Equities had a breakout year in 2017 after seeing significant volatility in 2016. With stocks gaining across the board, investors are increasing their confidence in equities.
While economic growth is predicted to be moderate, the current environment has been fueling gains for innovative and emerging technologies. This has been a trend globally throughout 2017 with China specifically seeing significant demand and sales growth. Continued demand from China’s middle class and newly passed U.S. corporate tax rates are both expected to support emerging companies in 2018.
2017’s top equity exchange-traded funds (ETFs) are all reporting a focus on emerging technologies and internet e-commerce. Below we provide the top four performing funds across the ETF market. These funds could provide considerable opportunity for generating alpha in 2018, with built in sector risk hedging through a diversified investment fund.
These funds do not use leveraged investing. They were selected based on assets under management and performance. All data is as of December 22, 2017.
ARK Innovation ETF (ARKK)
Issuer: ARK Invest
Average Volume: 201,009
YTD Return: 88.28%
Assets under Management: $391.2 million
The ARK Innovation ETF has a return of 88.28% in 2017. It includes companies focused on genomics, web technology and industrial innovation. Companies are involved in the global market’s most innovative product developments, services, technologies and scientific research advancements. The Fund is actively managed and comprehensively includes top investments across three of the firm’s thematic strategies, ARKG, ARKQ and ARKW.
The Fund has been steadily outperforming the Dow Jones and S&P 500. It has a three-year annualized total return of 23.82%.
ARK Web x.0 ETF (ARKW)
Issuer: ARK Invest
Average Volume: 118,740
YTD Return: 87.85%
Assets under Management: $253.8 million
ARKW is an actively managed fund offered by ARK Invest. Companies in the Fund are involved in supporting digital transformation across the global economy. The Fund includes a wide range of sectors within the technology market. Over 40% of the Fund is invested in cloud computing, cyber security, big data and machine learning. The Fund also invests in e-commerce, digital media, blockchain, internet lending, peer-to-peer payments, mobile, social and the internet of things.
Top holdings in the Fund include Bitcoin Investment Trust, Amazon.com Inc., Twitter Inc., Athenahealth Inc. and 2U Inc.
The Fund has been steadily outperforming the S&P 500 in 2017. It has a year-to-date (YTD) return of 87.85% versus 19.85% for the S&P 500. The three-year annualized total return for ARKW is 32.64%.
Guggenheim China Technology ETF (CQQQ)
Average Volume: 202,745
YTD Return: 74.09%
Assets under Management: $425.8 million
The Guggenheim China Technology ETF has a YTD return of 74.09%. The Fund invests in publicly traded companies that derive the majority of their revenue from the information technology sector in China. CQQQ is an index fund. It seeks to replicate the investment returns of the AlphaShares China Technology Index by investing in the securities in the Index.
The Fund holds 83 securities. Its top holdings are Tencent Holdings LTD, Alibaba and Baidu.com. Through December 22, 2017, the Fund’s three-year annualized return was 22.30%.
KraneShares CSI China Internet ETF (KWEB)
Average Volume: 617,331
YTD Return: 70.49%
Assets under Management: $1.2 billion
The KraneShares CSI China Internet ETF has a YTD return of 70.49%. KWEB is a broadly diversified ETF that seeks to invest in the investable universe of China-based companies with the majority of their revenue derived from internet and internet-related business. The Fund uses an index replication strategy and invests in the securities of the CSI Overseas China Internet Index.
The Fund’s top holdings are Tencent Holdings, Alibaba Group and Baidu. Over the past three years the Fund has an annualized total return of 21.37%.