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U.S. Outperforms YTD: 6 Top-Ranked ETF Winners

Sweta Killa

Wall Street has staged a comeback since late March, leaving behind the rest of the world. An unprecedented stimulus from the central bank and the government as well as a booming technology sector led to outperformance. Additionally, hopes surrounding a potential coronavirus vaccine and reopening of the economy instilled confidence (read: Tech Sector Outperforming This Year: Best ETFs, Stocks).

All the 50 states have lifted restrictions put in place to combat the coronavirus outbreak. The easing has resulted in a pick-up in economic activities. The latest bouts of data indicate that economic damage from the coronavirus pandemic was less severe than anticipated.

Per the latest data, U.S. manufacturing activity rose for the first time since January, indicating that worst may be over. Jobless claims also fell for the first time during the pandemic in the week ended May 23, while readings on durable goods beat forecasts. Additionally, stronger-than-expected consumer confidence and homebuilder confidence have led to some optimism. Strong signs of a rebound in the economy more than offset the recent increase in U.S.-China trade tensions. 

Notably, the S&P 500 rallied 36% from its March low, cutting its losses for the year to 5.8%. The index also capped its best two-month gain since 2009.

While there are winners in many corners of the space, several ETFs easily crushed the market by wide margins in the year-to-date timeframe and carry a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). Below, we have presented a bunch of top-performing ETFs from various corners of the market that are likely to continue outperforming, should the trends prevail.

WisdomTree Cloud Computing Fund WCLD – Up 38%

This fund offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs) primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 52 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $161.1 million in its asset base and trades in average daily volume of 81,000 shares. It has a Zacks ETF Rank #2 (read: 5 ETFs Up More Than 20% in Three Months).

First Trust Dow Jones Internet Index Fund FDN – Up 17.2%

This fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 42 stocks in its basket. FDN is the most-popular and liquid ETF in the broad technology space with AUM of $8.6 billion and average daily volume of around 550,000 shares. It charges 52 bps in fees per year and has a Zacks ETF Rank #2.

iShares Expanded Tech-Software Sector ETF IGV – Up 15.3%

This ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. The fund holds a basket of 100 securities and charges 46 bps in annual fees. It is popular with AUM of $4.3 billion and volume is good as it exchanges nearly 841,000 shares a day. The product has a Zacks ETF Rank #1.

iShares Nasdaq Biotechnology ETF IBB – Up 11.9%

This fund provides exposure to 210 U.S. biotechnology and pharmaceutical companies by tracking the Nasdaq Biotechnology Index. It is the most-popular fund in the biotech space with AUM of $8.9 billion and average daily volume of 3.4 million shares. IBB charges 47 bps in annual fees and has a Zacks ETF Rank #2 (read: Race for Coronavirus Vaccine Heats Up: Biotech ETFs to Gain).

Invesco QQQ QQQ – Up 10%

This ETF provides exposure to 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $109.5 billion and average daily volume of around 48.9 million shares. It charges investors 20 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy).

iShares Morningstar Large-Cap Growth ETF JKE – Up 9.2%

This fund targets large U.S. companies that are expected to see earnings growth at an above-average rate relative to the market. It follows the Morningstar Large Growth Index, holding 66 stocks in its basket. The ETF has amassed $1.6 billion in its asset bae while trades in moderate volume of 60,000 shares. It charges 25 bps in annual fees and has a Zacks ETF Rank #1.

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