Best Performing ETFs Can Bite You

I admit it: I wish I’d bought the Direxion Daily Gold Miners Index Bear 3x Shares (DUST), which is up 72.63% so far this year. The fund is the top-performing ETF year-to-date as of Sept. 17 in the top 100 performing ETFs [see below].

DUST seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the performance of the NYSE Arca Gold Miners Index. In a horrible year for precious metals and mining funds, borrowing heavily to bet against precious metals and mining stocks won big.

Had I invested $100,000in the beginning of the year, I’d have made more than $72,000. The Monday-morning quarterback voice in my head is saying “buy” but I know it’s the emotional part of my brain speaking. It’s coming from the same place that tells me gold is dead, as bitcoin is the new gold. I could probably even convince myself I was being rational.

Analyzing The Top 100

In looking at this “top performing” list, I see many things in common. First, the ETFs take on a ton of risk. Rather than investing in broad holdings such as a total stock index fund, they’re all quite narrow. Many magnify the risk by borrowing to buy more and going short against the market. This isn’t investing, it’s merely speculation.

Next, the fund families with the most listings tend to be small, gathering very little in the way of investor assets. ProShares had the most funds in the top 100, at 17, with Direxion in second place, with 12.

ProShares has about $30 billion in assets, while Direxion had about $12.5 billion. Combined, they make up about 1% of the total fund assets at Vanguard (mutual funds and ETFs combined).

The reason they represent such a small percentage is because the strategy of maximizing risk doesn’t work. If you look at the 100 worst-performing ETFs [see below], both fund families score even “better” on this list, with ProShares at 23 and Direxion at 25.

In fact, the Direxion Daily Gold Miners Index Bull 3x Shares (NUGT) is No. 3, losing 60.23%. This means you’d need a 151% return just to break even. These fund families tend to be small because people are generally pretty wise.

Finally, funds on the list tend to be very expensive. DUST, for example, has a 1.08% annual expense ratio, and that doesn’t include the cost of leverage. That’s dozens of times more expensive than broader ETFs that don’t follow these gambling strategies.

Math Here Not Your Friend

Between the extreme volatility and the fees, the math is heavily against you. Consider that if you lose 90% of your money (as the REX VolMAXX Short VIX Futures Strategy ETF (VMIN) has so far this year), you need a 1,000% return to get back to even.

A much better approach than picking from a top-performing fund list is to select a broad, ultra-low-cost ETF such as the Vanguard Total Stock Market ETF (VTI) that will never make a top-performing ETF list in any given year. That’s because they don’t take uncompensated risk.

But a funny thing happens over many years; they rise to the top. According to Morningstar, VTI has bested 90% of ETFs over the past 15 years. And that top-decile performance would be even better if the hundreds of ETFs that went defunct were included in the comparison. I think it’s safe to say those funds that closed weren’t the best performers.

My advice is to separate gambling and investing. In the long run, choosing an investment based on past performance is bad, but choosing based on top performance is even worse. You’d probably have better odds in Las Vegas and have more fun. These funds don't even give you comp drinks or show tickets.

Allan Roth is the founder of Wealth Logic LLC, an hourly based financial planning firm. He is required by law to note that his columns are not meant as specific investment advice. Roth also writes for the Wall Street Journal, AARP and Financial Planning magazine. You can reach him at ar@DareToBeDull.com or follow him on Twitter at Allan Roth (@Dull_Investing) · Twitter.

 

100 Top-Performing ETFs

Ticker	Fund	Issuer	AUM ($M)	YTD TRR
DUST	Direxion Daily Gold Miners Bear 3x Shares	Direxion	115.24	72.63
DSLV	VelocityShares 3x Inverse Silver ETN	Credit Suisse	15.45	59.36
JDST	Direxion Daily Junior Gold Miners Index Bear 3X Shares	Direxion	52.41	53.71
USOU	United States 3x Oil Fund	US Commodity Funds	9.89	53.31
UWT	VelocityShares 3x Long Crude Oil ETN	CitiGroup	180.04	47.65
GDXS	ProShares UltraShort Gold Miners	ProShares	3.44	46.46
WTIU	UBS ETRACS - ProShares Daily 3x Long Crude ETN	UBS	13.59	44.90
OILU	ProShares UltraPro 3x Crude Oil ETF	ProShares	34.62	43.65
TQQQ	ProShares UltraPro QQQ	ProShares	4,156.81	42.95
XWEB	SPDR S&P Internet ETF	State Street Global Advisors	59.61	42.43
PSCH	Invesco S&P SmallCap Health Care ETF	Invesco	1,358.43	42.42
ZSL	ProShares UltraShort Silver	ProShares	22.76	41.17
TECL	Direxion Daily Technology Bull 3x Shares	Direxion	779.98	40.83
DFEN	Direxion Daily Aerospace & Defense Bull 3X Shares	Direxion	69.86	36.75
PSJ	Invesco Dynamic Software ETF	Invesco	291.62	35.76
ARKG	ARK Genomic Revolution Multi-Sector ETF	ARK	315.92	35.36
RETL	Direxion Daily Retail Bull 3x Shares	Direxion	41.85	33.85
UCO	ProShares Ultra Bloomberg Crude Oil	ProShares	386.00	33.75
CURE	Direxion Daily Healthcare Bull 3x Shares	Direxion	171.22	33.70
XHE	SPDR S&P Health Care Equipment ETF	State Street Global Advisors	780.80	33.52
XITK	SPDR FactSet Innovative Technology ETF	State Street Global Advisors	73.49	32.17
PTH	Invesco DWA Healthcare Momentum ETF	Invesco	335.67	31.55
ROM	ProShares Ultra Technology	ProShares	439.93	31.54
UCC	ProShares Ultra Consumer Services	ProShares	32.57	30.58
XSW	SPDR S&P Software & Services ETF	State Street Global Advisors	138.16	30.58
QLD	ProShares Ultra QQQ	ProShares	2,124.19	30.51
DGLD	VelocityShares 3x Inverse Gold ETN	Credit Suisse	19.94	30.03
IGV	iShares North American Tech-Software ETF	BlackRock	2,136.84	30.03
FINX	Global X FinTech ETF	Mirae Asset Global Investments	401.46	29.79
URTY	ProShares UltraPro Russell2000	ProShares	168.49	29.38
TNA	Direxion Daily Small Cap Bull 3x Shares	Direxion	739.25	28.87
DTYS	iPath US Treasury 10-Year Bear ETN	Barclays Bank PLC	67.66	28.74
IBUY	Amplify Online Retail ETF	Amplify	561.96	28.56
PXMG	Invesco Russell MidCap Pure Growth ETF	Invesco	313.11	28.05
TAPR	Barclays Inverse US Treasury Composite ETN	Barclays Bank PLC	17.54	27.88
DLBS	iPath US Treasury Long Bond Bear ETN	Barclays Bank PLC	18.95	27.72
SAA	ProShares Ultra SmallCap600	ProShares	35.64	27.71
ARKK	ARK Innovation ETF	ARK	1,390.13	27.51
FDN	First Trust Dow Jones Internet Index Fund	First Trust	9,691.53	27.23
PILL	Direxion Daily Pharmaceutical & Medical Bull 3X Shares	Direxion	5.32	26.82
OLO	DB Crude Oil Long Exchange Traded Notes	Deutsche Bank	7.25	26.69
FBGX	UBS AG FI Enhanced Large Cap Growth ETN	UBS	1,759.62	26.63
BZQ	ProShares UltraShort MSCI Brazil Capped	ProShares	32.41	26.59
FLGE	Credit Suisse FI Large Cap Growth Enhanced ETN	Credit Suisse	2,409.80	26.57
IHI	iShares U.S. Medical Devices ETF	BlackRock	3,008.66	26.54
RXL	ProShares Ultra Health Care	ProShares	160.30	25.68
IHF	iShares U.S. Healthcare Providers ETF	BlackRock	936.03	25.43
HACK	ETFMG Prime Cyber Security ETF	ETF Managers Group	1,830.07	25.28
PXQ	Invesco Dynamic Networking ETF	Invesco	79.31	25.07
PTF	Invesco DWA Technology Momentum ETF	Invesco	162.18	24.79
JSML	Janus Henderson Small Cap Growth Alpha ETF	Janus Henderson	44.03	24.46
DBO	Invesco DB Oil Fund	Invesco	375.33	24.43
EDZ	Direxion Daily MSCI Emerging Markets Bear 3X Shares	Direxion	84.38	24.32
CHAD	Direxion Daily CSI 300 China A Share Bear 1X Shares	Direxion	124.32	24.32
PXSG	Invesco Russell 2000 Pure Growth ETF	Invesco	106.95	23.84
ARKW	ARK Web x.0 ETF	ARK	683.26	23.51
FXL	First Trust Technology AlphaDEX Fund	First Trust	2,337.86	22.99
SLIM	Obesity ETF	Janus Henderson	11.64	22.94
FYC	First Trust Small Cap Growth AlphaDEX Fund	First Trust	476.84	22.70
XHS	SPDR S&P Health Care Services ETF	State Street Global Advisors	98.31	22.40
CIBR	First Trust NASDAQ Cybersecurity ETF	First Trust	827.94	22.15
OLEM	iPath Pure Beta Crude Oil ETN	Barclays Bank PLC	2.83	21.80
SKYY	First Trust Cloud Computing ETF	First Trust	2,038.28	21.71
IGM	iShares North American Tech ETF	BlackRock	1,686.59	21.70
DZZ	DB Gold Double Short Exchange Traded Notes	Deutsche Bank	26.08	21.64
USL	United States 12 Month Oil Fund LP	US Commodity Funds	78.77	21.56
VGT	Vanguard Information Technology ETF	Vanguard	22,527.40	21.56
MILN	Global X Millennials Thematic ETF	Mirae Asset Global Investments	31.99	21.39
IPAY	ETFMG Prime Mobile Payments ETF	ETF Managers Group	495.71	21.35
SMLL	Direxion Daily Small Cap Bull 2X Shares ETF	Direxion	4.13	21.26
SLYG	SPDR S&P 600 Small Cap Growth ETF	State Street Global Advisors	2,469.73	21.05
IJT	iShares S&P Small-Cap 600 Growth ETF	BlackRock	7,306.73	20.97
PBE	Invesco Dynamic Biotechnology & Genome ETF	Invesco	282.50	20.96
VIOG	Vanguard S&P Small-Cap 600 Growth ETF	Vanguard	551.97	20.84
UWM	ProShares Ultra Russell2000	ProShares	259.05	20.64
USO	United States Oil Fund LP	US Commodity Funds	1,631.57	20.48
BNO	United States Brent Oil Fund LP	US Commodity Funds	98.34	20.44
XKFS	SPDR Kensho Future Security ETF	State Street Global Advisors	9.01	20.40
JSMD	Janus Henderson Small/Mid Cap Growth Alpha ETF	Janus Henderson	54.18	20.29
OILB	iPath Series B S&P GSCI Crude Oil ETN	Barclays Bank PLC	102.50	19.99
PPSC	PortfolioPlus S&P Small Cap ETF	Direxion	8.55	19.96
UPRO	ProShares UltraPro S&P500	ProShares	1,577.03	19.96
FBT	First Trust NYSE Arca Biotechnology Index Fund	First Trust	2,245.32	19.83
SPXL	Direxion Daily S&P 500 Bull 3x Shares	Direxion	947.27	19.80
RTH	VanEck Vectors Retail ETF	VanEck	119.00	19.79
CLIX	ProShares Long Online/Short Stores ETF	ProShares	64.99	19.64
XAR	SPDR S&P Aerospace & Defense ETF	State Street Global Advisors	1,552.27	19.60
ENTR	ERShares Entrepreneur 30 ETF	EntrepreneurShares, LLC	82.69	19.42
OILK	ProShares K-1 Free Crude Oil Strategy ETF	ProShares	9.01	19.35
GLL	ProShares UltraShort Gold	ProShares	28.17	19.30
BUZ	Buzz US Sentiment Leaders ETF	ALPS	11.48	19.23
BEMO	Aptus Behavioral Momentum ETF	Aptus Capital Advisors	84.09	18.95
BOSS	Global X Founder-Run Companies ETF	Mirae Asset Global Investments	4.15	18.88
FTEC	Fidelity MSCI Information Technology Index ETF	Fidelity	2,337.96	18.80
ALFA	AlphaClone Alternative Alpha ETF	Exchange Traded Concepts	25.52	18.47
JKK	iShares Morningstar Small-Cap Growth ETF	BlackRock	215.02	18.39
PXLG	Invesco Russell Top 200 Pure Growth ETF	Invesco	256.77	18.37
RZG	Invesco S&P Smallcap 600 Pure Growth ETF	Invesco	374.46	18.23
DWAS	Invesco DWA SmallCap Momentum ETF	Invesco	456.81	18.02
FXH	First Trust Health Care AlphaDEX Fund	First Trust	1,247.98	17.97

 

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Ticker	Fund	Issuer	AUM ($M)	YTD TRR
VMIN	REX VolMAXX Short VIX Futures Strategy ETF	Exchange Traded Concepts	10.21	-90.22
SVXY	ProShares Short VIX Short-Term Futures ETF	ProShares	398.73	-88.79
NUGT	Direxion Daily Gold Miners Index Bull 3x Shares	Direxion	1,109.45	-60.23
BRZU	Direxion Daily MSCI Brazil Bull 3X Shares	Direxion	298.15	-59.53
JNUG	Direxion Daily Junior Gold Miners Index Bull 3X Shares	Direxion	736.92	-57.32
USOD	United States 3x Short Oil Fund	US Commodity Funds	1.03	-54.58
DWT	VelocityShares 3x Inverse Crude Oil ETN	CitiGroup	176.57	-53.74
WTID	UBS ETRACS - ProShares Daily 3x Inverse Crude ETN	UBS	2.91	-52.97
OILD	ProShares UltraPro 3x Short Crude Oil ETF	ProShares	25.89	-52.94
SHNY	Direxion Daily Silver Miners Index Bull 2X Shares	Direxion	3.74	-49.90
TUR	iShares MSCI Turkey ETF	BlackRock	412.90	-49.04
USLV	VelocityShares 3x Long Silver ETN	Credit Suisse	284.62	-48.79
TVIX	VelocityShares Daily 2x VIX Short-Term ETN	Credit Suisse	478.63	-47.09
DRIP	Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares	Direxion	48.07	-46.07
NAIL	Direxion Daily Homebuilders & Supplies Bull 3X Shares	Direxion	46.77	-45.09
LABD	Direxion Daily S&P Biotech Bear 3X Shares	Direxion	69.47	-43.60
CHAU	Direxion Daily CSI 300 China A Share Bull 2X Shares	Direxion	66.80	-43.43
TECS	Direxion Daily Technology Bear 3X Shares	Direxion	29.12	-43.41
SQQQ	ProShares UltraPro Short QQQ	ProShares	566.70	-43.40
KORU	Direxion MSCI Daily South Korea Bull 3X Shares	Direxion	16.53	-42.61
CWEB	Direxion Daily CSI China Internet Index Bull 2x Shares	Direxion	59.36	-41.94
UBR	ProShares Ultra MSCI Brazil Capped	ProShares	6.99	-41.66
GDXX	ProShares Ultra Gold Miners	ProShares	7.17	-41.66
LBJ	Direxion Daily Latin America Bull 3X Shares	Direxion	12.08	-40.21
SOXS	Direxion Daily Semiconductor Bear 3x Shares	Direxion	73.99	-39.15
EDC	Direxion Daily MSCI Emerging Markets Bull 3x Shares	Direxion	242.23	-38.17
REMX	VanEck Vectors Rare Earth/Strategic Metals ETF	VanEck	128.82	-37.56
YINN	Direxion Daily FTSE China Bull 3X Shares	Direxion	305.62	-37.51
DTO	DB Crude Oil Double Short Exchange Traded Notes	Deutsche Bank	18.57	-37.40
BDD	DB Base Metals Double Long Exchange Traded Notes	Deutsche Bank	1.97	-36.94
SCO	ProShares UltraShort Bloomberg Crude Oil	ProShares	157.82	-36.56
ZBIO	ProShares UltraPro Short Nasdaq Biotechnology	ProShares	2.80	-34.89
AGQ	ProShares Ultra Silver	ProShares	181.32	-33.03
SRTY	ProShares UltraPro Short Russell2000	ProShares	59.10	-32.39
TZA	Direxion Daily Small Cap Bear 3x Shares	Direxion	315.24	-31.77
HOML	ETRACS Monthly Reset 2xLeveraged ISE Exclusively Homebuilders ETN	UBS	4.11	-31.24
REW	ProShares UltraShort Technology	ProShares	2.50	-31.11
CNXT	VanEck Vectors ChinaAMC SME-ChiNext ETF	VanEck	18.25	-31.04
BRF	VanEck Vectors Brazil Small-Cap ETF	VanEck	68.10	-30.32
SCIF	VanEck Vectors India Small-Cap Index ETF	VanEck	204.29	-29.99
QID	ProShares UltraShort QQQ	ProShares	261.59	-29.91
RUSL	Direxion Daily Russia Bull 3x Shares	Direxion	181.47	-29.58
ASHS	Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF	Deutsche Bank	21.25	-29.54
SCC	ProShares UltraShort Consumer Services	ProShares	1.06	-29.48
EWZS	iShares MSCI Brazil Small-Cap ETF	BlackRock	45.06	-28.89
UGLD	VelocityShares 3x Long Gold ETN	Credit Suisse	126.61	-27.65
SCIN	Columbia India Small Cap ETF	Columbia	18.41	-27.57
AGT	iShares MSCI Argentina & Global Exposure ETF	BlackRock	21.35	-27.40
EVIX	VelocityShares 1x Long VSTOXX Futures ETN	UBS	3.53	-27.36
EUFL	Direxion Daily MSCI European Financials Bull 2X Shares	Direxion	8.64	-27.26
ARGT	Global X MSCI Argentina ETF	Mirae Asset Global Investments	86.40	-27.16
SGDJ	Sprott Junior Gold Miners ETF	ALPS	94.64	-27.08
DYY	DB Commodity Double Long Exchange Traded Notes	Deutsche Bank	1.54	-26.84
KGRN	KraneShares MSCI China Environment Index ETF	KraneShares	5.56	-26.75
SPXS	Direxion Daily S&P 500 Bear 3x Shares	Direxion	277.09	-26.49
SPXU	ProShares UltraPro Short S&P500	ProShares	464.72	-26.48
SDD	ProShares UltraShort SmallCap600	ProShares	1.97	-26.31
SIL	Global X Silver Miners ETF	Mirae Asset Global Investments	340.48	-26.19
INDL	Direxion Daily MSCI India Bull 3X Shares	Direxion	89.19	-26.04
EZA	iShares MSCI South Africa ETF	BlackRock	354.38	-25.76
XINA	SPDR MSCI China A Shares IMI ETF	State Street Global Advisors	3.61	-25.75
EET	ProShares Ultra MSCI Emerging Markets	ProShares	26.89	-25.31
DAG	DB Agriculture Double Long ETN	Deutsche Bank	5.05	-25.20
EXIV	VelocityShares 1x Daily Inverse VSTOXX Futures ETN	UBS	14.22	-25.10
SGDM	Sprott Gold Miners ETF	ALPS	130.49	-25.01
RXD	ProShares UltraShort Health Care	ProShares	0.80	-24.80
SLVP	iShares MSCI Global Silver Miners ETF	BlackRock	48.05	-24.52
RING	iShares MSCI Global Gold Miners ETF	BlackRock	226.28	-24.16
CQQQ	Invesco China Technology ETF	Invesco	379.32	-24.07
GASL	Direxion Daily Natural Gas Related Bull 3x Shares	Direxion	31.63	-23.91
XPP	ProShares Ultra FTSE China 50	ProShares	29.61	-23.83
COPX	Global X Copper Miners ETF	Mirae Asset Global Investments	69.55	-23.80
ASHR	Xtrackers Harvest CSI 300 China A-Shares ETF	Deutsche Bank	735.94	-23.72
PEK	VanEck Vectors ChinaAMC CSI 300 ETF USD	VanEck	53.85	-23.68
RSXJ	VanEck Vectors Russia Small-Cap ETF	VanEck	38.69	-23.59
WDRW	Direxion Daily Regional Banks Bear 3X Shares	Direxion	2.38	-23.51
SMDD	ProShares UltraPro Short MidCap400	ProShares	1.70	-23.33
MIDZ	Direxion Daily Mid Cap Bear 3X Shares	Direxion	3.22	-23.16
ASHX	Xtrackers MSCI China A Inclusion Equity ETF	Deutsche Bank	11.06	-22.97
PSAU	Invesco Global Gold & Precious Metals ETF	Invesco	23.07	-22.88
SDOW	ProShares UltraPro Short Dow30	ProShares	191.75	-22.55
UGAZ	VelocityShares 3x Long Natural Gas ETN	Credit Suisse	361.08	-22.49
SILJ	ETFMG Prime Junior Silver ETF	ETF Managers Group	45.57	-22.47
ERY	Direxion Daily Energy Bear 3X Shares	Direxion	35.86	-22.29
KBA	KraneShares Bosera MSCI China A Share ETF	KraneShares	321.13	-22.27
FBZ	First Trust Brazil AlphaDEX Fund	First Trust	6.82	-21.95
CNYA	iShares MSCI China A ETF	BlackRock	13.66	-21.92
BIS	ProShares UltraShort Nasdaq Biotechnology	ProShares	29.63	-21.90
TWM	ProShares UltraShort Russell2000	ProShares	95.55	-21.76
UVXY	ProShares Ultra VIX Short-Term Futures ETF	ProShares	564.45	-21.74
EUXL	Direxion Daily EURO STOXX 50 Bull 3X Shares	Direxion	3.04	-21.74
ECON	Columbia Emerging Markets Consumer ETF	Columbia	478.85	-21.65
CHIQ	Global X China Consumer ETF	Mirae Asset Global Investments	146.86	-21.59
SSG	Proshares Ultrashort Semiconductors	ProShares	3.42	-21.46
CPER	United States Copper Index Fund	US Commodity Funds	10.10	-21.27
GDX	VanEck Vectors Gold Miners ETF	VanEck	7,989.71	-21.17
NGE	Global X MSCI Nigeria ETF	Mirae Asset Global Investments	40.03	-21.10
EMCG	WisdomTree Emerging Markets Consumer Growth Fund	WisdomTree	34.04	-20.98
GOEX	Global X Gold Explorers ETF	Mirae Asset Global Investments	32.48	-20.74
EIDO	iShares MSCI Indonesia ETF	BlackRock	368.57	-20.67

 

100 Bottom-Performing ETFs

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