Top And Flop ETFs Of The First Half Of 2023

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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 backdrop, we have highlighted three ETFs -- each from the best and worst-performing zones of the first half of the year.

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 space. The 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.

The Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top two firms. The 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 (MEME - Free Report) – Up 10.9%

The turnaround in the cryptocurrency and technology market has bolstered the meme rally this year. The 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. The Roundhill MEME ETF holds 25 stocks in its basket, with none making up for more than 5.2% share.

The Roundhill MEME ETF has gathered $1 million in its AUM, and it 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. The 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, this ETF holds a basket of 48 stocks with a heavy concentration on the top two firms. The iShares U.S. Home Construction ETF charges 39 bps of annual fees, and it trades in a heavy volume of around 2 million shares a day on average. The 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 (KSET - Free Report) – Down 68.8%

The 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.

The KraneShares Global Carbon Offset Strategy ETF has gathered $1.2 million in its asset base, and it 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%

The 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.

The ProShares VIX Short-Term Futures ETF has amassed $238.1 million in AUM, and it charges 85 bps in fees per year.

United States Natural Gas Fund (UNG - Free Report) – Down 49.1%

Natural gas prices declined in the first half of the year due to increased surplus of working natural gas stocks and record-high levels of natural gas production. The 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 United States Natural Gas Fund has an AUM of $1.1 billion, and it trades in a volume of around 18 million shares per day. UNG has a 1.06% expense ratio.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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