{"id":2947,"date":"2022-07-27T17:34:29","date_gmt":"2022-07-27T17:34:29","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2947"},"modified":"2022-07-27T17:39:56","modified_gmt":"2022-07-27T17:39:56","slug":"best-performing-etfs-year-to-date-2022","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/best-performing-etfs-year-to-date-2022\/","title":{"rendered":"Best Performing ETF’s Year-to-Date 2022"},"content":{"rendered":"

The list of best performing equity ETFs in the US thus far this year has been dominated by two categories:<\/span> 1.<\/b> Leveraged\/Inverse \u2013 almost always the case by definition and 2.<\/strong> <\/span>Single industry\/sector \u2013 including energy, utilities, defense, and insurance et al.\u00a0 Leveraged and inverse ETFs are short-term trading tools that are very rarely, if at all, suitable for most investors. Because these two categories are so inappropriate for many investors, what to do? Low volatility and high dividend yield funds have out performed as well and are readily accessible.<\/span><\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
Free Two Week Trial to all 5,000 plus equities and ETFs covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n

For the most part, sector and industry ETFs are cyclical timing tools.\u00a0 Sectors and industry groups tend to fall in and out of favor during different market and economic cycles.\u00a0 It is difficult for most investors to time when to get into and out of a particular sector or industry group, but savvy investors will try and sometimes succeed.\u00a0\u00a0<\/span><\/p>\n

The two exceptions to this rule are utilities and consumer staples.\u00a0 Those two sectors have two important characteristics that <\/span>VOO <\/b>and other S&P 500 ETFs do not: lower return volatility and higher dividend yields.\u00a0 For income-oriented investors, especially those with a less-than-10-year time horizon in which they need to access capital, funds in those two sectors (e.g., <\/span>VPU, <\/b>Vanguard Utilities ETF and <\/span>FSTA, <\/b>Fidelity Consumer Staples ETF<\/span>) <\/b>can be good compliments within a core that also contains growth-oriented ETFs such as <\/span>VOO. <\/b>\u00a0<\/span><\/p>\n

The overall point is that unless the primary goal is income generation, most sector ETFs, such as the Energy, defense and commodities-based ETFs that exploded in the first half of 2022, are generally tactical rather than strategic holdings.\u00a0 Volatility and cyclicality render these products unsuitable as all-weather holdings for most long-term investors.<\/span><\/p>\n

Many clients of financial advisors and direct investors are more comfortable with ETFs that they can hold in most markets without needing to anticipate cycle changes.\u00a0 That doesn\u2019t necessarily mean that the only ETFs they should hold are S&P 500 ETFs.\u00a0 For income-oriented investors and those needing to draw capital without a significant risk of drawdowns, ETFs that emphasize low volatility, value and high dividends can be an appropriate addition or substitute for core index and alpha-seeking ETFs.<\/span><\/p>\n

Of the 677 equity funds that fit one of Morningstar\u2019s nine categories, only 33 delivered positive returns for the past one-year period and the top 20 were all large- or mid-cap value funds.\u00a0 The top four of these were also low-volatility and high dividend funds.\u00a0 Those four funds were the only funds to somehow manage to deliver positive returns year-to-date as compared with -19% for S&P 500 ETF <\/span>VOO.\u00a0\u00a0<\/b><\/p>\n

Current ValuEngine reports on these ETF\u2019s can be viewed <\/b>HERE<\/b><\/a><\/h5>\n

In order of one-year return, these include:<\/span><\/p>\n

FDL <\/b>\u2013 First Trust Morningstar Dividend Leaders ETF (10%);<\/span><\/p>\n

DHS \u2013 <\/b>Wisdom Tree US High Dividend ETF (9%);<\/span><\/p>\n

HDV \u2013 <\/b>iShares Core High Dividend ETF, (7%); and<\/span><\/p>\n

GBDV \u2013 <\/b>Global Beta Smart Income ETF (7%).<\/span><\/p>\n

All six benchmark index ETFs are down substantially as shown here.\u00a0 For reference, the last two columns compare the data for <\/span>VOO <\/b>as of July 1, 2022, with <\/span>VOO <\/b>as of December 31, 2021. The differences are striking.<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\u00a0<\/span><\/td>\nFDL<\/b><\/td>\nDHS<\/b><\/td>\nHDV<\/b><\/td>\nGBDV<\/b><\/td>\nVOO<\/b><\/td>\nAGG<\/b><\/td>\n<\/tr>\n
ETF Name<\/span><\/td>\nFirst Trust Morningstar Dividend Leaders ETF<\/span><\/td>\nWisdom Tree US High Dividend ETF<\/span><\/td>\niShares Core High Dividend ETF<\/span><\/td>\nGlobal Beta Smart Income ETF<\/span><\/td>\nVanguard S&P 500 ETF\u00a0<\/span><\/td>\niShares Core US Aggregate Bond\u00a0 ETF<\/span><\/td>\n<\/tr>\n
ValuEngine Rating<\/span><\/td>\n3<\/b><\/td>\nN\/A<\/b><\/td>\n4<\/b><\/td>\n1<\/b><\/td>\n3<\/b><\/td>\nN\/A<\/b><\/td>\n<\/tr>\n
Assets Under Mgmt. -AUM<\/span><\/td>\n$ 3 Billion<\/span><\/td>\n$1.2 Billion<\/span><\/td>\n$13 Billion<\/span><\/td>\n$6.7 Million<\/span><\/td>\n$247 Billion<\/span><\/td>\n$ 82 Billion<\/span><\/td>\n<\/tr>\n
Historic YTD. Total Return<\/span><\/td>\n+0.5%<\/span><\/td>\n+0.7%<\/span><\/td>\n+0.4%<\/span><\/td>\n+1.2%<\/b><\/td>\n-19.0%<\/span><\/td>\n-9.4%<\/span><\/td>\n<\/tr>\n
Historic 1-Yr. Total Return<\/span><\/td>\n+9.7%<\/b><\/td>\n+8.8%<\/span><\/td>\n+6.9%<\/span><\/td>\n+6.6%<\/span><\/td>\n-10.7%<\/span><\/td>\n-9.5%<\/span><\/td>\n<\/tr>\n
Historic 3-Yr Ann. Total Return<\/span><\/td>\n8.9%<\/span><\/td>\n8.2%<\/span><\/td>\n5.4%<\/span><\/td>\nN\/A<\/span><\/td>\n10.4%<\/b><\/td>\n-0.6%<\/span><\/td>\n<\/tr>\n
Historic 5-Yr Ann. Total Return<\/span><\/td>\n8.7%<\/span><\/td>\n7.6%<\/span><\/td>\n7.5%<\/span><\/td>\nN\/A<\/span><\/td>\n11.4%<\/b><\/td>\n1.1%<\/span><\/td>\n<\/tr>\n
Historic 10-Yr Ann. Total Return<\/span><\/td>\n10.5%<\/span><\/td>\n9.8%<\/span><\/td>\n9.2%<\/span><\/td>\nN\/A<\/span><\/td>\n13.0%<\/b><\/td>\n1.6%<\/span><\/td>\n<\/tr>\n
VE Forecast 1-yr. Price Return<\/b><\/td>\n-0.6%<\/span><\/td>\nN\/A<\/span><\/td>\n+0.7%<\/b><\/td>\n-2.2%<\/span><\/td>\n-0.6%<\/span><\/td>\nN\/A<\/span><\/td>\n<\/tr>\n
Volatility<\/span><\/td>\n18.0%<\/span><\/td>\n18.2%<\/span><\/td>\n16.6%<\/b><\/td>\n26.6%<\/span><\/td>\n17.1%<\/span><\/td>\n4.6%<\/span><\/td>\n<\/tr>\n
Sharpe Ratio (5-Year)<\/span><\/td>\n0.46<\/b><\/td>\n0.40<\/span><\/td>\n0.40<\/span><\/td>\n0.15<\/span><\/td>\n0.62<\/b><\/td>\n0.24<\/span><\/td>\n<\/tr>\n
Beta<\/span><\/td>\n0.90<\/span><\/td>\n0.88<\/span><\/td>\n0.84<\/b><\/td>\n1.07<\/span><\/td>\n1.00<\/span><\/td>\n1.00<\/span><\/td>\n<\/tr>\n
# of Stocks<\/span><\/td>\n100<\/span><\/td>\n751<\/b><\/td>\n76<\/span><\/td>\n95<\/span><\/td>\n500<\/span><\/td>\n10,000<\/span><\/td>\n<\/tr>\n
Undervalued by VE %*<\/b><\/td>\n76%<\/b><\/td>\nN\/A<\/span><\/td>\n53%<\/span><\/td>\n60%<\/span><\/td>\n65%<\/span><\/td>\nN\/A<\/span><\/td>\n<\/tr>\n
P\/B Ratio<\/span><\/td>\n2.8<\/span><\/td>\n2.8<\/span><\/td>\n3.9<\/span><\/td>\n2.5<\/b><\/td>\n4.1<\/span><\/td>\nN\/A<\/span><\/td>\n<\/tr>\n
P\/E Ratio<\/span><\/td>\n15.4<\/b><\/td>\n16.1<\/span><\/td>\n17.8<\/span><\/td>\n17.3<\/span><\/td>\n20.7<\/span><\/td>\nN\/A<\/span><\/td>\n<\/tr>\n
Div. Yield<\/span><\/td>\n3.5%<\/b><\/td>\n3.4%<\/span><\/td>\n3.2%<\/span><\/td>\n2.0%<\/span><\/td>\n1.6%<\/span><\/td>\n2.0%<\/span><\/td>\n<\/tr>\n
Expense Ratio<\/span><\/td>\n0.45%<\/span><\/td>\n0.38%<\/span><\/td>\n0.08%<\/b><\/td>\n0.29%<\/span><\/td>\n0.03%<\/b><\/td>\n0.03%<\/span><\/td>\n<\/tr>\n
Index<\/span><\/p>\n

Scheme<\/span><\/td>\n

Dividend Weighting<\/span><\/td>\nDividend Weighted<\/span><\/td>\nDividend Weighting<\/span><\/td>\nRevenue Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nDollar Weighted by Issuance<\/span><\/td>\n<\/tr>\n
ETF Sponsor<\/span><\/td>\nFirst Trust<\/span><\/td>\nWisdom Tree<\/span><\/td>\niShares by Blackrock<\/span><\/td>\nGlobal Beta<\/span><\/td>\nVanguard<\/span><\/td>\niShares by Blackrock<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Current ValuEngine reports on these ETF\u2019s can be viewed <\/b>HERE<\/b><\/a><\/h5>\n

Observations<\/b><\/p>\n

    \n
  1. As expected, <\/span>VOO <\/b>had the highest total returns for the three-, five- and ten-year periods while suffering huge underperformance in the short term next to the four top-performing ETFs, all oriented towards low volatility, high current income, and attractive value ratios.\u00a0 The data reinforce the thesis that long-term investors not needing current income or to withdraw money from the account should stick to a growth-centric core as represented by the S&P 500.<\/span><\/li>\n
  2. For the ten-year period ending July 15, 2022, the first 9.5 of which were as strong as the S&P 500 has ever enjoyed, the trade-offs in total return in exchange for lower drawdowns, lower Betas, <\/span>and higher dividend <\/span>yields seem very reasonable.\u00a0 This is particularly true for <\/span>FDL<\/b>, First Trust Morningstar Dividend Leaders ETF and <\/span>HDV<\/b>, iShares Core High Dividend ETF. 10.5% annual return.\u00a0 For those needing access to principal and current income, receiving double the dividend yield and still getting 10%+ annual growth while averting drawdowns is more than adequate compensation for an additional 3% per year total asset growth when compared to <\/span>VOO<\/b>.<\/span><\/li>\n
  3. On traditional value ratios, all four value ETFs are less expensive than the S&P 500 with FDL <\/b>providing the best ratio values and dividend yield while HDV <\/b>has the lowest volatility.\u00a0 Another way we look at attractiveness from a value perspective is by the percentage of portfolio holdings rated as undervalued by our models. FDL <\/b>fares best here with 76% of its stocks considered undervalued.\u00a0 FDL <\/b>also has a buy signal from ValuEngine\u2019s predictive models for year-ahead performance (4 rated).<\/li>\n
  4. On a cost basis, HDV<\/b> by iShares is the clear winner, Its 8 basis points (0.08%) expense ratio is just 5 basis points higher than VOO<\/b>\u2019s 3 basis points while FDL <\/b>has the highest expense ratio at a whopping 35 basis points.<\/li>\n
  5. AGG <\/b>is included to provide another somewhat surprising comparison.\u00a0 Traditional asset allocations include an allocation to bonds to minimize drawdowns and provide income.\u00a0 For this specific period, FDL <\/b>and its peers did a much better job of both than AGG.\u00a0 <\/b>Of course, hindsight is 20-20 and these potentially anomalous characteristics may not hold true in most periods going forward. Nonetheless, as shown, the trade-offs for investors in this category is worth subordinating attempts at core-relative alpha.<\/li>\n<\/ol>\n
    Financial Advisory Services based on ValuEngine research available: \u00a0 <\/b>www.ValuEngineCapital.com<\/b><\/a><\/h5>\n

    Perspective<\/b><\/p>\n

    This bear market has provided an unusual skew of outperformance for ETFs combining tilts toward income low volatility, and value characteristics.\u00a0 In bull markets or even average return markets, this is unlikely to be the case, but the goals of low volatility and higher-than-average income should continue to be reached.\u00a0\u00a0<\/span><\/p>\n

    July has begun with the seedlings of a rally.\u00a0 Time will tell whether it\u2019s a bear market rally or the start of a new bullish period.\u00a0 Investors and their advisors might wish to prioritize the goals of the account over predicting whether or not this is the beginning of the end for the bear.\u00a0 <\/span>FDL <\/b>and <\/span>HDV <\/b>are worthwhile investigating for the clients described above.\u00a0 Investors with the same objectives but more comfortable with active management oversight and nimbleness might also take a look at <\/span>DIVZ, <\/b>TrueShares Low Volatility Equity Income ETF managed by Austin Graff of Titleist Asset Management.\u00a0 It is the top performing active fund in this category with more than $50 Million under management.\u00a0\u00a0\u00a0<\/span><\/p>\n

    Accounts with longer time horizons and growth as the prime objective should stick to traditional core growth holdings such as <\/span>VOO <\/b>or <\/span>VTI, <\/b>Vanguard Total US Market Equity ETF.\u00a0 Competitively active alternatives for 5-year and recent performance include <\/span>SYLD, <\/b>Cambria Shareholder Yield ETF managed by the famed Meb Faber and <\/span>PSET<\/b>, Principal Quality ETF. Even though the latter is rated to underperform during the next 12 months with a 2 rating by ValuEngine\u2019s models, the combination of its team\u2019s excellent track record and strong underlying fundamental characteristics make <\/span>PSET <\/b>worthy of checking out as a potential holding.\u00a0 As always, due diligence and staying true to client objectives are the keys to success.\u00a0\u00a0\u00a0<\/span><\/p>\n

    By Herbert Blank<\/b><\/h5>\n
    Senior Quantitative Analyst, ValuEngine Inc<\/b><\/h5>\n
    www.ValuEngine.com<\/b><\/a><\/h5>\n
    support@ValuEngine.com<\/b><\/h5>\n
    _______________________________________________<\/b><\/h5>\n
    All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 600 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
    Financial Advisory Services based on ValuEngine research available through <\/b>ValuEngine Capital Management, LLC<\/b><\/a><\/h5>\n
    Free Two Week Trial to all 5,000 plus equities covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n
    Subscribers log in <\/b>HERE<\/b><\/a><\/h5>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    The list of best performing equity ETFs in the US thus far this year has been dominated by two categories: 1. Leveraged\/Inverse \u2013 almost always the case by definition and 2. Single industry\/sector \u2013 including energy, utilities, defense, and insurance et al.\u00a0 Leveraged and inverse ETFs are short-term trading tools that are very rarely, if … Read more<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[2035,1939,2032,1760,1761,1719,1733,1996,2034,2033,1731,1510,28,1656,1659,1768],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2947"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2947"}],"version-history":[{"count":5,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2947\/revisions"}],"predecessor-version":[{"id":2952,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2947\/revisions\/2952"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2947"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}