Top exchange-traded funds (ETFs) are a cost-effective way for investors to gain exposure to different asset classes, sectors, and themes through a single brokerage account. The top ETFs typically have sizable assets under management (AUM) and enough liquidity to keep management fees and trading costs low, making them suited for both buy-and-hold investors and active traders.
Key Takeaways
- Top ETFs enable investors to diversify their holdings across various asset classes, such as stocks, bonds, fixed-interest securities, commodities, and currencies.
- For December 2023, ETFs with the best one-month returns include BITQ, FEMB, EPRF, KCCA, and FXE.
- Cryptocurrency ETFs benefited from bullish cryptocurrency prices amid speculation that a spot Bitcoin ETF will be approved.
- Euro ETFs had buying interest as traders baked in a diverging policy stance between the Federal Reserve and the European Central Bank (ECB) over interest rates and inflation.
Below, we discuss the top equity, bond, fixed income, commodities, and currency ETFs that generated the highest returns over the past month, excluding leveraged and inverse ETFs, as well as funds with less than $50 million in AUM. All data is as of Nov. 28, 2023.
Equity ETF with the Best 1-Month Return: Bitwise Crypto Industry Innovators ETF (BITQ)
- One-month performance: 16.62%
- Expense ratio: 0.85%
- Annual dividend yield: N/A
- 30-day average daily volume: 91,565
- AUM: $94.7 million
- Inception date: May 1, 2021
- Issuer: Exchange Traded Co.
The fund tracks the performance of the Bitwise Crypto Innovators 30 Index, a modified market-cap-weighted benchmark compromising crypto mining firms, crypto mining equipment suppliers, and financial services companies specializing in digital assets.
MicroStrategy Inc. (MSTR) and the U.S. crypto exchange Coinbase Global, Inc. (COIN) are the ETF's top allocations at 14.2% and 12.4%, respectively. Other notable companies in the fund's top holdings include crypto miner Marathon Digital Holdings, Inc. (MARA) and digital asset financial services company Galaxy Digital Holdings Ltd. (BRPHF). The fund benefited last month from bullish cryptocurrency prices on speculation that the U.S. Securities and Exchange Commission would soon approve spot Bitcoin ETFs.
Bond ETF with the Best 1-Month Return: First Trust Emerging Markets Local Currency Bond ETF (FEMB)
- One-month performance: 7.00%
- Expense ratio: 0.85%
- Annual dividend yield: 5.56%
- 30-day average daily volume: 23,262
- AUM: $127.6 million
- Inception date: Nov. 4, 2014
- Issuer: AJM Ventures LLC
FEMB aims to generate a return like the JP Morgan GBI-EM Global DiversifiedIndex, which tracks U.S.-dollar-denominated Brady bonds, Eurobonds, traded loans, and local market debt instruments.
The fund's top three holdings, about 15% of AUM, include Malaysia government nonconvertible bonds with a 3.885% interest rate due on Aug. 15, 2029, Nota do Tesouro Nacional nonconvertible bonds with a 10% interest rate due on Jan. 1, 2031, and Mexico Bonos Desarr Fix RT nonconvertible bonds with a 7.50% interest rate due on June 3, 2027. Bond ETFs continue to perform well as investors chase high yields despite inflation moderating in November.
Fixed-Income ETF with the Best 1-Month Return: Innovator S&P Investment Grade Preferred ETF (EPRF)
- One-month performance: 6.08%
- Expense ratio: 0.47%
- Annual dividend yield: 5.94%
- 30-day average daily volume: 16,667
- AUM: $104.00 million
- Inception date: May 24, 2016
- Issuer: Innovator
This fund aims to replicate the performance of the S&P U.S. High-Quality Preferred Stock Index, which consists of investment-grade preferred issues from U.S.-listed preferred stocks. EPRF gives a 75% weight to cumulative shares and 25% to noncumulative shares.
The fund holds preferred shares in financials like Cullen/Frost Bankers, Inc. (CFR), AXIS Capital Holdings Limited (AXS), Northern Trust Corporation (NTRS), and Lincoln National Corporation (LNC). Fixed-income ETFs remain popular as investors seek to generate income and reduce overall portfolio volatility amid an uncertain economic outlook.
Commodities ETF with the Best 1-Month Return: KraneShares California Carbon Allowance ETF (KCCA)
- One-month performance: 3.17%
- Expense ratio: 0.78%
- Annual dividend yield: 0.88%
- 30-day average daily volume: 31,604
- AUM: $269.3 million
- Inception date: Oct. 5, 2021
- Issuer: CICC ETFs
The ETF seeks to mimic the IHS Markit Carbon CCA Index, a benchmark that represents changes in CCA carbon credit futures. KCCA selects futures contracts maturing in December of the following one or two and rebalances annually. It may also invest in short-term fixed-income securities as collateral.
The fund should experience further inflows if companies and governments accelerate their commitments to decarbonize and reduce emissions. The price projected for one carbon allowance in the California cap-and-trade program is$100 per ton or an increase of about 250% by 2029.
Currency ETF with the Best 1-Month Return: Invesco CurrencyShares Euro Currency Trust (FXE)
- One-month performance: 1.97%
- Expense ratio: 0.4%
- Annual dividend yield: 1.33%
- 30-day average daily volume: 66,674
- AUM: $217.3 million
- Inception date: Dec. 9, 2005
- Issuer: Invesco
The fund provides investors with vanilla-like exposure to the euro/USD exchange rate without having to open a foreign exchange brokerage account. The ETF's physical deposits of euros are uninsured, meaning it carries the default risk of its depositary, J.P. Morgan.
The euro strengthened against the dollar throughout November as traders accounted for the Federal Reserve slowing its interest rate hikes as against the ECB's more aggressive rate posture.
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As of the date this article was written, the author does not own any of the above securities.
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