Exchange-traded funds (ETFs)offer a way for investors to diversify their portfolio across different asset classes through a single investment product that can be bought and sold on an exchange like a stock. Top ETFs typically have a large asset base and lower operating costs. Investors can also use ETFs to mitigate investment risks and gauge the performance of an index, sector, or industry to make more informed investment decisions.
Key Takeaways
- Leading ETFs offer investors an opportunity to broadly diversify their holdings through a single investment with a low expense ratio and/or higher returns compared to competitors.
- We screened for the equity, bond, fixed income, commodities, and currency ETFs providing the highest one-month total returns.
- These funds include SGDM, FLRN, CLOI, DBA, and UUP.
Below, we outline the top equity, bond, fixed income,commodities, and currency ETFs that generated the highest returns over the last month. We have excluded leveraged and inverse ETFs, as well as funds with less than $50 million inassets under management (AUM).
All data are current as of April 25, 2024.
Equity ETF with the Best 1-Month Return: Sprott Gold Miners ETF (SGDM)
- One-month performance: 10.51%
- Expense ratio: 0.35%
- Annual dividend yield: N/A
- 30-day average daily volume: 41,955
- AUM: $236 million
- Inception date: July 15, 2014
- Issuer: Sprott
SGDMaims to replicate the performance of the Solactive Gold Miners Custom Factors Index, which focuses on larger gold mining companies listed in Canada and the U.S. The index emphasizes companies with strong revenue growth, high free cash flow yield, and low long-term debt-to-equity ratios. The index is updated quarterly to include the highest-scoring companies.
As of March 31, 2024, the ETF's portfolio comprises 32 companies with a total market capitalization of approximately $216.6 billion. The companies range in size from a market cap of $760.57 million to $41.3 billion, with large-cap companies making up about 46.6% of the portfolio. The gold industry represents 88% of the total holdings. The ETF mainly holds Canadian companies (71%), followed by the United States (19%), and the UK (5%).
Bond ETF with the Best 1-Month Return: SPDR Bloomberg Investment Grade Floating Rate ETF(FLRN)
- One-month performance: 0.56%
- Expense ratio: 0.15%
- Annual dividend yield: 5.77%
- 30-day average daily volume: 612,095
- AUM: $2.35 billion
- Inception date: Nov. 30, 2011
- Issuer: SPDR
FLRN aims to track the performance of the Bloomberg U.S. Dollar Floating Rate Note (less
than 5 Years) Index, which consists of U.S. dollar-denominated, variable-rate bonds
with a maturity of one month to less than five years.
These instruments primarily include bonds with rates tied to the 3-month Secured Overnight Financing Rate (SOFR), a benchmark interest rate commonly used as a reference rate for various financial products, including loans and derivatives, replacing the older LIBOR (London Interbank Offered Rate). The index is updated monthly and excludes bonds with fixed rates.
Fixed Income ETF with the Best 1-Month Return: VanEck CLO ETF (CLOI)
- One-month performance: 1.11%
- Expense ratio: 0.40%
- Annual dividend yield: 5.9%
- 30-day average daily volume: 41,619
- AUM: $322 million
- Inception date: June 21, 2022
- Issuer: VanEck
CLOI is focused on preserving capital and generating current income by investing mainly in investment-grade-rated tranches of collateralized loan obligations (CLOs). These CLOs are portfolios of loans that have been securitized, which involves bundling individual loans, such as mortgages or auto loans, into a single financial product that is then sold to investors as securities.
This process allows lenders to free up capital and manage risk by distributing the potential for loan defaults among a wider pool of investors. They are particularly advantageous in the current interest rate environment due to their limited exposure to rising rates. As part of an investment portfolio, CLOs offer a higher yield compared to similarly rated corporate bonds and loans, adding value through potential income generation and risk diversification.
Commodities ETF with the Best 1-Month Return: Invesco DB Agriculture Fund (DBA)
- One-month performance: 10.2%
- Expense ratio: 0.93%
- Annual dividend yield: 3.7%
- 30-day average daily volume: 812,591
- AUM: $853 million
- Inception date: Jan. 5, 2007
- Issuer: Invesco
The Invesco DB Agriculture Fund (DBA) is an agricultural commodities fund structured as acommodity pool, a structure that pools investor assets to invest in commodities futures and options. DBA tracks the DBIQ Diversified Agriculture Index, a rules-based index composed of futures contracts on some of the most widely traded agricultural commodities. As of April 23, 2024, DBA’s largest holdings are futures contracts on Cocoa (26.7%), Coffee (12.3%), Live Cattle (10.4%) and Soybeans (9.5%).
Currency ETF with the Best 1-Month Return: Invesco DB US Dollar Index Bullish Fund (UUP)
- One-month performance: 1.8%
- Expense ratio: 0.77%
- Annual dividend yield: 6%
- 30-day average daily volume: 1,102,725
- AUM: $421.7 million
- Inception date: Feb. 20, 2007
- Issuer: Invesco
UUPis a commodity pool that tracks the Deutsche Bank Long USD Currency Portfolio Index - Excess Return. The fund tracks the performance of the U.S. dollar relative to a basket of six major world currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss Franc. The fund’s benchmark index is rules-based and is comprised of U.S Dollar Index futures contracts. The U.S. Dollar has strengthened against other major currencies as rate-cut expectations were pared back following stronger-than-anticipated inflation data.
How We Chose the Best ETFs
We selected the best ETFs across five areas of focus (equities, bonds, fixed-income, commodities, and currencies) utilizing a screener by VettaFi. In each case, we sorted ETFs according to the specified category and ranked them by highest 1-month returns. We then filtered out any ETFs employing a leveraged or inverse strategy as well as any with AUM of under $50 million. Finally, for currencies ETFs, we excluded any funds focused on cryptocurrencies from our screen.
How to Invest in ETFs
Investors can buy and sell shares of ETFs in the same way they make traditional stock trades. Most brokerages provide access to a broad spectrum of ETFs. To begin, simply create and fund a brokerage account, then determine which ETFs you may be interested in purchasing. Follow the steps to initiate a buy through your particular brokerage. In most cases, it's as easy as that.
The Bottom Line
Exchange-traded funds offer investors access to an entire professionally managed portfolio of
holdings with a single transaction. Their ability to diversify and simplify a retail investor's investing process is widely regarded. One metric that investors often look to is trailing one-month performance. The top ETFs for equities, bonds, fixed income, commodities, and currencies for May 2024 based on this metric include SGDM, FLRN, CLOI, DBA, and UUP.
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As of the date this article was written, the author does not own any of the above ETFs.
