Top 30 Performing ETFs For The 1st Half Of 2021

The list of 1st half winners is dominated by energy-related ETFs, but small-cap, cannabis and biotech also make the cut.
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Stocks finished on a tear during the 2nd half of 2020 and the 1st half of 2021 picked up right where last year left off. This time around, however, it was cyclical sectors that led the way. Energy and financials, the two sectors which were perhaps the hardest in the initial COVID pandemic downturn, recovered the hardest. The Energy Select Sector SPDR ETF (XLE) returned 42% during the 1st half, while the Financial Select Sector SPDR ETF (XLF) added 24%.

For the first time in a while, the tech sector was a relative underperformer gaining a comparatively modest 13%. Consumer staples and utilities were the two worst-performing sectors of 2021 so far, returning just 3% and 1%, respectively.

The broader market fared better. The Dow (DIA), S&P 500 (SPY), Russell 2000 (IWM) and the Nasdaq 100 (QQQ) all gained 13-17% during the past six months. Long-term Treasuries were one of the market's biggest losers, falling more than 8% as the economic recovery and stronger inflation translated into higher interest rates.

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As it stands at this moment, positive sentiment centered around the global recovery and low volatility will work in stocks favor as we push into the 2nd half of the year. The commodities collapse adds a layer of concern over the health of the recovery as does the spread of the new COVID delta variant. For the time being, it looks like inflation expectations are becoming less worrisome and the Fed, as always, is standing by to protect against any potential hiccups.

Here's the list of the top 30 performing ETFs for the 1st half of June 2021.

Top 30 Performing ETFs for the 1st Half of 2021

Top 30 Performing ETFs for the 1st Half of 2021

I suppose it goes without saying that the energy sector has been 2021's big winner.

The Breakwave Dry Bulk Shipping ETF (BDRY), however, has been the year's biggest gainer and it's not even close. Trade restrictions centered around COVID pandemic shutdowns and disruptions in the global supply chain hammered shipping stocks for much of 2020, but 2021 has been a recovery story. Investors have been looking forward to the post-pandemic environment, which figures to include a softer trade rhetoric and a return to brisk business activity.

In total, 23 of the 30 ETFs on this list operate in the energy sector in some way, shape or form. That includes big broadly diversified ETFs, such as the Fidelity MSCI Energy ETF (FENY) and the Vanguard Energy ETF (VDE), as well as those focused on the MLP space, such as the Infracap MLP ETF (AMZA), the Global X MLP ETF (MLPA) and the Alerian MLP ETF (AMLP). ETFs focused on the exploration and drilling space, including the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), also made the cut.

Among the other non-energy ETFs that made the 1st half honor roll:

  • SPDR S&P Retail ETF (XRT) - It's "only" the 12th best-performing non-leveraged ETF of 2021 so far with a return of 51%, but it's also been the best recovery play this year. Retail as a whole has been a mixed bag throughout the pandemic - online retail has surged, while old brick & mortar has struggled - but trillions of dollars of government stimulus payments combined with a readily available vaccine and a return to pre-pandemic shopping habits has pushed retail back into the lead.
  • Loncar China BioPharma ETF (CHNA) - This fund caught a double dose of good luck. China was the first country to largely emerge from the COVID shutdowns and the race for a coronavirus vaccine put biotechs front and center. Not all China or biotech ETFs have done well this year, but this equal-weighted portfolio of just over 50 names managed to hit the right note.
  • Amplify Seymour Cannabis ETF (CNBS) - The narrative here is pretty simple to explain. As states continue to win over voters in their push towards legalization and decriminalization of cannabis for both recreational and medical purposes, the forecasted growth rates in this industry grows ever higher. There's still a lot of volatility in this space, but the beginning of a potential M&A cycle in this sector adds to the potential upside.
  • Invesco S&P SmallCap 600 Revenue ETF (RWJ) and Invesco S&P SmallCap Value with Momentum ETF (XSVM) - Small-caps were also volatile in the 1st half, but those positioned in the right areas of the market did especially well. Value stocks, in general, have outperformed their growth counterparts this year, although performance has been choppy. Value stocks effectively became momentum stocks during the post-COVID rebound, so the combination of those themes became more concentrated. The revenue-weighting methodology used by RWJ also tended to favor more mature value-oriented companies.

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