7 ETFs That Are Crushing the Market This Year

Author: Dan Caplinger | November 16, 2018

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There are a handful of standout performers

The stock market has had a tough year in 2018, with major market benchmarks struggling to eke out even a small gain on the year. But among the hundreds of exchange-traded funds in the market, several standout performers have pulled ahead of the crowd. Below, we'll look at 7 ETFs that are absolutely crushing the roughly 3% gain for the stock market so far in 2018, along with a brief explanation of why they've done so well.

ALSO READ: Your Complete Dividend ETF Guide

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1. United States Natural Gas -- up 35%

The United States Natural Gas ETF (NYSEMKT: UNG) has been one of the leading funds in the market, and the reason is simple: with exposure to the natural gas market, this ETF rises in value when the price of natural gas in the commodity markets goes up. With natural gas having jumped from around $2.50 early in the year to more than $4 recently, investors in United States Natural Gas have reaped some big rewards.

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2. iShares U.S. Healthcare Providers -- up 26%

The iShares U.S. Healthcare Providers ETF (NYSEMKT: IHF) invests in companies that provide health insurance, diagnostic tests, and specialized treatment options to patients. Healthcare in general has done quite well so far in 2018, and the health insurance realm has outperformed its peers due to favorable trends in the industry, with several small companies in the space seeing even better performance than the blue-chip stalwarts in the industry. Many see gridlock in Washington as positive for health insurers, and that could keep the ETF climbing in the future.

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3. iShares U.S. Medical Devices -- up 20%

Focusing on a different niche in healthcare, the iShares U.S. Medical Devices ETF (NYSEMKT: IHI) includes stocks of companies that produce and distribute the medical devices that patients rely on for their health. Performance across the sector has been uniformly good, with solid gains not just from cutting-edge manufacturers of robotic surgical systems but also makers of simpler tools like stents and catheters. An aging population could support the sector well into the future.

ALSO READ: How to Invest in Healthcare Stocks the Easy Way

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4. Invesco Dynamic Software -- up 19%

Technology has taken investors on a wild ride in 2018, but Invesco Dynamic Software (NYSEMKT: PSJ) has largely managed to produce winning performance. A proprietary approach to investing in companies specializing in software applications, systems, and information-based services has given the ETF exposure to companies ranging from well-known giants in operating systems and internet services to up-and-coming players in cloud computing. Volatility is a given for the stocks this ETF owns, but their prospects also look bright.

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5. VanEck Vectors Retail -- up 16%

Retail has had some tough years lately, but 2018 has been a banner year for VanEck Vectors Retail ETF (NYSEMKT: RTH). The ETF has tapped into the resurgence of big-box retail, with several traditional department stores among its top 10 stocks. At the same time, a focus on e-commerce is also apparent, and although not all of its holdings have avoided losses in the sector, the ETF's ability to pick resilient companies that have adapted to changing industry conditions is paying off with attractive total returns.

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6. ETFMG Prime Cyber Security -- up 13%

Securing technology and information in the digital age is a constant challenge, and many companies have found out the hard way what happens when data breaches threaten their businesses. ETFMG Prime Cyber Security (NYSEMKT: HACK) searches for the best providers of security services, ranging from behemoths in the tech industry to tiny upstarts providing niche services for highly specialized applications. With enterprises increasingly reliant on technology, the need for competent providers of cybersecurity will only rise in the future.

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7. Invesco DWA Consumer Staples Momentum -- up 12%

When markets get turbulent, many investors turn to defensive industries for shelter. Invesco DWA Consumer Staples Momentum (NYSEMKT: PSL) owns shares of many well-known makers of consumer goods, with top performers that include manufacturers of household products, spices, processed meats, and nutritional supplements. As long as a core set of investors remain concerned about the possibility of a stock market decline, staples are likely to do well, and this ETF's focus on finding stocks with upward momentum has served investors well so far in 2018.

ALSO READ: 3 ETFs to Keep You Invested After Retirement

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Make smart moves with your ETFs

Exchange-traded funds are a great way to invest. By looking at some of the best performers so far this year, you'll be better informed about the trends that could help guide your investing strategy for the rest of 2018 and beyond.


Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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