Top Performing ETFs For July 2021

The real estate sector claims several spots, but water, rare earth metals and even Treasuries show up on the list.
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July was a month of mixed performance. If you were invested in large-cap growth and tech, you were probably pleased with your portfolio's performance. The S&P 500 (SPY) gained 2.4% in July, while the Nasdaq 100 (QQQ) was up 2.9%. The Vanguard Growth ETF (VUG) was also higher by 3.2%, supporting the idea that investors are still more than willing to keep adding risk to their portfolios.

There are also hints of defensive posturing though. The Utilities Select Sector SPDR ETF (XLU) outperformed the broader market by returning 4.3%. Small-caps significantly lagged large-caps with the Russell 2000 (IWM) dropping 3.6%. Long-term Treasuries added 3.7% as interest rates continued to drift lower.

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The big story was the collapse of Chinese equities (although a China-themed ETF actually does show up on the top performer list). The most prominent sector you'll find on this month's winner list, however, is real estate. Nine of this month's top 30 list have a real estate theme and one sector that most investors probably don't even think of - water - also claims several entries (although several of them come from just one issuer).

Here's the list of the top performing ETFs for the month of July 2021.

Top Performing ETFs For July 2021

Top Performing ETFs For July 2021

The VanEck Vectors Rare Earth & Strategic Metals ETF (REMX) was easily the top performer of July gaining 28% as the commodities sector shows some signs of bottoming. Even as the materials sector badly underperformed the broader market during the month, rare earth metal miners, whose uses include batteries, clean energy, cell phones and autonomous vehicles, soared. REMX is now up 65% on the year making it one of 2021's top performers.

The Real Estate Select Sector SPDR ETF (XLRE) gained 4.6%, but several niche-oriented REIT ETFs performed even better. The Pacer Benchmark Industrial Real Estate SCTR ETF (INDS) took advantage of the infrastructure-focused real estate market's optimism. The iShares Residential & Multi-Sector Real Estate ETF (REZ), which targets healthcare and self-storage REITs along with residential, gained 8%. The Janus Henderson U.S. Real Estate ETF (JRE), which is a more broad-based actively-managed ETF, was also a top 5 performer having gained more than 7%.

The clean energy trade remains volatile as this group routinely appears on both the top and bottom performer list. The bigger clean energy ETFs don't show up on this month's list, but several water ETFs do. The Ecofin Global Water ESG ETF (EBLU), the Invesco S&P Global Water ETF (CGW), the Invesco Water Resources ETF (PHO), the Invesco Global Water ETF (PIO) and the Global X Clean Water ETF (AQWA) all gained between 5-7%. The three Invesco ETFs have actually been around since the mid-2000s.

Other ETFs worth noting:

The Global X MSCI China Materials ETF (CHIM) gained 8% during July despite the carnage in Chinese stocks. China stocks, in general, fell about 13% for the month as the country's government continues cracking down on several corners of its economy. Only a couple of other China ETFs managed to generate even 0-1% gains, but CHIM was the big outlier.

The iShares U.S. Medical Devices ETF (IHI) was the best-performing healthcare ETF in a sector that's managed to perform very well over the past month despite a broad lack of participation among other defensive sectors. The Invesco S&P 500 Equal Weight Healthcare ETF (RYH) is the other sector ETF showing up on the list, showing that the group's recent gains aren't just coming from large-caps.

It's not often that a Treasury ETF shows up among the ETF universe's top performers, but the riskiest of the bunch, the PIMCO 25+ Year Zero Coupon U.S. Treasury ETF (ZROZ) sneaks into the final spot. I believe that the 10-year Treasury yield is headed towards the 1% level (it's at 1.17% as I write this), so don't be surprised to see this one or the iShares 20+ Year Treasury Bond ETF (TLT) showing up in the future.

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