7 Best ETFs for 2023

The market looks stronger in December as we close out 2022 with a bang.

Back in October, it seemed like 2022 might go down in the history books as one of the worst years ever for investors. But in the last several weeks, stocks have gotten some spring back in their step. By the end of November, the S&P 500 index of large-cap stocks had rallied more than 14% from its low less than two months earlier, and some are predicting an end to the bear market in 2023. If you’re looking to make some moves to play the change in fortunes on Wall Street, the following seven exchange-traded funds, or ETFs, offer tactical ways to position for profits as we close out the year.

iShares MSCI Turkey ETF (ticker: TUR)

Turkey has had a rough few years. After a failed coup in 2016, Western sanctions and steep inflation sparked a currency and sovereign debt crisis in the country — just in time for the pandemic to make things even worse. But at long last, new policies are starting to stabilize the nation and GDP is projected to grow 3% in 2022. Admittedly, there’s a lot of risk here, as this emerging market is still in the fragile stages of recovery. But this Turkey-focused ETF has been on a tear lately, with six-month returns of more than 50% and a surge of about 25% in the last 30 days alone. That hints that investors are optimistic as we close out the year.

KraneShares CSI China Internet ETF (KWEB)

This KraneShares ETF was doubly shunned this year as a “risk-off” environment drove folks out of both emerging markets and growth-oriented tech stocks. However, a more favorable economic backdrop lately seems to be supporting KWEB as shares have soared more than 36% over the month of November, thanks to big rebounds in components like Tencent Holdings Ltd. (TCEHY), Alibaba Group Holding Ltd. (BABA) and JD.com Inc. (JD). As with the prior overseas ETF, there’s no guarantee that the recent rally will last. But Wall Street is clearly giving this top China fund another chance.

VanEck Semiconductor ETF (SMH)

This $6 billion tech fund comprises only semiconductor companies, including Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Nvidia Corp. (NVDA) and Qualcomm Inc. (QCOM) among others. Supply chain bottlenecks as well as pricing pressures and weak demand have really weighed on this subsector in 2022, but since the market bottom in October we’ve seen a recovery and renewed optimism. At the end of November, SMH was up more than 31% from its October low, and hopes that the semiconductor industry has brighter days ahead could continue to lift this ETF across the month of December.

SPDR Euro Stoxx 50 ETF (FEZ)

This roughly $1.5 billion developed market fund plays 50 prominent European equities to provide a diversified portfolio similar to the Dow Jones Industrial Average in the U.S. These include Dutch semiconductor company ASML Holding NV (ASML), French luxury goods giant LVMH Moet Hennessy Louis Vuitton SE (LVMUY) and U.K. chemicals giant Linde PLC (LIN), among others. Europe has been hit hard by the war in Ukraine and the resulting spike in energy prices. But consumers and businesses have slowly learned how to adapt, and predictions of a milder winter should help the region get back on its feet and plot a better course in 2023.

Global X Copper Miners ETF (COPX)

Another megatrend of the last several months has been inflation driving up the costs of raw materials. But unlike some of the other energy or agricultural commodities that have soared in price, the practical metal copper has actually seen a steep dive this year thanks to waning industrial demand. That has changed in the last few months, however, and copper miners like Freeport-McMoRan Inc. (FCX) are up strongly since their October lows. As a result, COPX has jumped 20% over the course of November and is looking strong as we enter the New Year.

Vanguard Dividend Appreciation ETF (VIG)

A mammoth dividend stock fund with about $70 billion in assets under management, VIG is the go-to option for many investors who are interested in keeping a foothold in the stock market but who want to take a bit more conservative approach. Top holdings are bulletproof blue-chips like Microsoft Corp. (MSFT), JPMorgan & Chase Co. (JPM) and Johnson & Johnson (JNJ). Some of these stocks have had short-term troubles at some point, but they always come out on the other side with gains for their investors in the long run. If you are worried the recent rally may ultimately end in tears, then consider VIG as a good way to play stocks without getting burned as badly should the market decline in December.

iShares Russell 2000 Growth ETF (IWO)

Closing out our list is an aggressive U.S.-focused ETF that is benchmarked to the Russell 2000 index of small-cap stocks, and then screens out roughly half of those stocks to create a focused list of about 1,100 junior companies with growth-oriented characteristics. That includes firms like cardiovascular device specialist Shockwave Medical Inc. (SWAV) and fast-growing restaurateur Texas Roadhouse Inc. (TXRH), among others. IWO ended November about 23% down on the year even after some recent momentum, but those who think the bear market is over may want to consider a tactical bet on smaller, hungry stocks via IWO as we enter 2023.

7 Best ETFs for December:

— iShares MSCI Turkey ETF (TUR)

— KraneShares CSI China Internet ETF (KWEB)

— VanEck Semiconductor ETF (SMH)

— SPDR EURO STOXX 50 ETF (FEZ)

— Global X Copper Miners ETF (COPX)

— Vanguard Dividend Appreciation ETF (VIG)

— iShares Russell 2000 Growth ETF (IWO)

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