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7 Best ETFs of the First Nine Months of 2021

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The U.S. stock market is booming this year with major bourses hitting multiple highs braving a myriad of woes. This is primarily thanks to the reopening of businesses and economies, the largest vaccination drive, an unprecedent stimulus, a huge infrastructure package and a healing job market.

All these have resulted in speedy economic recovery and powered activities across all sectors and categories, resulting in increased consumer spending. Americans are spending on big-ticket items such as vacations and weddings, companies are going on hiring sprees, and the transition to new technologies such as electric vehicles is accelerating. Resumption of earnings growth also bodes well for the stock market rally.

Additionally, the first full U.S. approval of the Pfizer (PFE - Free Report) -BioNTech COVID-19 vaccine and the approval of emergency use of a booster dose bolstered risk-on trade as it will help put brakes on the ongoing surge in the COVID-19 Delta variant cases and lead to continued reopening of the economy. The U.S. economy returned to the pre-pandemic level in the second quarter, indicating a sustained recovery from the pandemic recession. Further, the Fed, in its latest meeting, kept current monetary stimulus in place for a little bit longer, fueling increased confidence among investors (read: Will Pfizer ETFs Soar on FDA's COVID-19 Vaccine Booster Approval?).

However, inflation fears, resurgence in pandemic, taper talks, potential for high corporate tax rates and signs of slowdown in China economy have kept the stock market edgy throughout the year.

With just a week left to end the first nine months of 2021, the S&P 500 is up about 18.4% while the Dow Jones and the Nasdaq have gained 13.6% and 16.8%, respectively. In fact, the cyclical sectors have been outperforming this year on a rebounding economy.

While there have been winners in many corners of the space, we highlight seven ETFs from different segments that have outperformed and gained more than 40% in the first nine months of 2020. These are expected to continue outperforming, provided the fundamentals remain intact.

North Shore Global Uranium Mining ETF (URNM - Free Report) – Up 89.6%

Uranium stocks have been on a tear buoyed by growing social media attention, restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit, being accelerated by COVID-19 pandemic related production cuts. This ETF provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee. The ETF holds 35 stocks in its basket and has accumulated $676.2 million in its asset base. It trades in a good volume of 298,000 shares per day on average (read: Why Uranium Stocks & ETFs are Going Nuclear).

First Trust ISE-Revere Natural Gas Index Fund (FCG - Free Report) – Up 79.7%

Natural gas is surging on tightening supplies and low inventories, providing upside to the natural gas stocks and ETFs. FCG offers exposure to U.S. companies involved in the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 40 stocks in its basket. The fund has amassed $267.8 million in its asset base while charging 60 bps in annual fees. Volume is good with 1.3 million shares exchanged per day on average. The product has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Natural Gas ETFs Heat Up on Supply Crunch Ahead of Winter).

Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – Up 78.4%

Oil price is also rising amid the backdrop of tightening supply, lower crude stockpiles and expectations of an increase in demand as vaccination roll-outs widen. This product follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. Holding 32 stocks in its basket, the fund has amassed $75 million in its asset base while trading in an average daily volume of 45,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

VanEck Vectors Rare Earth/Strategic Metals ETF (REMX - Free Report) – Up 70.2%

Rare earth metals are getting a boost from an accelerating shift to new technologies such as electric vehicles. About 27% of rare metals are used in the production of neomagnets, which are the essential components in electric vehicles (EVs). REMX offers exposure to companies engaged in producing, refining and recycling of rare earth and strategic metals and minerals. It follows the MVIS Global Rare Earth/Strategic Metals Index, holding 20 stocks in its basket. The ETF has AUM of $979.1 million and an average daily volume of 232,000 shares. From a country look, Chinese firms dominate the portfolio with a 47.6% share, closely followed by Australia (25%) and the United States (11.8%). The product charges 59 bps in annual fees.

SPDR S&P Retail ETF (XRT - Free Report) – Up 48.9%

With millions of Americans being vaccinated and reopening of the economy, consumers are feeling more optimistic, about the economy, leading to increased spending. With AUM of $1.1 billion, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 108 securities in its basket with the key holdings in the Internet & direct marketing retail, apparel retail, automotive retail, and specialty stores. The fund charges 35 bps in annual fees and trades in volume of 2.3 million shares a day on average. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Buy the Dip With These Top-Ranked ETFs).

Invesco S&P SmallCap Value with Momentum ETF (XSVM - Free Report) – Up 45.2%

This fund offers exposure to the companies having the highest "value scores" and "momentum scores" by tracking the S&P 600 High Momentum Value Index. It holds a basket of 117 stocks with AUM of $336.4 million and an average daily volume of 90,000 shares. Financials and consumer discretionary take the largest share at 29% and 23.3%, respectively, while industrials round off the next spot with a double-digit exposure. The ETF charges 39 bps in annual fees.

ETFMG Treatments Testing and Advancements ETF (GERM - Free Report) – Up 43%

This fund offers exposure to biotech companies engaged in the testing and treatments of infectious diseases by tracking the Prime Treatments, Testing and Advancements Index. It holds 78 stocks in its basket and charges 68 bps in annual fees. The ETF has amassed $67.2 million in its asset base and trades in an average daily volume of 22,000 shares.