This article was originally published on Opto – Understand What Really Moves Markets.
The exchange-traded fund (ETF) market was highly competitive in 2020. Despite the coronavirus pandemic triggering a global market sell-off and sending total assets in European ETFs down €780bn in the first quarter, the subsequent quarter marked a turnaround in sentiment.
Investors poured €33.4bn into European ETFs during the second quarter, raising total assets back to €903bn, Morningstar data shows. Fixed income funds were the top play, with 70% of inflows going to bond ETFs. Meanwhile, thematic ETFs were the most popular equity choice, the research firm notes.
Throughout the third quarter, demand for equity funds waned only to find a tailwind in November’s global stock market rally. Indeed, U.S. equity funds stole the show with inflows surging to an estimated $81.8bn, which pushed total monthly inflows to a record $91.4bn, Morningstar data indicated.
“If December flows are in the neighbourhood of their average level in recent years, 2020 could be a record year for ETF flows,” Ben Johnson, director of ETF research at Morningstar, wrote.
So, as the year draws to a close, which ETFs have been the top performers?
iShares PHLX Semiconductor ETF
These strong performances across chipmakers lifted the iShares PHLX Semiconductor ETF [SOXX] — a capitalised-weighted index composed of 30 semiconductor companies — to record heights in 2020. The fund showed impressive resilience during the pandemic, as the rapid adoption of information technologies continues to fuel growth for powerful computer chips.
The semiconductor ETF had a year-to-date total daily return of 49.4% on 15 December, with net assets of $4.5bn. The fund, which was launched by BlackRock [BLK] in 2001, rallied 54.3% since the turn of the year to a record intraday high of $384.05 on 8 December.
ARK Genomic Revolution ETF
The last decade has seen a boom in next-generation DNA sequencing technologies, with the lucrative returns in ARK Investment Management’s Genomic Revolution ETF [ARKG] standing out as a top thematic play.
The fund, which was launched in 2014, had an eye-watering year-to-date daily total return of 190.6% as of 15 December. With net assets totalling $4.01bn, the ARK Genomic Revolution ETF has seen extensive growth in 2020. Since the turn of the year, the fund has rallied 184% to close at $94.71 on 18 December.
Top holdings such as Crispr Therapeutics [CRSP], Pacific Biosciences of California [PACB], Invitae Corp [NVTA] and Arcturus Therapeutics [ARCT] have been key to that outperformance.
Invesco Solar ETF
The rush to sustainable investment assets picked up massively in 2020, which drove up interest in environmental equities, particularly companies working in the solar industry. As a result, the Invesco Solar ETF [TAN] was one of the top-performing funds throughout the year.
The solar fund had clocked a year-to-date daily total return of 165.7% by 15 December and, with $1.8bn in assets, investors appear to be increasingly drawn to it. Invesco’s solar ETF has almost trebled since the start of the year, growing 200.65% to $96.00 on 18 December.
The high returns are thanks to a strong performance by top holdings such as SolarEdge Technologies [SEDG], Enphase Energy [ENPH], Xinyi Solar Holdings  and First Solar [FSLR].
First Trust Nasdaq Clean Edge Green Energy ETF
It’s not just the solar industry that’s posting impressive returns. Renewable energy ETFs were among the hottest industry funds in 2020, which helped give the First Trust Nasdaq Clean Edge Green Energy ETF [QCLN] a boost in momentum.
The fund is diversified to give investors exposure to traditional renewable energy as well as electric vehicle makers and semiconductor makers, with holdings in Nio [NIO], SolarEdge Technologies [SEDG], Enphase Energy [ENPH], Tesla [TSLA] and Albemarle [ALB].
The fund had climbed 164.9% since the turn of the year to 18 December, with a total daily return of 150.2% and net assets of $1.5bn as of 15 December. Launched in 2007, the fund hit an all-time high of $68.24 on 18 December.
Amplify Online Retail ETF
Ecommerce stocks have been a top play since COVID-19 emerged and the strong performance of Amplify Online Retail ETF [IBUY] illustrates this trend. The fund’s 123.3% year-to-date (through 18 December’s close) climb has outperformed its peers by more than doubling in value.
The IBUY ETF hit an all-time high of $116.16 on 18 December and has attracted a year-to-date daily total return of 110.93% on net assets of $1.2bn (through 15 December).
The retail fund was launched by Amplify Investment Partners in 2016 with the aim of investing in companies that generate at least 70% of their revenues from virtual sales. It has top holdings in stocks including Groupon [GPRN], TripAdvisor [TRIP], Qurate Retail Group [QRTEA] and Lyft [LYFT].
ARK Next Generation Internet ETF
This year saw many investors shift towards disruptive technologies, such as artificial intelligence, blockchain, e-commerce, cloud computing and social platforms. The Ark Next Generation Internet ETF [ARKW] has risen 156.25% year-to-date (through 18 December). In turn, this has boosted its daily total return to an astronomical 149.87% to 15 December.
The fund, launched in 2014, is actively managed and typically has between 35 and 50 holdings in stocks including Tesla, Roku [ROKU], Square [SQ], Pinterest [PINS] and Spotify Technology [SPOT].
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