Many long-term investors prefer to be the tortoise rather than the hare, with a slow-and-steady approach that delivers reliable returns over time. It should also be said that a low-cost and diversified strategy also tends to be much less stressful than actively making high-stakes trades.
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That said, many folks are either too impatient or too aggressive to settle for what the market is going to give them. Rather than buy broad-based index funds, this crowd tends to shun diversification because the lower volatility profile of these investments is seen as a detriment to short-term gains. After all, volatility can be a very good thing if you happen to own a stock that’s moving fast to the upside.
The following list of the best ETFs offers a variety of approaches that have higher risk but potentially offer higher reward. The following seven ETFs all offer various thematic investment options, and have seen recent outperformance that indicates Wall Street momentum is on their side in the back half of the year:
| ETF | Assets Under Management | Expense Ratio |
| iShares Bitcoin Trust ETF (ticker: IBIT) | $22.6 billion | 0.12% |
| Global X Defense Tech ETF (SHLD) | $470 million | 0.50% |
| iShares MSCI Global Gold Miners ETF (RING) | $566 million | 0.39% |
| iShares U.S. Insurance ETF (IAK) | $610 million | 0.39% |
| Roundhill Magnificent Seven ETF (MAGS) | $668 million | 0.29% |
| VanEck Semiconductor ETF (SMH) | $22.4 billion | 0.35% |
| ProShares Ultra Semiconductors (USD) | $1.1 billion | 0.95% |
iShares Bitcoin Trust ETF (IBIT)
AUM: $22.6 billion Expense ratio: 0.12%
Leading cryptocurrency Bitcoin has had a great run this year, returning about 40% from Jan. 1 through the beginning of September. The iShares Bitcoin trust allows investment in Bitcoin with the ease and liquidity of an exchange-traded product. While IBIT doesn’t track the digital asset perfectly, it has put up more than 32% gains in the same period — compared with just 25% or so for the S&P 500. A good-sized fund with a very reasonable expense ratio, this iShares product provides one of the simplest ways to get direct exposure to Bitcoin prices without the hassles of using a digital wallet.
Global X Defense Tech ETF (SHLD)
AUM: $470 million Expense ratio: 0.5%
According to Global X data, global defense spending has grown at more than 4% each year since 2020 thanks to continued concern about Russian aggression in Ukraine as well as geopolitical tensions in the Middle East. This focused fund has just shy of 40 total holdings, including leading defense names like Lockheed Martin Corp. (LMT), RTX Corp. (RTX) and Northrop Grumman Corp. (NOC). The SHLD ETF has good short-term momentum, but it is admittedly smaller than some of the other names on the list. And while the environment seems favorable for defense spending, it’s important to also acknowledge that highly focused funds like this can lurch lower on one bad headline. That said, it seems highly unlikely that tensions in various hotspots around the world are going away anytime soon.
iShares MSCI Global Gold Miners ETF (RING)
AUM: $566 million Expense ratio: 0.39%
With recent inflation concerns, gold prices have been very firm as investors have looked at alternatives to cash and stocks. And while inflation rates have definitely cooled off lately, measuring just 2.5% in July for the most recent reading, there are still concerns about the way forward for the Federal Reserve and for the U.S. economy. In uncertain times, gold tends to be a safe haven — and RING has rallied lately as a result, tacking on more than 30% so far this year. The fund is composed of about 35 total positions, including leading international gold mining stocks Newmont Corp. (NEM), Agnico Eagle Mines Ltd. (AEM) and Barrick Gold Corp. (GOLD), among others.
[READ: 8 Top-Rated Income Funds to Buy in 2024]
iShares U.S. Insurance ETF (IAK)
AUM: $610 million Expense ratio: 0.39%
Most investors likely don’t think of insurance stocks as particularly sexy, but this sector-specific fund has outperformed the broader S&P 500 handily this year with roughly 30% returns since Jan. 1. Part of the reason for that lift is a generally higher-interest-rate environment than in prior years, with the Federal Reserve refusing to cut rates earlier in the year and helping insurance companies that typically keep a large stockpile of cash invested in interest-bearing assets. Holdings include mega-insurers Progressive Corp. (PGR), Chubb Ltd. (CB) and Travelers Cos. Inc. (TRV), at the top of the list. These are low-risk plays that see strong performance in any market environment, meaning they may not be as at risk of a severe change in direction as some other sector stocks on Wall Street.
Roundhill Magnificent Seven ETF (MAGS)
AUM: $668 million Expense ratio: 0.29%
Keeping with the theme of putting more eggs in fewer baskets to tap into favorable trends, MAGS boasts a very limited portfolio of seven “magnificent” market leaders — Nvidia Corp. (NVDA), Google parent Alphabet Inc. (GOOG, GOOGL), Apple Inc. (AAPL), Tesla Inc. (TSLA), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META) and Microsoft Corp. (MSFT). The prior funds all show a tactical way to bet on a specific part of Wall Street, and these companies are all similar flavors of mega-cap tech stocks that offer growing operations and a history of outperformance well above their peers.
VanEck Semiconductor ETF (SMH)
AUM: $22.4 billion Expense ratio: 0.35%
A different approach to the tech sector is to zero in on the fast-moving corner that is the semiconductor marketplace. Nvidia is the most popular chipmaker out there. That’s for good reason, considering its roughly 140% gain year to date. But other high-flyers in SMH include Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) and Broadcom Inc. (AVGO) — two stocks that have gained about 40% and 60%, respectively, since Jan. 1. For investors who want to play the upside in chipmakers but don’t want to go “all in” on Nvidia, this VanEck option is worth a look.
ProShares Ultra Semiconductors (USD)
AUM: $1.1 billion Expense ratio: 0.95%
Of course, those looking to dive into semiconductors with even more aggressive exposure may be interested in this ProShares fund that is “leveraged” with derivatives to provide nearly 2x exposure to the movements of the sector each day. The approach is complex and thus drives costs up significantly when compared with the expense ratios of other ETFs on this list. And to be clear, that amplified performance means things are twice as bad when things go wrong. However, with more than $1 billion in assets and returns of more than 100% since Jan. 1, it’s hard to argue with the performance provided by USD.
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Update 09/03/24: This story was previously published at an earlier date and has been updated with new information.
