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10 Top-Ranked ETFs That Crushed the Market in 2018

Sweta Killa

The Wall Street witnessed a tumultuous ride last year, marked by record highs and sharp reversals. The S&P 500 and Dow Jones fell for the first time in three years and also logged in their biggest annual losses since 2008, declining 6.2% and 5.6%, respectively. Meanwhile, Nasdaq snapped a six-year winning streak and registered the worst year in a decade, tumbling 4%. The slump sparked concerns over the nearly decade-long bull run (read: Best & Worst Zones of 2018 and Their ETFs).

Most of the losses came mainly in December when the three indices dropped at least 8.7% amid concerns of an economic slowdown and the Fed’s less-than-dovish outlook. Worries over the trade spat between the United States and China also continued to weigh on the stocks. Notably, the Dow and S&P 500 recorded their worst December performance since 1931 and their biggest monthly loss since February 2009.

Weakness during the year was also due to inflationary threats, worries about increased regulation of the technology sector, political malaise in Europe and slowing growth in emerging and developed markets.

While there have been losers in most corner of the space, several ETFs still managed to end the year in green. Below, we have presented a bunch of those ETFs that are likely to continue outperforming in 2019 too as these have potentially superior weighting methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).

Invesco Dynamic Software ETF PSJ – Up 16.4%

With AUM of $229.3 million, this ETF provides exposure to 30 software segments of the broader U.S. technology space with each accounting for less than 5.1% share. It charges 63 basis points (bps) in annual fees and trades in average daily volume of 49,000 shares. The product has a Zacks ETF Rank #2 with a High risk outlook (read: 4 Sector ETFs Surviving the Market Rout in 2018).

iShares U.S. Medical Devices ETF IHI – Up 15.5%

The fund provides exposure to U.S. companies that manufacture and distribute medical devices by tracking the Dow Jones U.S. Select Medical Equipment Index. In total, the fund holds 57 securities in its basket with AUM of $2.7 billion. It trades in good average daily volume of 178,000 shares and charges 43 bps in fees per year. The fund has a Zacks ETF Rank #1.

SPDR S&P Internet ETF XWEB – Up 11.9%

This product targets the Internet corner of the broad tech space and follows the S&P Internet Select Industry Index. It charges 35 bps in annual fees and trades in a volume of 14,000 shares. With AUM of $42 million, the fund holds 45 stocks in its basket and carries a Zacks ETF Rank #2 (read: Biggest ETF Stories of 2018 Worth Watching in 2019).

iShares Expanded Tech-Software Sector ETF IGV – Up 12.4%

This ETF provides exposure to the software segment in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. Holding a basket of 94 securities, the fund charges 47 bps in annual fees and has AUM of $1.7 billion. Volume is good as it exchanges around 463,000 shares a day. IGV has a Zacks ETF Rank #2.

Invesco S&P SmallCap Health Care ETF PSCH    – Up 9.1%

This ETF tracks the S&P SmallCap 600 Capped Health Care Index and provides exposure to the healthcare sector of the U.S. small-cap segment. It is home to 68 stocks and has amassed $830.8 million in its asset base. The product charges 29 bps in annual fees and has a Zacks ETF Rank #2.

SPDR S&P Software & Services ETF XSW – Up 7.6%

This fund targets the software and services segment and follows the S&P Software & Services Select Industry Index. It holds 158 stocks in its basket, charging 35 bps in annual fees. XSW has accumulated $120.2 million and trades in paltry volume of 18,000 shares a day on average. It has a Zacks ETF Rank #2.

Health Care Select Sector SPDR Fund XLV – Up 6.3%

This is an ultra-popular ETF, offering exposure to the broad healthcare sector by tracking the Health Care Select Sector Index. Holding 61 stocks in its basket, the ETF charges 13 bps in annual fees. It has AUM of $18 billion and trades in average daily volume of 10.2 million shares. XLV has a Zacks ETF Rank #1.

Invesco Russell MidCap Pure Growth ETF PXMG – Up 6.1%

This fund tracks the Russell Midcap Pure Growth Index, which is composed of securities with strong growth characteristics selected from the Russell Midcap Index. It holds 97 securities in its portfolio, charging 39 bps in annual fees. The fund has AUM of $237.1 million and average daily volume of about 78,000 shares. It has a Zacks ETF Rank #2 (read: Fed Hikes Rates But Offers Dovish Outlook: ETFs to Play).

iShares U.S. Healthcare Providers ETF IHF – Up 5.6%

This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to 45 companies that provide health insurance, diagnostics and specialized treatment. It has amassed $825.7 million in its asset base and trades in volume of about 111,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank #2 (read: 4 Recession-Proof ETFs to Buy Right Away).

iShares U.S. Healthcare ETF IYH – Up 5%

This ETF follows the Dow Jones U.S. Health Care Index and provides exposure to U.S. healthcare equipment and services, pharmaceuticals and biotechnology companies. With AUM of $2.3 billion, it holds 128 stocks in its basket and charges 43 bps in annual fees. The fund trades in volume of more than 115,000 shares a day on average and has a Zacks ETF Rank #2.

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