The ETF industry has seen impressive growth with a record $3.445 trillion in assets globally as of November 30. It has gathered inflows of over $59 billion so far, according to ETFGI. Assets in U.S. listed ETFs also reached a new milestone of $2.471 trillion.

While large and the market-cap ETFs are always popular, funds that focus on ‘niche’ strategies have garnered immense investors’ interest this year, given a vast number of innovative launches. This is because these funds have the potential to outperform their traditional counterparts generating alpha (higher return) even in the less-efficient markets with high income prospects and more tax efficiency, though these carry higher risk. Notably, niche funds track a basket of stocks that are aimed at a single industry or theme.

While none of the niche funds that debuted this year repeated the success of 2014’s blockbuster PureFunds ISE Cyber Security ETF (HACK - Free Report) , some of them have seen a crazy run since their inception, outpacing the broad market fund’s (SPY - Free Report) year-to-date gain of 10.7%. Below, we have presented five such funds. However, investors should note that these currently have lower trading volumes that might increase their initial cost of trading.

SPDR S&P Technology Hardware ETF (XTH - Free Report)

This fund targets the hardware segment of the technology market by tracking the S&P Technology Hardware Select Industry Index. It holds 42 stocks in its basket with spread out across various components. None holds more than 3.45% of the assets. The fund has a certain tilt toward the small cap stocks at 58%, while mid and large caps account for 22% and 19%, respectively. It charges 35 bps in annual fees. Since its debut in late June, the ETF has accumulated $6.3 million in its asset base and surged 25.8%.

With the renewed focus on devices, increased momentum of Internet of Things (IoT) and growing adoption of virtual reality (VR), hardware industry, the foundation for IT systems, the fund is poised for strong growth amid slowdown in the PC market.  

The PureFunds Video Game Tech ETF (GAMR - Free Report)

This is the first ETF targeting the global video game industry of the technology sector including game developers, console and chip manufacturers, and game retailers. It was introduced on March 9 and has garnered $7.6 million in AUM, returning 21.1% this year. GAMR follows the EEFund Video Game Tech Index, holding 36 securities in its basket with none holding more than 5.5% of the assets. American firms take the top spot at 44% while Japanese and Chinese firms round off the top three at 29% and 11%, respectively. While large cap accounts for 43% share, small caps make up for 35% share and the rest goes to mid caps. Expense ratio comes in at 0.75%.

Its huge success was mainly driven by the frenzied popularity of the Pokemon Go app, an augmented reality game. The growing demand for smartphones and tablets, global broadband expansion, the shift to digital media, eSports, and continued drive for reality gaming added to its strength. According to market research firm Newzoo, the global video game market is expected to grow at an annual rate of 8% to $113.3 billion by 2018 from 2014.

SPDR FactSet Innovative Technology ETF (XITK - Free Report)

This fund seeks to provide exposure to the most innovative companies with high revenue growth across the technology sector and other industries that deal with technology, such as electronic media. It follows the FactSet Innovative Technology Index, charging investors 45 bps in annual fees. Holding 101 securities, the product has an equal weight exposure across each security with a concentrated exposure to small caps at 63%. It has gathered $11.7 million and gained 19.8% since its inception on January 13, thanks to the rapidly evolving areas, such as mobile devices, cyber security and cloud computing.

SPDR S&P Internet ETF (XWEB - Free Report)

This product targets the Internet corner of the broad tech space by tracking the S&P Internet Select Industry Index and does not have any novel concept. It holds 63 stocks in its basket with an equal-weight exposure and has accumulated $5.8 million within six months of its debut. Here again, small caps dominate the fund’s holdings at 68% while the rest is evenly split between mid and large caps. The fund charges 35 bps in fees from investors and has added 13.6% so far. The impressive gains were made by growing Internet usage, rising global IT spending, improving overseas demand, technology innovation and surging popularity of e-commerce.

USCF Restaurant Leaders Fund (MENU - Free Report)

With a large number of restaurants going public, and an increase in consumer spending and confidence, this new ETFison a high with a solid run-up of 11.3% since its inception last month. According to the National Restaurant Association (NRA), industry revenues have grown almost $200 billion from $586.7 billion in 2010 over the past several years and are expected to hit $782.7 billion this year, up 5% year over year.

MENU tracks the Restaurant Leaders INDXX Index, which seeks to identify the companies that are outperforming or are expected to outperform their industry peers. Holding 34 stocks in its basket, the fund has a small-cap tilt with none holding more than 3.05% of the assets. It has amassed $1.7 million since inception and charges 0.65% in expense ratio.