Over the previous ten years, this article will highlight five of the best performing ETFs from various market sectors. Several exchange-traded funds have outperformed the general stock market in terms of investment returns.
I. What is the difference between an ETF and a mutual fund?
In comparison to a mutual fund, an exchange-traded fund, or ETF, has a very similar investment structure. It pools the funds of several participants to create a fund that invests in a variety of financial instruments on the open market. ETFs, give investors access to practically any asset class, including stocks, bonds, and commodities, to build an investment portfolio.
Precious metals-oriented ETFs, for example, could be invested in 20 to 50 different mining firm equities, or hold real gold or gold futures, or a combination of the three.
There are six key reasons for the growing tendency of ETFs displacing mutual funds as an investor’s preferred option:
- ETFs provide you access to a wider range of investments.
- They are typically low-cost investment vehicles, with low expenditure ratios and low operating costs. overall
- ETFs are a more liquid investment since they trade like stocks throughout the day.
- They usually have a smaller initial investment need.
- ETFs typically result in decreased tax burden for investors due to the way an ETF investment portfolio is handled.
- Index funds have become more popular for passive investment, and ETFs provide access to hundreds of different indices.
An exchange-traded fund that makes the list of the best performing ETFs over the previous ten years has to be a market outperformer. The SPDR S& P 500 (SPY) rose from a low of $107.43 in October 2011 to a high of $454.05 in September 2021. That’s a 323 percent raise.
III. Last Decade’s Best Performing ETFs
Let’s get started with five of the best-performing non-leveraged ETFs in various market sectors over the last decade.
1. iShares PHLX Semiconductor ETF is the best technology sector ETF (SOXX)
It’s no surprise that a technology sector ETF is at the top of the list of best-performing ETFs. From its lows in 2011 to its highs in 2021, this semiconductor ETF from BlackRock’s iShares, one of the largest ETF developers, was up about 1.000 percent, making it the best performing ETF over the last ten years. Almost every component of modern technology relies on the semiconductor sector.
The SOXX fund is well-diversified, with more than 100 different US and foreign market tech firms – mostly mid-cap and large-cap – in its portfolio. Broadcom Inc., Intel Corp., and NXP Semiconductors NV are among its top holdings. Over the last ten years and the last five years, SOXX has been a top performer. With more than $2.6 billion in assets under management, it’s also the largest ETF in its industry (AUM).
One thing to note is that another ETF in the technology sector did well as well. Since its creation, the ARK Next Generation Internet ETF (ARKW) has increased by nearly 850 percent to its swing highs in 2021. However, as it was originally traded in 2014, the ETF does not yet have a 10-year track record. Regardless, this is an outstanding result.
2. Invesco S&P SmallCap Health Care ETF is the best performing ETFs in the health care sector (PSCH)
Over the last ten years, the healthcare and technology sectors have competed for the first position in the stock market, since both have experienced exponential development. This Invesco small-cap fund is at the top of the healthcare stack. Between the swing low in 2011 and the all-time high in February 2021, investors saw a cumulative gain of almost 700 percent.
PSCH invests in a wide range of pharmaceutical, biotechnology, and healthcare facility firms to match the performance of the S&P SmallCap 600 Health Care Index. Omnicell Inc., NeoGenomics Inc., and CONMED Corporation are among the top holdings among the about 70 small-cap US healthcare equities.
3. Best New US Stocks ETF – First Trust US Equity Opportunities ETF (FPX)
This First Trust service focuses on a distinct type of investment: Its whole portfolio is made up of equities from companies that have been publicly traded for less than three years. FPX is one of the best-performing exchange-traded funds because of a slew of exceptionally successful initial public offers (IPOs) over the last decade, including Alibaba, Snap, and Kinder Morgan.
Between the lows of 2011 to the highs of 2021, the 10-year return is nearly 580 percent. The fund invests in a variety of US small-cap, mid-cap, and large-cap securities that suit its investment philosophy of selecting relatively new, high-growth firms.At the present, the top holdings in FPX are Marvell Technology Inc., Snap Inc., and DocuSign Inc.
4. Invesco China Technology ETF is the best Asia Pacific Region ETF (CQQQ)
International stock funds have performed worse than US equity funds in recent years, owing in part to the strong US currency. Nonetheless, this fund has performed well for investors looking to invest directly in large-cap China technology equities, with a 10-year cumulative gain of roughly 500 percent from its lows of $18.26 in 2011 to its highs of $108.61 in 2021. The top fund investments are Tencent Holdings Ltd., Baidu Inc., and Kingdee International Software Group Co., Ltd.
5. Invesco Global Listed Private Equity ETF – Best Alternative Investments ETF (PSP)
This exchange-traded fund, which invests in private equity, a type of investment that was previously solely available to high-net-worth individuals. This is a terrific illustration of how ETFs have opened up a larger range of asset classes to ordinary investors. The Red Rocks Global Listed Private Equity Index is tracked by this ETF.
The fund’s holdings include American depository receipts (ADRs) and global depository receipts (GDRs) that are part of the Red Rocks index, as well as global investments in the equities of 50 to 70 private equity firms.The largest interests include KKR & Co. Inc., Partners Group Holding AG, and The Carlyle Group Inc. The fund has a higher-than-average expense ratio of 1.44 percent, which is a significant disadvantage.
While the alternative investing sector has underperformed the main stock market over the last ten years. PSP investors have only received a 130 percent return.
If you look at the chart, you’ll find that this ETF has a lot of volatility. The ETF lost more than 80% of its value between 2007 and 2009, and 50% between February and March 2020. But the instability persisted after that, and the price only reverted a few months later. So, while it is the best performing ETFs in this industry, it is the worst-performing ETF in comparison to other sector-specific ETFs, as well as the S& P 500.
Conclusion in best performing ETFs
Finally, I hope you’ve enjoyed this look at some of the best performing ETFs during the previous decade. While it is often said that “previous performance is no guarantee of future success”. Most investors still choose investments with a proven track record of profitability.
ETFs, provide investors with an easy-to-understand investment instrument that allows them to build a diversified portfolio. At the same time, ETF investors have the option of concentrating their investments in specific sectors. Or asset classes within the financial markets. Such as the exchange-traded funds listed above indicate.