The bull market, which was badly hit by trade dispute, decelerating global economic growth and recession calls in recent months, witnessed a comeback with the S&P 500 Index hitting new highs. The renewed momentum was driven by easing monetary policy and trade deal optimism.
The Fed slashed interest rates twice this year by 25 basis points (bps) each, and is expected to do so again in the meeting scheduled on Oct 29-30. Per CME FedWatch tool, there is a 93% chance of a 25-bp rate cut at this meeting, up from 49.2% chance noted a month ago. Lower interest rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth, and is thus a boon for the stock market (read: Dividend ETFs to Invest as Odds for October Fed Rate Cut High).
Meanwhile, U.S. President Trump said that negotiations for the so called phase one of the trade deal with China were “ahead of schedule”. The Office of the U.S. Trade Representative said that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China. Additionally, better-than-expected third-quarter corporate earnings lifted investor sentiments.
Notably, the new high for the S&P 500 extended the second-longest ever bull market to 3,885 days, according to data from Bespoke Investment Group. The index is up 21% so far this year.
While there have been winners in many corners of the space, several ETFs have easily crushed the S&P 500 by wide margins this year. Below, we have presented a bunch of top-performing ETFs of 2019 so far that are likely to continue outperforming as these have potentially superior weighting methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
Invesco Solar ETF (TAN - Free Report) – Up 57%
This ETF targets the global solar power market and offers exposure to 22 stocks. American firms dominate the fund’s portfolio with nearly 46.6% share, followed by China (25.3%) and Germany (8.5%). The product has amassed $426.9 million in its asset base and charges investors 70 bps in fees per year. It has a Zacks ETF Rank #2 with a High risk outlook (read: Best & Worst Zones of This Year and Their ETFs).
VanEck Vectors Semiconductor ETF (SMH - Free Report) - Up 47.7%
This fund provides exposure to 25 semiconductor companies by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $1.3 billion and charges 35 bps in annual fees and expenses. The ETF has a Zacks ETF Rank #2 with a High risk outlook (read: Time to Buy the Dip in Semiconductor ETFs?).
Technology Select Sector SPDR Fund (XLK - Free Report) – Up 36.8%
This is the most popular technology ETF with $23 billion in AUM and expense ratio of 0.13%. It tracks the Technology Select Sector Index, holding 68 stocks in its basket. The product has a Zacks Rank #1 with a Medium risk outlook.
Invesco Aerospace & Defense ETF (PPA - Free Report) — Up 36.1%
It offers exposure to 48 companies involved in the development, manufacturing, and operations as well as provides support to U.S. defense, homeland security and aerospace. It tracks the SPADE Defense Index, charging 59 bps in annual fees from investors. The fund has so far managed assets of $1.1 billion and has a Zacks ETF Rank #2 with a Medium risk outlook.
SPDR S&P Kensho Final Frontiers ETF (ROKT - Free Report) – Up 34.9%
This ETF follows the S&P Kensho Final Frontiers Index, which utilizes artificial intelligence and a quantitative weighting methodology to capture companies which offer products and services that are driving innovation behind the exploration of the final frontiers, including the areas of outer space and the deep sea. It holds a basket of 27 stocks and charges 45 bps in annual fees. The product has accumulated AUM of $4.5 million so far since inception in October last year and has a Zacks ETF Rank #2.
Invesco S&P MidCap Momentum ETF (XMMO - Free Report) – Up 30.8%
This ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms having the highest momentum scores. It holds 78 securities in its basket and charges 39 bps in annual fees. XMMO has AUM of $579.7 million and has a Zacks ETF Rank #1.
Invesco QQQ (QQQ - Free Report) – Up 28.8%
This fund follows the Nasdaq-100 Index and holds a basket of 103 stocks. With AUM of $76.8 billion, it charges 20 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Can Q3 Earnings Bring Back the Allure for FAANG ETFs?).
SPDR S&P Kensho Future Security ETF (FITE - Free Report) – Up 28.7%
With AUM of $15.3 million, this ETF offers exposure to companies which offer products and services that are driving innovation behind future security including the areas of cyber security, advanced border security, and the following areas for military application: robotics, drones and drone technologies, space technology, wearable technologies and virtual or augmented reality activities. It tracks the S&P Kensho Future Security Index, charging 46 bps in annual fees from investors. The fund has a Zacks ETF Rank #2.
Invesco DWA Industrials Momentum ETF (PRN - Free Report) – Up 28.6%
This fund provides exposure to companies in the industrial sector that are showing relative strength (momentum). It follows the Dorsey Wright Industrials Technical Leaders Index and holds 40 stocks in its basket. The fund has amassed $100.8 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Real Estate Select Sector SPDR Fund (XLRE - Free Report) – Up 28.6%
This fund provides exposure to companies from real estate management and development and REITs, excluding mortgage REITs by tracking the Real Estate Select Sector Index. With AUM of $4 billion, it holds 32 stocks in its basket and charges 13 bps in annual fees. XLRE has a Zacks ETF Rank #2 with a High risk outlook (read: Real Estate Tops YTD: 5 Best ETFs & Stocks).
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