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The best-performing ETFs of 2023

The best-performing ETFs of 2023

When developing their trading strategies, investors seek vehicles that not only provide diversification but also align with their risk tolerance and investment goals. 

Enter exchange-traded funds (ETFs), a cornerstone in many investors’ strategies. 

These funds have emerged as go-to choices for traders crafting their portfolios, offering a unique blend of diversification, liquidity, and cost-effectiveness. In this light, we will shift our focus to the top-performing ETFs of 2023, delving into the distinctive advantages that make them a preferred tool in the development of robust trading strategies.

Crypto ETFs take the spotlight

Remarkably, the top few spots for best-performing ETFs in 2023 are captured by crypto-related funds.

According to the data retrieved on December 25, the highest-performing ETF of this year is The Valkyrie Bitcoin Miners ETF (WGMI). As its name suggests, WGMI is a fund that invests in publicly listed companies operating in the Bitcoin (BTC) mining industry.

WGMI’s biggest holdings include popular crypto mining firms such as Marathon Digital Holdings (NASDAQ: MARA), CleanSpark (NASDAQ: CLSK), Iris Energy (NASDAQ: IREN), and Riot Platforms (NASDAQ: RIOT), among others. All of these companies saw massive returns in 2023 driven by the broader crypto market’s resurgence. 

As a result, the overall year-to-date performance of WGMI currently sits at more than 316%, propelling it to the top of the list. 

WGMI YTD gains. Source: Google

The second-best performing ETF in 2023 is Global X Blockchain & Bitcoin Strategy ETF (BITS). 

The bulk of this fund’s performance is fueled by two other ETFs – the Global X Blockchain ETF (BKCH) and the Global X 1-3 Month T-Bill ETF (CLIP). Per Yahoo Finance, these two funds represent 52.1% and 29.5% of BITS’ weight, respectively.

Similar to WGMI, BKCH mainly invests in crypto-related public companies. Its largest holdings include Coinbase Global (NASDAQ: COIN), MARA, RIOT, CLSK, IREN, and so on.

CLIP, on the other hand, is an ETF that invests in Treasury bills issued by the US government, most of which have a remaining maturity of at least 1 month but less than 3 months. 

The sound performance of these two funds propelled BITS’s overall 2023 gains to more than 228%. 

BITS YTD gains. Source: Google

Intriguingly, the third spot also belongs to a cryptocurrency-focused ETF. 

Simplify Bitcoin Strategy Plus Income ETF (MAXI) rose over 130% in 2023, deriving its gains from derivatives and other funds that make up its portfolio.

Managed by Simplify Asset Management, MAXI focuses on fixed-income and currency markets in the US, most notably derivatives contracts such as Bitcoin futures and options. These assets represent over 80% of MAXI’s portfolio, while the remaining portion is mainly allocated to US Treasury bills. 

MAXI YTD gains. Source: Google

While the three aforementioned ETFs took the spotlight in 2023, there are several other funds that gave a solid display throughout the year. These include the metaverse-oriented Bitwise Web3 ETF, ARK Web x.0 ETF, the chipmaker-focused VanEck Semiconductor ETF, and others.

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