We recently compiled a list of the 10 Best Performing ETFs of the Last 5 Years. In this article, we are going to take a look at where ProShares Ultra Semiconductors (NYSE:USD) stands against the other ETFs.

Futures markets have switched from expecting a June rate decrease and potentially another before the end of the year, to no cuts until the autumn, with a low possibility of a follow-up before the end of 2025. Reduced confidence about Fed easing came after the January consumer price index report showed a 0.5% monthly rise, raising the annual inflation rate to 3%, a little higher than December and only marginally lower than the 3.1% reading in January 2024. Excluding food and energy, the news was much worse, with a 3.3% rate indicating that core inflation was growing well beyond the central bank’s target.

Furthermore, persistent inflation and President Donald Trump’s strict trade policies have reignited worries of stagflation. Despite repeated warnings over the last 50 years, stagflation has not materialized as a serious danger to investment portfolios. That said, the dreaded scenario has resurfaced as a major risk for investors in recent weeks, as the potential of trade conflicts and punitive tariffs casts a pall over US growth. Jack McIntyre, portfolio manager for Brandywine Global’s fixed income strategies, believes that stagflation has a decent chance of materializing. He said the following:

“Stagflation has definitely re-emerged as a possibility because we have these policies that could hurt consumer demand even while persistent inflation limits the Federal Reserve’s ability to maneuver. It’s not a zero-possibility scenario any more, by a long shot.”

According to a Bank of America poll of global fund managers released on February 18, the number of investors anticipating stagflation, which the bank defines as below-trend GDP and above-trend inflation, during the next year has reached a seven-month high. At the same time, investors remained optimistic about equities, viewing a trade war as a low-probability danger.

The Labor Department’s report on February 20 showed no evidence that Republican President Donald Trump’s administration’s huge layoffs of federal agency workers and severe expenditure cutbacks were having an impact on the economy. Thousands of federal employees, largely on probation, have been sacked in recent days by billionaire Elon Musk’s Department of Government Efficiency, or DOGE, an agency established by Trump. Of course, However, economists who predict a spillover to the private sector believe it is too early to see negative repercussions, although negative effects aren’t completely off the table either. In that regard, Christopher Rupkey, chief economist at FWDBONDS, said:

“The current round of unprecedented belt-tightening and budget cuts and layoffs in Washington have not become a reality yet in terms of showing up in the national statistics. But actions taken in the early days of the new administration may yet bring about a broader economic slowdown and is frankly a risk factor that economists did not see at the start of the year.”

ETF Trends Dominating The Market

Europe played a significant role in driving ETF growth, with total assets under management (AUM) nearing $2.3 trillion by the end of 2024, helped by the fast expansion of online retail savings accounts. Nonetheless, the US was a driving force behind global ETF growth, with AUM topping $10 trillion by the end of 2024. Moreover, a report by EY states that active ETFs are on their way to becoming an increasingly important source of growth. These ETFs are a rising part of European ETF markets, while in the United States they account for 8% of ETF AUM and over half of net inflows in 2024.

In addition, active ETFs accounted for the vast majority of ETF launches in the United States, Canada, and Australia last year. In the first 10 months of 2024, the United States had 482 new active ETFs launched, compared to 144 indexed ETF releases. Regulatory developments in various countries are also promoting active ETFs. The continued entry of new ETF providers and platforms is increasing competition and specialization in ETF markets. This is fantastic news for investors, implying that now is the ideal time for established ETF providers to expand and for newcomers to enter the market.

Our Methodology

For this list, we ranked some of the best performing ETFs by their 5-year share price performance as of February 18, 2024, and arranged them in ascending order. In addition, we have included insights into each ETF’s top holdings.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).

ProShares Ultra Semiconductors (NYSE:USD)

5-Year Share Price Performance as of February 18: 702.16%

ProShares Ultra Semiconductors (NYSE:USD) provides two times the daily performance of the Dow Jones U.S. Semiconductor Index. Rather than simply investing in semiconductor companies, the fund significantly owns swaps. These are derivatives exchanged with another party that synthetically offers ProShares Ultra Semiconductors (NYSE:USD) with leveraged exposure to the Dow Jones U.S. Semiconductors SM Index. That said, swaps can often be expensive, as seen by USD’s high 0.95% expense ratio. The fund manages $1.1 billion in net assets and trades at an average daily volume of 570,314 shares.

QUALCOMM Incorporated (NASDAQ:QCOM), one of the fund’s top holdings, is a major American telecom equipment and semiconductor corporation headquartered in California. The firm provides chips to big corporations such as Samsung, Huawei, and BMW in a variety of high-growth areas, including smartphones and self-driving cars.

QUALCOMM Incorporated (NASDAQ:QCOM) posted better-than-expected fiscal first-quarter earnings for 2025, with sales up 18% from $9.92 billion the year before. The company forecasts revenues between $10.2 billion and $11 billion in the March quarter, which is higher than the midpoint estimate of $10.34 billion. It also expects adjusted profits to come in at $2.70 to $2.90 per share, exceeding Wall Street’s forecast of $2.69 per share.

Overall USD ranks 1st on our list of the best performing ETFs of the last 5 years. While we acknowledge the potential of USD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than USD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article is originally published at Insider Monkey.