Harry Domash's Winning Investing

Hottest ETFs in This Hottest Market

This is a hot market by anyone’s definition. How long this wild market lasts is anybody’s guess.

But for readers who want to jump on the bandwagon, here are five ETFs worth considering.

As hot as the overall market has been, these ETFs have been even hotter.

Five Hot ETFs

Global X MSCI China Information Technology (CHIK)

Tracks a portfolio of 101 large- and mid-cap high-tech stocks based in China. Despite the relatively large number of holdings, its biggest holding, Semiconductor Manufacturing International, accounts for 13% of the portfolio and the top 10 holdings together comprise 56% of total assets. A December 2018 IPO, the fund has chalked up an amazing 62% return over the past 12-months and 47% in 2019. By contrast, the S&P 500 returned 11% over 12 months and 29% in 2019.

ARK Genomic Revolution (ARKG)

Holds mostly U.S.-based companies involved in genomic-related health care stocks. A concentrated portfolio containing only 37 stocks with the top five holdings accounting for 40% of assets. Those top five holdings include CRISPR Therapeutics, Illumina, Invitae, Compugen, and Arcturis Therapeutics. The fund has returned 84% over the past 12 months and averaged 42% annual returns over the past three years. For comparison, the S&P 500 averaged 12% annual returns over three years, and as noted above, returned 29% last year.

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)

Holds 43 stocks listed on U.S. exchanges that are involved in manufacturing, developing, distributing or installing emerging clean-energy technologies. Its biggest holding, Tesla, accounts for 11% of total assets. Other top holdings include NIO Inc., Brookfield Renewable Partners, Albemarle, and SolarEdge Technologies. An August 2015 IPO, First Trust returned 68% over the past 12-months, and averaged 25% annually over three years.

VanEck Vectors Video Gaming and eSports (ESPO)\

Holds a portfolio comprised of 25 mostly non-U.S.-based stocks that generate at least 50% of revenues from video gaming or from Esports (electronic sports games played by teams) events. Biggest holdings include Tencent Holdings, NVIDIA, Nintendo, Advanced Micro Devices and Activision Blizzard. An October 2018 IPO, the fund has returned 63% over the past 12 months and 42% in 2019.

First Trust Dow Jones International Internet (FDNI)  

Holds a fixed portfolio comprised of the 20 largest internet service companies and the 20 largest internet commerce companies headquartered outside of the U.S. To qualify for the portfolio, firms must have a minimum $1 billion market-cap and derive a majority of revenues from Internet-based activities. Biggest holdings include Tencent Holdings, Alibaba Group, Shopify, Meituan Dianping and Naspers. A November 2018 IPO, the fund returned 54% over the past 12 months and 79% in 2019. FDNI pays quarterly dividends equating to a 2.2% yield.

Not Long-Term Holds  

These five ETFs may have some room to run, but they’re bound to eventually give back at least part of their astounding gains. If you buy them, pay attention and sell as soon as they start to cool down. When is that? Sell as soon as they move below their 50-day moving average (average of last 50-days closing prices), or when they close at least 15% below a recent high, whichever comes first.

published 7/21/20

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