in those futures beyond what is already priced into the market. BDRY provides pure-play exposure to the dry bulk shipping industry, which plays an instrumental role in global commodity markets and supply chains. The ETF’s price has soared in recent months as global supply chains have faced increasing strain amid the pandemic. Supply chain bottlenecks were exacerbated earlier this year when a container ship became grounded in the Suez Canal, blocking commercial traffic in one of the world’s busiest shipping routes.
- Performance over 1-Year: 147.9%
- Expense Ratio: 0.85%
- Annual Dividend Yield: 1.68%
- 3-Month Average Daily Volume: 150,618
- Assets Under Management: $363.7 million
- Inception Date: Dec. 3, 2019
- Issuer: Exchange Traded Concepts
URNM tracks the North Shore Global Uranium Mining Index. The benchmark is designed to gauge the performance of companies engaged in the mining, exploration, development, and production of uranium, as well as companies that hold physical uranium or other non-mining assets. Investors have become increasingly bullish on the uranium industry as concerns over climate change have triggered global support for a transition to cleaner forms of energy. URNM follows a blended strategy, investing in a mix of value and growth stocks of various market capitalizations. The fund’s top three holdings include Cameco Corp. (CCO:TSE), a Canada-based uranium producer; sponsored GDRs of National Atomic Company Kazatomprom JSC (KAP:LON), a Kazakhstan-based mineral producer specializing in natural uranium production; and Uranium Participation Corp. (U:TSE), a Canada-based company that invests in uranium oxide concentrates or uranium-related chemical compounds.
- Performance over 1-Year: 143.8%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.95%
- 3-Month Average Daily Volume: 811,725
- Assets Under Management: $1.3 billion
- Inception Date: April 19, 2010
- Issuer: Mirae Asset Global Investments Co. Ltd.
COPX tracks the Solactive Global Copper Miners Total Return Index, which measures the performance of global companies engaged in exploration, mining, and refining of copper. The fund provides investors with a targeted play on the mining of the base metal that in market lingo is called “Dr. Copper.” In the industry, copper is seen as possessing a “Ph. D in economics” because of its wide use and, thus, its ability to predict turning points in the global economy. The price of copper has risen significantly as economies around the world begin to recover from the pandemic. COPX follows a blended strategy, investing in a mix of growth and value stocks across the market cap spectrum. The fund’s top three holdings include sponsored ADRs of Vedanta Ltd. (VEDL), an India-based company that mines and produces base metals; class H shares of Zijin Mining Group Co. Ltd. (2899:HKG), a China-based metal mineral resources exploration and mining company; and Glencore PLC (GLEN:LON), an Anglo-Swiss multinational commodity trading and mining company headquartered in Switzerland.
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