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After several twists and turns, 2023 is turning out to be a banner year for Wall Street. With less than two weeks left before year-end, the Dow Jones is trading at an all-time high while the S&P 500, Nasdaq Composite, small-cap Russell 2000 and S&P MidCap 400 are all trading at 52-week highs.The artificial intelligence (AI) boom, surge in “Magnificent Seven” stocks, cooling inflation, and the optimism that the Fed is done with interest rate hikes has led to an astounding performance. The winners are broad-based across the sectors, with technology being the star performer, building up massive gains this year. We have presented a bunch of top-performing ETFs from various corners of the market that have gained more than 50% this year. These include Valkyrie Bitcoin Miners ETF ( – ), MicroSectors FANG+ ETN ( – ), iShares U.S. Home Construction ETF ( – ), Fidelity Blue Chip Growth ETF ( – ) and SoFi Social 50 ETF ( – ).These funds could also be winners in 2024 if the current trends continue.
Behind the Solid Performance
A significant portion of the gains can be attributed to the strong performance of a group of large-cap stocks, referred to as the “Magnificent Seven.” This group, comprising Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla, has jumped about 75% in 2023. The perceived safety of these investments, their size, competitive advantages and the potential of emerging technologies like artificial intelligence have been the key factors driving their performances.The economy has withstood the worst of the Fed’s policy tightening and is now expected to enjoy a major policy shift. Federal Reserve Chair Jerome Powell, in the latest meeting, hinted at three rate cuts for the next year as inflation is easing and the economy is holding up better. The federal funds rate is expected to be in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, implying that the historic rate-hiking campaign might be ending.Recent indicators suggest that economic activity has been expanding at a moderate pace, buoyed by robust consumer spending, strong job gains and a low unemployment rate. Americans are now feeling more confident about the economy than they did over the past few months. Further, corporate earnings have improved. The S&P 500 index witnessed earnings growth in the third quarter after three back-to-back quarters of decline.Let’s dig into the details of the abovementioned ETFs:Valkyrie Bitcoin Miners ETF (WGMI) – Up 257.2%Valkyrie Bitcoin Miners ETF is an actively managed ETF providing exposure to the bitcoin mining industry. WGMI 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.Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket and charges 75 bps in annual fees. It has amassed $41.1 million in its asset base while trading in an average daily volume of 224,000 shares.MicroSectors FANG+ ETN (FNGS) – Up 96.9%MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket.MicroSectors FANG+ ETN has accumulated $167.9 million in its asset base and charges 58 bps in annual fees. FNGS trades in an average daily volume of 196,000 shares and has a Zacks ETF Rank #3 (Hold).iShares U.S. Home Construction ETF (ITB) – Up 68.1%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 AUM of $2.4 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #3.Fidelity Blue Chip Growth ETF (FBCG) – Up 58.1%Fidelity Blue Chip Growth ETF invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or medium market capitalizations. These companies have above-average growth potential (stocks of these companies are often called “growth” stocks). Fidelity Blue Chip Growth ETF holds 156 securities in its basket with double-digit concentration on the top two firms.Fidelity Blue Chip Growth ETF charges 59 bps in annual fees and trades in an average daily volume of 217,000 shares. It has AUM of $973.5 million.SoFi Social 50 ETF (SFYF) – Up 58%SoFi Social 50 ETF follows the SoFi Social 50 Index and is composed of the top 50 most widely held U.S. listed stocks on SoFi Invest, where the companies are measured by the number of accounts that invest in that stock. Consumer cyclical is the top sector, accounting for 30.5%, while technology (27.7%) and communications (25.3%) round off the next two spots.SoFi Social 50 ETF has amassed $16.7 million in its asset base and charges 29 bps in annual fees. It trades in average daily volume of 2,000 shares.More By This Author:
5 ETFs That Crushed The Market In 2023
