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Wall Street has rebounded strongly in the first half of 2023, setting the stage for big gains. The tech-heavy Nasdaq Composite Index has gained 30%, marking its best first-half performance in 40 years, while the S&P 500 has risen 14%.
Mega-cap tech stocks’ surge, a better-than-expected earnings season and hopes that the Fed is nearing the end of its rate-hiking cycle have boosted investors’ confidence amid slowdown concerns and the banking crisis. Additionally, the U.S. economy has shown resilience in the face of the Fed’s aggressive monetary policy tightening. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target.
While a recession was seen as a likely scenario at the start of the year, the chances decreased significantly as the year progressed.
Meanwhile, bitcoin, the world's largest cryptocurrency, hit a one-year high and surpassed the $31,000 mark, shrugging off the economic uncertainty and regulatory crackdown woes on some crypto exchanges.
Given this, we have highlighted three ETFs each from the best and worst-performing zones of the first half:
A wave of optimism from institutional investors led to a surge in the cryptocurrency. Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top two firms (read: 5 Top-Performing Stocks of the Top ETF of 1H).
Valkyrie Bitcoin Miners ETF has amassed $12.3 million in its asset base while trading in an average daily volume of 78,000 shares. It charges 75 bps in annual fees.
Roundhill MEME ETF ) – Up 10.9%
The turnaround in the cryptocurrency and technology market has bolstered the meme rally this year. Roundhill MEME ETF is the first ETF globally, which is explicitly designed to track the performance of meme stocks. It follows the Solactive Roundhill Meme Stock Index, which consists of equal-weighted U.S.-listed equity securities that exhibit a combination of elevated social media activity and high short interest. Roundhill MEME ETF holds 25 stocks in its basket, with none making up for more than 5.2% share.
Roundhill MEME ETF has gathered $1 million in its AUM and charges 69 bps in annual fees. It trades in a volume of 3,000 shares a day on average.
iShares U.S. Home Construction ETF (ITB - Free Report) ) – Up 40.2%
The U.S. housing sector has shown immense improvement, with homebuilder confidence reaching its highest level in almost a year. iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With an AUM of $2.2 billion, it holds a basket of 48 stocks with a heavy concentration on the top two firms (read: What's Behind the Surge in Homebuilder Stocks & ETFs?).
iShares U.S. Home Construction ETF charges 39 bps of annual fees and trades in a heavy volume of around 2 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Flop ETFs
KraneShares Global Carbon Offset Strategy ETF ) – Down 68.8%
KraneShares Global Carbon Offset Strategy ETF provides investors access to global carbon offset futures contracts, previously unavailable through an ETF. It tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. These futures contracts include Nature-Based Global Emission Offsets (N-GEOs) and Global Emission Offsets (GEOs), which trade through the CME Group, the world's largest financial derivatives exchange.
KraneShares Global Carbon Offset Strategy ETF has gathered $1.2 million in its asset base and trades in a volume of 7,000 shares a day on average. It charges 79 bps in annual fees.
ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.
ProShares VIX Short-Term Futures ETF has amassed $238.1 million in AUM and charges 85 bps in fees per year.
United States Natural Gas Fund (UNG - Free Report) ) – Down 49.1%
Natural gas price declined in the first half due to increased surplus of working natural gas stocks and record-high levels of natural gas production. United States Natural Gas Fund provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near-month contract is within two weeks of expiration, the benchmark will be the next month's contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, LA (read: Harnessing El Nino in 2023 & Its Impact on ETF World).
The United States Natural Gas Fund has an AUM of $1.1 billion and trades in a volume of around 18 million shares per day. UNG has a 1.06% expense ratio.
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Top and Flop ETFs of the First Half of 2023
Wall Street has rebounded strongly in the first half of 2023, setting the stage for big gains. The tech-heavy Nasdaq Composite Index has gained 30%, marking its best first-half performance in 40 years, while the S&P 500 has risen 14%.
Mega-cap tech stocks’ surge, a better-than-expected earnings season and hopes that the Fed is nearing the end of its rate-hiking cycle have boosted investors’ confidence amid slowdown concerns and the banking crisis. Additionally, the U.S. economy has shown resilience in the face of the Fed’s aggressive monetary policy tightening. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target.
While a recession was seen as a likely scenario at the start of the year, the chances decreased significantly as the year progressed.
Meanwhile, bitcoin, the world's largest cryptocurrency, hit a one-year high and surpassed the $31,000 mark, shrugging off the economic uncertainty and regulatory crackdown woes on some crypto exchanges.
Given this, we have highlighted three ETFs each from the best and worst-performing zones of the first half:
Top ETFs
Valkyrie Bitcoin Miners ETF (WGMI - Free Report) ) – Up 192.8%
A wave of optimism from institutional investors led to a surge in the cryptocurrency. Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top two firms (read: 5 Top-Performing Stocks of the Top ETF of 1H).
Valkyrie Bitcoin Miners ETF has amassed $12.3 million in its asset base while trading in an average daily volume of 78,000 shares. It charges 75 bps in annual fees.
Roundhill MEME ETF ) – Up 10.9%
The turnaround in the cryptocurrency and technology market has bolstered the meme rally this year. Roundhill MEME ETF is the first ETF globally, which is explicitly designed to track the performance of meme stocks. It follows the Solactive Roundhill Meme Stock Index, which consists of equal-weighted U.S.-listed equity securities that exhibit a combination of elevated social media activity and high short interest. Roundhill MEME ETF holds 25 stocks in its basket, with none making up for more than 5.2% share.
Roundhill MEME ETF has gathered $1 million in its AUM and charges 69 bps in annual fees. It trades in a volume of 3,000 shares a day on average.
iShares U.S. Home Construction ETF (ITB - Free Report) ) – Up 40.2%
The U.S. housing sector has shown immense improvement, with homebuilder confidence reaching its highest level in almost a year. iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With an AUM of $2.2 billion, it holds a basket of 48 stocks with a heavy concentration on the top two firms (read: What's Behind the Surge in Homebuilder Stocks & ETFs?).
iShares U.S. Home Construction ETF charges 39 bps of annual fees and trades in a heavy volume of around 2 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Flop ETFs
KraneShares Global Carbon Offset Strategy ETF ) – Down 68.8%
KraneShares Global Carbon Offset Strategy ETF provides investors access to global carbon offset futures contracts, previously unavailable through an ETF. It tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. These futures contracts include Nature-Based Global Emission Offsets (N-GEOs) and Global Emission Offsets (GEOs), which trade through the CME Group, the world's largest financial derivatives exchange.
KraneShares Global Carbon Offset Strategy ETF has gathered $1.2 million in its asset base and trades in a volume of 7,000 shares a day on average. It charges 79 bps in annual fees.
ProShares VIX Short-Term Futures ETF (VIXY - Free Report) ) – Down 55.3%
ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.
ProShares VIX Short-Term Futures ETF has amassed $238.1 million in AUM and charges 85 bps in fees per year.
United States Natural Gas Fund (UNG - Free Report) ) – Down 49.1%
Natural gas price declined in the first half due to increased surplus of working natural gas stocks and record-high levels of natural gas production. United States Natural Gas Fund provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near-month contract is within two weeks of expiration, the benchmark will be the next month's contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, LA (read: Harnessing El Nino in 2023 & Its Impact on ETF World).
The United States Natural Gas Fund has an AUM of $1.1 billion and trades in a volume of around 18 million shares per day. UNG has a 1.06% expense ratio.