Best Performing ETFs 2024: Top Picks for Maximum Returns

Why Invest in the Best Performing ETFs in 2024?

2024 is shaping up to be a pivotal year for the financial markets. With economic uncertainty looming large and innovation accelerating at an unprecedented pace, investors are seeking intelligent strategies to grow their wealth. Enter the best performing ETFs. These investment vehicles have the potential to not only keep up with the market but to outperform it significantly.

Why the focus on performance? The answer is simple: returns. The top ETFs of the past year have delivered impressive gains, often eclipsing traditional investment options like mutual funds. But it’s not just about short-term wins. Investing in high-performing ETFs can set the stage for long-term financial growth, providing a powerful tool for retirement planning, wealth accumulation, or achieving your financial goals.

Our Methodology for Selecting Top ETFs

In this guide, we’ve taken a deep dive into the world of ETFs. We’ve meticulously analysed past performance data, paying close attention to year-to-date, 1-year, and 3-year returns. We’ve consulted with financial experts, tapping into their insights and predictions for the coming year. And we’ve scoured market trends, identifying the industries and sectors poised for significant growth in 2024.

But we have continued. We’ve also considered other crucial factors that can make or break an ETF investment. We’ve looked at expense ratios, ensuring that fees don’t eat up your hard-earned money. We’ve examined sector exposure, emphasising diversification to mitigate risk. And we’ve evaluated each ETF’s investment strategy, looking for those with a clear edge in the ever-evolving market.

The result is a hand-picked selection of the top-performing ETFs for 2024. Whether you’re a seasoned investor or just starting your journey, this guide is your roadmap to discovering the ETFs with the potential to supercharge your portfolio and achieve your financial dreams.

Top 5 Best Performing ETFs in 2024

Invesco QQQ Trust (QQQ) – Tech Titans Powering Ahead

If you’re looking to ride the wave of technological innovation, the Invesco QQQ Trust (QQQ) could be your ticket. This ETF tracks the Nasdaq-100 Index, a collection of the largest non-financial companies listed on the Nasdaq stock exchange. 

Performance Analysis: QQQ has consistently delivered strong returns, outperforming the broader market over the past few years. In 2023, it boasted an impressive year-to-date return of 33.63%, fueled by the success of its top holdings.

• Key Holdings: Tech giants like Apple, Microsoft, Amazon, and Tesla dominate QQQ’s portfolio, driving impressive growth. These companies are at the forefront of technological advancements, constantly pushing boundaries and expanding into new markets.
• Sector Exposure: QQQ provides concentrated exposure to the technology sector, a major driver of economic growth in recent years. The ETF also offers exposure to other innovative industries, such as communication services and consumer discretionary.
• Outlook for 2024: With continued advancements in artificial intelligence, cloud computing, and other cutting-edge technologies, the outlook for QQQ in 2024 remains bullish. Many analysts expect the tech sector to maintain momentum, making QQQ an attractive option for growth-oriented investors.
• Risk Assessment: While QQQ offers high growth potential, the technology sector can be volatile. Investors should be prepared for potential short-term fluctuations and ensure that QQQ aligns with their risk tolerance.

Vanguard S&P 500 ETF (VOO) – The Reliable Steady Climber

For investors seeking a more diversified approach, the Vanguard S&P 500 ETF (VOO) provides broad exposure to the U.S. stock market. This ETF tracks the S&P 500 Index, which includes 500 of the largest publicly traded companies in the U.S.

• Performance Analysis: VOO has a long track record of solid performance, consistently delivering returns in line with the broader market. While it may not experience the explosive growth of some sector-specific ETFs, it offers stability and steady returns over time.
• Key Holdings: VOO’s holdings span a wide range of sectors, from technology and healthcare to financials and consumer staples. This diversification helps to mitigate risk and provides a more balanced approach to investing.
• Sector Exposure: With its broad market focus, VOO offers exposure to virtually every sector of the U.S. economy. This makes it a suitable option for investors seeking to capture the overall market growth potential.
• Outlook for 2024: The S&P 500 is expected to continue its upward trajectory in 2024, driven by factors such as economic recovery, corporate earnings growth, and continued technological innovation. VOO provides a convenient way to participate in this growth.
• Risk Assessment: While VOO is less volatile than some sector-specific ETFs, it’s still subject to market fluctuations. Investors should be aware of the risks associated with investing in equities and diversify their portfolios accordingly.

iShares Global Clean Energy ETF (ICLN) – Powering a Sustainable Future

As the world shifts towards renewable energy sources, the iShares Global Clean Energy ETF (ICLN) stands out as a compelling investment opportunity. This ETF tracks the S&P Global Clean Energy Index, encompassing companies involved in clean energy production and technology.

• Performance Analysis: ICLN has experienced remarkable growth in recent years, driven by increased demand for clean energy solutions. While it experienced some volatility in 2023, its year-to-date return of 22.5% underscores its potential for significant gains.
• Key Holdings: ICLN holds a diverse mix of companies involved in solar, wind, and other renewable energy technologies. Top holdings include industry leaders like Enphase Energy, SolarEdge Technologies, and Vestas Wind Systems.
• Sector Exposure: This ETF offers targeted exposure to the rapidly growing clean energy sector. As governments and businesses invest heavily in sustainable solutions, the companies within ICLN are well-positioned to benefit from this global trend.
• Outlook for 2024: The clean energy sector is expected to continue its rapid expansion in 2024, fueled by supportive government policies, technological advancements, and increasing consumer demand. ICLN is poised to capture this growth and potentially deliver substantial returns for investors.
• Risk Assessment: Like any sector-specific ETF, ICLN carries a higher risk than a broad market index fund. The clean energy industry is still evolving, and specific companies within the ETF may face challenges or setbacks. However, the long-term outlook for clean energy remains promising, making ICLN an attractive option for investors with a moderate risk tolerance.

ARK Innovation ETF (ARKK) – Disruptive Innovation at its Core

The ARK Innovation ETF (ARKK) offers a unique opportunity for investors seeking exposure to cutting-edge technologies and disruptive innovation. This actively managed ETF focuses on companies involved in areas like genomics, robotics, artificial intelligence, and fintech.

• Performance Analysis: ARKK has a track record of delivering impressive returns, albeit with higher volatility than some other ETFs. Its year-to-date performance in 2023 has been noteworthy, with a return of 25.73%, showcasing its potential for significant gains.
• Key Holdings: ARKK’s portfolio includes established players and emerging companies with disruptive technologies. Top holdings include Tesla, Roku, Teladoc Health, and Square, all pushing boundaries in their respective industries.
• Sector Exposure: This ETF provides exposure to diverse, innovative sectors, offering the potential for significant growth as these technologies reshape the future.
• Outlook for 2024: As disruptive innovation accelerates, ARKK is well-positioned to capitalise on these emerging trends. The ETF’s focus on high-growth potential companies makes it an attractive option for investors seeking outsized returns, but it’s important to note the associated risks.
• Risk Assessment: ARKK is considered a high-risk, high-reward investment. The companies in its portfolio are often early-stage or involved in rapidly evolving industries, which can lead to significant volatility. Investors should carefully consider their risk tolerance before investing in ARKK.

SPDR S&P Biotech ETF (XBI) – Riding the Wave of Biotech Innovation

If you’re intrigued by the potential of groundbreaking medical advancements, the SPDR S&P Biotech ETF (XBI) is worth a closer look. This ETF tracks the S&P Biotechnology Select Industry Index, which includes a wide range of biotechnology companies involved in drug development, research, and manufacturing.

• Performance Analysis: XBI has a history of delivering solid returns, albeit with higher volatility than broader market ETFs. It’s known for its boom-and-bust cycles, driven by the inherent risks and rewards of the biotech industry. In 2023, it experienced a rebound, boasting a year-to-date return of 16.73%, signalling renewed investor confidence in the sector.
• Key Holdings: XBI’s holdings include a diverse mix of large-cap and small-cap biotech companies, each working on innovative therapies and treatments for various diseases. Some of its top holdings include Vertex Pharmaceuticals, Moderna, and Biogen, all significant players in the biotech landscape.
• Sector Exposure: This ETF offers targeted exposure to the biotechnology sector, which has the potential for significant growth as new drugs and therapies are developed and approved. With advancements in gene editing, immunotherapy, and other cutting-edge technologies, the future of biotech looks promising.
• Outlook for 2024: As the global demand for innovative healthcare solutions continues to rise, the biotech sector is expected to experience continued growth in 2024. XBI, with its diverse portfolio of biotech companies, is well-positioned to benefit from this trend. However, investors should be aware of the inherent risks associated with biotech investing.
• Risk Assessment: Biotech investments are inherently risky due to the long and uncertain drug development process, regulatory hurdles, and potential competition. XBI’s performance can be volatile, with sharp ups and downs depending on clinical trial results, regulatory approvals, and other industry news. Investors should carefully consider their risk tolerance before investing in XBI.

Vanguard FTSE Emerging Markets ETF (VWO) – Tapping into Global Growth

The Vanguard FTSE Emerging Markets ETF (VWO) offers a diversified approach for investors seeking exposure to emerging markets. This ETF tracks the FTSE Emerging Markets All Cap China A Inclusion Index, which includes large–, mid-, and small-cap companies from emerging markets worldwide, including China.

• Performance Analysis: VWO’s performance has been mixed in recent years, reflecting emerging markets’ volatility and unique challenges. However, it has shown resilience and potential for growth, with a year-to-date return in 2023.
• Key Holdings: VWO’s holdings include companies from various sectors, including technology, financials, consumer staples, and industrials. Top holdings include Taiwan Semiconductor Manufacturing, Tencent Holdings, and Alibaba Group.
• Sector Exposure: This ETF provides exposure to a diverse range of emerging markets, offering the potential to participate in the growth of economies like China, India, Brazil, and others. While this diversification can mitigate risk, it’s important to note that emerging markets can be more volatile than developed markets.
• Outlook for 2024: Emerging markets are expected to continue their growth trajectory in 2024, driven by increasing consumer spending, technological advancements, and urbanisation. VWO offers investors a convenient way to access this growth potential, but it’s essential to be aware of the associated risks.
• Risk Assessment: Investing in emerging markets carries certain risks, including political instability, currency fluctuations, and regulatory challenges. These factors can impact VWO’s performance, making it a higher-risk investment compared to some other ETFs. However, for investors with a long-term perspective and a tolerance for volatility, VWO can be a rewarding addition to a diversified portfolio.

Market Trends and Economic Outlook

The performance of ETFs, especially those aiming for high returns, is intricately tied to the broader market and economic landscape. In 2024, several key trends are set to shape the ETF investing landscape. The global economy is projected to continue its recovery from the pandemic-induced slowdown, but the pace of growth varies across regions. While developed markets like the U.S. are expected to grow moderately, emerging markets like India and Southeast Asia are poised for a faster rebound. This divergence could create opportunities for ETFs focused on specific regions or countries.

Inflation, a significant concern in recent years, is anticipated to moderate in 2024, thanks to central bank policies and easing supply chain disruptions. However, it’s essential to keep an eye on inflation as it can impact the performance of various asset classes. Interest rates are also likely to rise gradually as central banks aim to normalise monetary policy. This could affect bond ETFs, potentially leading to lower prices as yields rise.

Industry Disruptors and Innovation

Innovation is a driving force behind many high-growth sectors. In 2024, several industries will experience significant disruption, creating challenges and opportunities for ETF investors.

Artificial intelligence (AI) continues to advance rapidly, with applications in various industries, from healthcare to finance. ETFs focused on AI and robotics could benefit from this continued growth. Clean energy is another sector ripe for disruption, as governments and businesses invest heavily in sustainable solutions. ETFs tracking renewable energy companies and technologies could see substantial gains in the coming year.

Other disruptive trends to watch include the rise of blockchain technology, the growing adoption of electric vehicles, and the increasing demand for personalised medicine. ETFs that capture these emerging trends could be well-positioned for future growth.

Regulatory Changes and Government Policies

Government policies and regulations can significantly impact ETF performance. In 2024, several key policy areas could shape the investment landscape. Climate change policies are becoming increasingly important globally, with governments and businesses committing to reducing carbon emissions. This could benefit ETFs focused on clean energy and other environmentally friendly sectors.

Healthcare regulations are also under scrutiny, with potential changes to drug pricing and insurance coverage in the U.S. These changes could impact the performance of healthcare ETFs, particularly those focused on pharmaceutical companies.

Additionally, geopolitical events can create both risks and opportunities for ETF investors. Trade tensions, political instability, and conflicts can all affect market sentiment and investment flows. It’s essential for investors to stay informed about these developments and assess their potential impact on their ETF portfolios.

By understanding the key factors influencing ETF performance in 2024, investors can make more informed decisions and position their portfolios for potential growth.

Investing in the Best Performing ETFs

Q: What are the risks of investing in high-performing ETFs?

A: While high-performing ETFs offer enticing returns, it’s important to remember that higher potential rewards often come with increased risk. These risks can stem from various factors, including:

• Market Volatility: Even the best-performing ETFs can experience price fluctuations due to broader market trends.
• Sector Concentration: ETFs focused on specific sectors (like technology or biotech) may be more susceptible to volatility if that sector experiences a downturn.
• Investment Strategy: Some ETFs, like actively managed funds, may employ complex strategies that carry additional risk.

Diversifying your investments and conducting thorough research on each ETF can help mitigate these risks. It’s also crucial to align your investments with your risk tolerance and financial goals.

Q: How do I choose the best ETFs for my portfolio?

A: Choosing the right ETFs for your portfolio involves careful consideration of several factors:

• Your financial goals: Are you saving for retirement, a down payment on a house, or another financial milestone?
• Your risk tolerance: How comfortable are you with the potential for investment fluctuations?
• Your investment timeline: Are you investing for the short term or the long term?

Research different ETFs, compare their past performance, fees, and holdings, and consider seeking advice from a financial advisor if needed.

Q: Can I invest in ETFs through my existing brokerage account?

A: Yes, most brokerage accounts offer access to a wide range of ETFs. Look for a platform with low fees, user-friendly tools, and educational resources to help you make informed decisions.

Q: Are there any tax implications for investing in ETFs?

A: Yes, ETFs are subject to capital gains taxes when you sell them for a profit. However, they are generally considered more tax-efficient than mutual funds due to their lower turnover rates. Consult with a tax advisor for specific guidance on the tax implications of ETF investing.

Key Takeaways for Investing in Best Performing ETFs in 2024

As we navigate the ever-changing financial landscape of 2024, investing in the best-performing ETFs can be a powerful strategy to achieve your financial goals. The ETFs highlighted in this guide – Invesco QQQ Trust, Vanguard S&P 500 ETF, iShares Global Clean Energy ETF, ARK Innovation ETF, and SPDR S&P Biotech ETF – offer diverse opportunities for growth and diversification.

Remember, the best ETF for you will depend on your individual risk tolerance, investment timeline, and financial objectives. It’s crucial to conduct thorough research and consider seeking advice from a financial advisor to make informed decisions.

The key to successful ETF investing is understanding the factors driving performance. To make timely investment choices, stay informed about market trends, economic indicators, and industry disruptors. Diversify your portfolio to spread risk and maximise potential returns.

The Future of ETF Investing

The world of ETFs is constantly evolving, with new and innovative products emerging to meet the needs of modern investors. As technology advances and new investment strategies are developed, the potential for ETF growth is immense.

We expect to see even more specialised ETFs focused on specific sectors, themes, or investment strategies in the coming years. We may also see increased adoption of actively managed ETFs, which aim to outperform the market through strategic portfolio management.

The future of ETF investing is bright, offering exciting opportunities for investors willing to embrace change and adapt their strategies to the evolving landscape. Stay informed, stay diversified, and stay invested in the best-performing ETFs to maximise your chances of financial success.