This article compiles the top 10 ETFs based on assets under management, performance, fund management quality and thematic specialisation that investors should monitor for 2024.
1. Financial Select Sector SPDR® Fund (XLF)
The XLF fund offers strategic exposure to leading companies across banking, insurance, diversified financial services, and real estate in the US through a single investment vehicle. It provides access to prominent names dominating Wall Street like JPMorgan, Goldman Sachs, Morgan Stanley by aiming to mirror the performance of the benchmark Financial Select Sector index. As monetary tightening reaches terminal stages with rates peaking, XLF stands likely to benefit from the upside potential of gradual policy easing, driving economic recovery and improving profitability for the wider financial services industry.
2. Energy Select Sector SPDR® Fund (XLE)
The XLE fund provides targeted exposure to leading traditional energy companies in oil, gas, consumable fuels and allied services sectors. With the Russia-Ukraine conflict showing no signs of de-escalation in the foreseeable future, resulting supply-side uncertainties have kept crude oil prices sharply elevated even as demand has rebounded robustly post-pandemic. XLE offers a prudent route to benefit from this cycle by providing single-window access to global energy conglomerates like ExxonMobil and Chevron that dominate production and distribution worldwide.
3. VanEck Vectors Semiconductor ETF (SMH)
The SMH ETF provides exposure to leading US-listed semiconductor companies involved across the technology design, application, equipment and manufacturing supply chain. As exponential growth in 5G connectivity and artificial intelligence drive demand for advanced chipsets and data center investments globally, semiconductor producers stand to benefit over long horizons structurally. By tracking the performance of the MVIS Semiconductor index, SMH offers targeted technology sector exposure to leading innovative enterprises like Nvidia, Intel, Qualcomm, Texas Instruments that are at the forefront of driving industry-wide growth.
4. iShares U.S. Home Construction ETF (ITB)
The iShares ITB ETF provides strategic exposure to leading home construction companies and allied building materials producers in the United States. As inflationary pressures moderate with peaking interest rates, demand revival is projected in the real estate sector, benefitting homebuilders. Additionally, government infrastructure expansion plans offer auxiliary prospects for multiplier growth effects across affiliated construction stocks.
5. SPDR® Gold Shares (GLD)
The SPDR Gold Shares ETF provides efficient exposure to fluctuations in international gold bullion prices by aiming to mirror spot rates. With its relative inertness to volatility in conventional equity and bond markets during times of uncertainty, allocation to gold serves the objective of portfolio diversification and insulation. GLD offers an accessible route for retail investors to incorporate this durable safe haven asset class in their holdings mix, without challenges associated with physical ownership of gold bars. Its performance tends to move contra to risk-on assets provides potential cushioning during market turmoil.
6. VanEck Vectors Gold Miners ETF (GDX)
GDX allows us to up-reward chasing gears by directly betting on miners hitting pay dirt! By tracking an index of leading global gold mining enterprises, GDX provides diversified equity exposure into players like Newmont Corp or Barrick Gold leveraged to bullion fortunes. While riskier than owning real gold, the amplified profit windfalls from mining stocks when strikes and ore discoveries start flooding offer chunkier wealth creation prospects for believing gold still has shine left.
7. SPDR® S&P Bank ETF (KBE)
As rates peak out, KBE diversifies exposure to recovering financial stocks beyond just Wall Street names covered in XLF but rather the regional banking names throughout US feeding off revived lending activity with investors seeking inflation protection.
8. Invesco QQQ Trust (QQQ)
The Invesco QQQ ETF offers exposure to the largest non-financial technology, consumer services and communications companies listed on the Nasdaq exchange. By tracking the benchmark Nasdaq 100 index stocks based on market capitalisation, QQQ provides access to globally leading innovative enterprises like Apple, Microsoft, Amazon, Meta Platforms, Alphabet etc. that dominate business and consumer tech applications.
9. iShares MSCI Emerging Markets ETF (EEM)
EEM offers investors diversified exposure to equities across 24 high-growth developing economies spanning Asia, Africa, the Middle East, Eastern Europe and Latin America. By monitoring the performance of the MSCI EM benchmark index, EEM covers about 85% of the free float-adjusted market capitalisation across its constituent markets.
10. Invesco DB Commodity Index Tracking Fund (DBC)
DBC offers retail investors exposure to an array of global commodities through futures-based allocation tracking the DBIQ Diversified Commodity Index. The index represents the most heavily traded futures contracts across diverse segments – comprising energy products, including crude oil, gasoline, and natural gas; industrial metals, including aluminium and zinc; and agricultural commodities like wheat, soybeans, and cattle.
The Bottom Line
We hope this guide summarising the top ETF contenders across categories offered you insights into some exciting themes to help achieve your investing goals in 2024. Remember to evaluate historical returns and risk attributes before allocating. As long-term wealth creation vehicles, ETFs can simplify owning markets without overwhelming yourself.