FV Best Performing ETFs Of 2017

Video Length: 00:10:01

The ETF industry continues to grow at a rapid pace. During the first eleven months of 2017, global exchange-traded products saw record net inflows of US$600 billion, 53.6% more than in all of 2016, according to London-based consulting firm ETFGI.

Most of the money went into ultra-popular and very cheap passively managed ETFs that track broad areas of the market. The iShares Core S&P 500 ETF (IVV- Free Report) was the top asset gainer. This fund that tracks the S&P index and charges just 4 basis points.

The top performers this year were, however, those that tracked this year’s hottest trends. ETFs occupying the top two spots this year—the ARK Web x.0 ETF (ARKW – Free Report) and the ARK Innovation ETF (ARKK – Free Report) –are actively managed funds from ARK Investment Management. The firm focuses on investing in disruptive innovation.

ARKW holds companies that are expected to benefit from technological innovations in some of the hottest areas including cloud computing, big data, digital media, e-commerce, bitcoin, and theInternet of Things (IoT). It has gained about 94% this year.

It is the first ETF to include exposure to bitcoin. The fund provides exposure to the cryptocurrency through the Bitcoin Investment Trust (GBTC), an OTC-traded open-ended investment trust.It currently has 11.3% of its assets invested in GBTC.

GBTC is up more than 1,900% this year thanks to soaring bitcoin prices.It is, however, an expensive and ineffective way to own bitcoin. It usually trades at a premium to its NAV—as high as 125% at times. It has an expense ratio of 2%.

ARKK is a similar thematic product, focusing on disruptive innovation across three themes: next generation internet, industrial Innovation, and genomic revolution.

GBTC is ARKK’s top holding too—accounting for 10.5% of assets. This ETF is up more than 91% year-to-date.