As many investors are aware, the Standard & Poor’s 500 Index is the most commonly used benchmark for determining the state of the overall economy. Many investors also use the S&P 500 as a benchmark for their individual portfolios.
While the Dow Jones Industrial Average used to be the main gauge of economic health for the United States, it only contains 30 companies and is limited in the sectors it represents. Thus, the S&P 500 eventually upstaged the DJIA and has become the leading stock index due to its broader scope. Many hedge funds compare their annual performance to the S&P 500 – seeking to realize alpha, or market edge, in excess of the index’s returns.
While the markets in general have staged a strong recovery in 2019, after a dismal close to 2018, there are at least a handful that have been outperforming the S&P 500 this year. Here are 5 ETFs that are beating the S&P 500 by more than 30 percent YTD as of June 13, 2019:
The Invesco DWA Technology Momentum ETF (PTF) is up 37.92% YTD. It’s based on the Dorsey Wright® Technology Technical Leaders Index (DWA Technology Technical Leaders Index). The Fund will normally invest at least 90% of its total assets in the securities that comprise the Index. The Index is designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 securities from the NASDAQ US Benchmark Index. Relative strength is the measurement of a security’s performance in a given universe over time as compared to the performance of all other securities in that universe. The Fund and the Index are rebalanced and reconstituted quarterly. The fund has an expense ratio of 0.74%.
The Renaissance IPO ETF (IPO) is up 34.15% YTD. It tracks the rules based Renaissance IPO Index, which adds sizeable new companies like Uber on a fast entry basi,s and the rest upon scheduled quarterly reviews. Companies that have been public for two years are removed at the next quarterly review. The fund has a 0.60% expense ratio.
For those environmentally conscious investors, the Invesco WilderHill Clean Energy ETF (PBW) is up 32.26% YTD. It’s based on the WilderHill Clean Energy Index (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is composed of stocks of companies that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. The Fund and the Index are rebalanced and reconstituted quarterly. The expense ratio is 0.77%.
Investors looking into tech might like the Global X FinTech ETF (FINX), which is up 31.96%. It seeks to invest in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The fund has a 0.68% expense ratio.
Finally, the ETFMG Prime Mobile Payments ETF (IPAY) is up 31.82% YTD. It capitalizes on the shift from credit card and cash transactions to digital and electronic. The fund is the first and only ETF to target the mobile payments industry. IPAY capitalizes on the transition taking place from cash/physical credit card payments to a mobile/digital system and benefits from the increasing use of smartphones, ecommerce, and the need for hassle free transacting. The expense ratio for the fund is 0.75%.
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