In this article, we discuss 10 best performing ETFs in 2023. If you want to skip our detailed discussion on the stock market and the performance of ETFs, head directly to 5 Best Performing ETFs in 2023.
Amid concerns about the unpredictable economy and rapid stock market movements, strategies focused on safe investments are largely preferred by investors in 2023. In June 2023, the chief investment officer at Astoria Portfolio Advisors, John Davi, joined CNBC’s “ETF Edge” and highlighted three big ETF trends he’s seeing this year. Davi noted that bond ETFs have attracted $82 billion in investments this year, as opposed to $55 billion that has entered equity funds. Another trend highlighted by Davi is the disparity in flow patterns between non-U.S. and U.S. ETFs. Among equity ETFs, non-U.S. funds have received $40 billion in investments this year, while U.S. equities have secured $14 billion. Lasly, the shift from value to growth is an important trend to watch.
Also Read: 12 Best NASDAQ ETFs
According to Natixis Investment Managers, there has been a significant decline in the influx of investments into equity ETFs in 2023 compared to the relatively steady flow observed in 2022. In contrast, fixed income ETFs have maintained a consistently robust and favorable net flow throughout this year. The firm expects that this upward trend in fixed income ETFs will continue due to the influence of three ongoing factors. Firstly, investor apprehension regarding an economic recession that might trigger a decline in the stock market; secondly, the appeal of exceptionally favorable short-term interest rates; and thirdly, concerns about potential bank failures. Moreover, the present state of the market might further strengthen investors’ preference for active ETF management, given that notable market volatility has generated opportunities for active managers to capitalize on. Furthermore, over the course of 2023, Natixis expects an increase in the number of options-related ETFs. Data extracted from Strategic Insight’s Simfund indicates a more than twofold growth in assets from 2020 onwards, which suggests a greater level of investor interest towards options overlays.
Don’t Miss: 10 Best Industrial ETFs
The global ETF market has gained remarkable momentum in the last half-decade. The impact of the COVID-19 pandemic has further emphasized the durability and expansion prospects of ETFs. After successfully navigating the market turbulence in 2020 and 2021, ETFs are emerging from the crisis with more strength, driven by a surge in fund inflows, new participants, and innovative product offerings. Global ETF assets under management have nearly tripled as per a PwC report, increasing from $3.4 trillion in 2016 to over $10 trillion as of November 2021. The best performing ETFs in 2023 offer investors exposure to stocks like Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Meta Platforms, Inc. (NASDAQ:META).
Our Methodology
We used an ETF screener and filtered out the best performing ETFs in 2023 based on year-to-date share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These ETFs have amassed significant gains in 2023. The list is ranked in ascending order of the year-to-date share price performance of these ETFs as of August 24, 2023.
Source:Pixabay
Best Performing ETFs in 2023
10. Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSE:NAIL)
YTD Share Price Performance as of August 24: 120.85%
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSE:NAIL)’ aim is to achieve daily returns that are 300% of the Dow Jones U.S. Select Home Construction Index’s performance, excluding fees and costs. The Dow Jones U.S. Select Home Construction Index tracks American companies within the home construction industry. This includes companies engaged in home construction, as well as vendors and providers of building resources, furnishings, fixtures, and even retailers specializing in home improvement. The index holds large, medium, or small-cap companies. Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSE:NAIL) was established on August 19, 2015 and it currently offers an expense ratio of 0.98%. It is one of the best performing ETFs in 2023.
D.R. Horton, Inc. (NYSE:DHI) is the largest holding of Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSE:NAIL)’ underlying index. D.R. Horton, Inc. (NYSE:DHI) is a homebuilding company that acquires and develops land, constructing residential homes. On July 20, D.R. Horton, Inc. (NYSE:DHI) reported its financial results for the third quarter of fiscal year 2023. The company announced a GAAP EPS of $3.90 and a revenue of $9.73 billion, outperforming Wall Street estimates by $1.11 and $1.32 billion, respectively.
According to Insider Monkey’s first quarter database, 54 hedge funds were bullish on D.R. Horton, Inc. (NYSE:DHI), compared to 46 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with a position worth $726.45 million.
Like Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Meta Platforms, Inc. (NASDAQ:META), D.R. Horton, Inc. (NYSE:DHI) is one of the top stock picks of smart investors.
Baron Real Estate Fund made the following comment about D.R. Horton, Inc. (NYSE:DHI) in its second quarter 2023 investor letter:
“Our investments in homebuilder companies – Toll Brothers, Inc., Lennar Corporation, and D.R. Horton, Inc. (NYSE:DHI) – performed well in the first six months of 2023. The share price of Toll Brothers increased nearly 60% and the shares prices of Lennar and D.R. Horton each gained more than 35%.
Year-to-date, each company has witnessed a meaningful uptick in demand to buy homes:
- Home buyers continue to come off the sidelines and buy homes despite 30-year mortgage rates remaining in the 6.5% to 7.0% range. Several factors are contributing to the recent strength, including pent-up demand to buy homes and fears that mortgage rates could move higher. • The sticker shock of rapidly rising mortgage rates appears to have cooled down. Homebuilders have made homes more affordable to prospective home purchasers by offering mortgage rate buydowns to the mid-5% mortgage rate range while maintaining strong profitability margins. • A dearth of inventory in the existing home market and an overall housing supply shortage is driving home buyers to “stretch their wallet” due to fears that they could miss the opportunity to buy a home.
We remain optimistic about the long-term potential for the Fund’s investments in Toll Brothers, Lennar, and D.R. Horton for several reasons…” (Click here to read the full text)
9. Bitwise Crypto Industry Innovators ETF (NYSE:BITQ)
YTD Share Price Performance as of August 24: 121.24%
Bitwise Crypto Industry Innovators ETF (NYSE:BITQ) offers targeted exposure to the crypto economy while avoiding the complexities of directly owning crypto assets. Bitwise Crypto Industry Innovators ETF (NYSE:BITQ) operates as a conventional, regulated exchange traded fund, and it was established on May 11, 2021. As of August 18, 2023, the ETF holds a total of $81.5 million in net assets and maintains an expense ratio of 0.85%. Its portfolio consists of 27 stocks. Bitwise Crypto Industry Innovators ETF (NYSE:BITQ) is one of the top performing ETFs in 2023, with year-to-date share price gains exceeding 114% as of August 21, 2023.
Coinbase Global, Inc. (NASDAQ:COIN), a top stock in Bitwise Crypto Industry Innovators ETF (NYSE:BITQ)’s portfolio, offers financial technology and infrastructure for the global crypto economy, serving individuals and institutions. On August 3, Coinbase Global, Inc. (NASDAQ:COIN) reported a Q2 GAAP EPS of -$0.42 and a revenue of $707.9 million, outperforming Wall Street consensus by $0.36 and $70.12 million, respectively.
According to Insider Monkey’s second quarter database, 27 hedge funds were long Coinbase Global, Inc. (NASDAQ:COIN), compared to 28 funds in the preceding quarter. Cathie Wood’s ARK Investment Management is the largest stakeholder of the company, with 12.12 million shares worth $867.3 million.
Here is what Hayden Capital has to say about Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2022 investor letter:
“Coinbase (NASDAQ:COIN): The crypto ecosystem moves extremely quickly, and there’s been many new developments since we first invested in Coinbase, a year ago. Most notably, crypto market cap has declined from a peak of ~$3 Trillion last fall, to ~$1.1 Trillion today (a -63% decline, and -72% peak-to-trough; LINK). Crypto is a volatile asset class, and has experienced many draw-downs of similar magnitude in the past. For example, Bitcoin was down -93% during 2011, -85% from 2013-15, and -84% from 2017-18. In this context, the latest draw-down is a pretty normal outcome for this emerging asset class.
A large reason for this volatility is simply because there aren’t any major “real-world use cases” for the asset just yet. In our letter outlining the investment last year, we wrote that crypto is still “in the middle of ‘crossing the chasm’ into mainstream adoption & use cases, which will result in millions of mainstream users needing to transact crypto in some form”…” (Click here to see the full text)
8. ProShares UltraPro QQQ (NASDAQ:TQQQ)
YTD Share Price Performance as of August 24: 135.25%
ProShares UltraPro QQQ (NASDAQ:TQQQ) aims to achieve daily returns, prior to costs and charges, that mirror the triple (3x) performance of the NASDAQ-100 Index. The exchange traded fund was launched on February 9, 2010. It features a gross expense ratio of 0.98% as of August 18, 2023. ProShares UltraPro QQQ (NASDAQ:TQQQ) is one of the best performing ETFs in 2023 based on year-to-date share price gains.
Apple Inc. (NASDAQ:AAPL) is the largest equity holding of ProShares UltraPro QQQ (NASDAQ:TQQQ). On August 16, Foxconn Technology commenced manufacturing of Apple Inc. (NASDAQ:AAPL)’s iPhone 15 at a plant situated in the Indian state of Tamil Nadu. The objective is to provide the phones just a few weeks after they begin shipping from Chinese factories. Apple Inc. (NASDAQ:AAPL) is engaged in a multiyear initiative to diversify its manufacturing beyond China, aiming to reduce supply chain vulnerabilities for its crucial products due to uncertain trade relations between the U.S. and China.
According to Insider Monkey’s second quarter database, 135 hedge funds were long Apple Inc. (NASDAQ:AAPL), compared to 131 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with 915.5 million shares worth $177.6 billion.
Choice Equities Capital Management made the following comment about Apple Inc. (NASDAQ:AAPL) in its second quarter 2023 investor letter:
“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)
Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.
On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…” (Click here to read the full text)
7. VanEck Digital Transformation ETF (NASDAQ:DAPP)
YTD Share Price Performance as of August 24: 136.16%
VanEck Digital Transformation ETF (NASDAQ:DAPP)’s goal is to closely mimic, prior to fees and expenses, the price and yield movement of the MVIS Global Digital Assets Equity Index. This index is designed to mirror the performance of businesses involved in digital asset economies. The ETF features a management fee of 0.50% and its total net assets stood at $45.34 million as of August 18, 2023. VanEck Digital Transformation ETF (NASDAQ:DAPP) is one of the best performing ETFs this year.
Bitdeer Technologies Group (NASDAQ:BTDR) is the top company in VanEck Digital Transformation ETF (NASDAQ:DAPP)’s portfolio. It is a tech company focused on cryptocurrency mining. It mines cryptocurrencies and offers solutions to the mining community, handling aspects like equipment procurement, logistics, datacenter design, management, and operations. On August 11, Bitdeer Technologies Group (NASDAQ:BTDR) reported a Q2 GAAP EPS of -$0.36 and a revenue of $93.8 million, up 5.2% year-over-year.
6. Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)
YTD Share Price Performance as of August 24: 141.45%
Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)’s objective is to achieve daily returns equivalent to 300% or the inverse of 300% of the ICE Semiconductor Index’s performance, excluding fees and costs. The ETF was founded on March 11, 2010, and comes with an expense ratio of 0.94%. Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) is one of the best performing ETFs this year.
NVIDIA Corporation (NASDAQ:NVDA) is the largest holding of Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)’s underlying index. On August 21, HSBC analyst Frank Lee reiterated a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) and raised his price target on the shares to $780 from $600. The analyst highlighted that even though there are high expectations, there remains untapped potential for earnings growth in NVIDIA Corporation (NASDAQ:NVDA) during the latter part of fiscal 2024 and fiscal 2025, which has not yet been fully factored into the current pricing.
According to Insider Monkey’s second quarter database, 175 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), up from 132 funds in the last quarter. Rajiv Jain’s GQG Partners is a significant position holder in the company, with approximately 14 million shares worth $5.9 billion.
In addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Meta Platforms, Inc. (NASDAQ:META), elite hedge funds are piling into NVIDIA Corporation (NASDAQ:NVDA).
Mairs & Power Growth Fund made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:
“Regarding stock selection in the first half, NVIDIA Corporation (NASDAQ:NVDA) was a massive outperformer, up 189.54%. Amazon and Microsoft were also positive contributors, up 55.19% and 42.66%, respectively. All three stocks benefited from a renewed interest in growth stocks by investors in the first half of the year. Nvidia is the leading provider of processors used for artificial intelligence (AI) computation for both learning and inferencing, and its stock rallied significantly on a massive earnings report in the first quarter as cloud data center companies invested heavily in AI.”
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Disclosure: None. 10 Best Performing ETFs in 2023 is originally published on Insider Monkey.
