Year-to-date, the ARK Innovation Fund (NYSEArca: ARKK) and ARK Web x.0 ETF (NYSEArca: ARKW) were the top two best performing, non-leveraged, long-only ETFs, surging 89.2% and 87.7%, respectively. ARK’s actively managed ETFs, which have outperformed the broader markets since inception, try to generate long-term capital appreciation and outperformance with a relatively low correlation to traditional investment strategies by investing exclusively in disruptive innovation – companies that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the Genomic Revolution, so-called Web x.0 and Industrial Innovation.
The VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) jumped 83.4%. The rare earth metals ETF has enjoyed a phenomenal year and strengthening fundamentals may continue to support this sector. Demand for rare earth metals is on the rise as technological advancements and global consumers’ increased reliance on high-tech gadgets have fueled demand. Furthermore, the sub-sector strengthened after China started stockpiling rare earth metals for strategic reserves, raising concerns over Beijing’s control over the coveted resources.
The WisdomTree China Ex State Owned Enterprises Fund (NasdaqGM: CXSE) was the best performing China ETF this year, gaining 80.2%. CXSE tracks companies that are not state-owned enterprises, which means that it does not hold some of the large Chinese banks that make up a sizeable portion of the overall Chinese market capitalization. Consequently, information technology accounts for 33.4% of the fund’s portfolio, followed by consumer discretionary 22.6% – two sectors that have capitalized on the growth of e-commerce in China.
Along with the broader CXSE play, more sector-focused China ETF Guggenheim China Technology ETF (NYSEArca: CQQQ) also rallied 74.0% this year. China has been a world leader in the online commercial retail space as it draws upon its large group domestic consumers and rising middle-income base. Consequently, a China tech-related ETF has been among the best performers over the past five years and may continue to lead.