The table below is a list of the 25-top performing ETFs over the last ten years. As you will see, the majority of the Exchange Traded Funds on this list produced returns of 15% or more on an annualized basis, with the top ETF returning more than 19% a year on average over the past decade. That would equate to roughly a 250% return before any dividends or fees.
The most notable trend is technology was king over the last decade. Whether it was pure-play technology with the “internet” focused ETFs or the semiconductor ETFs, which are direct inputs into most tech devices, the two NASDAQ focused ETFs which sit in the top ten.
If you think about the big winners in terms of individual stocks over the last ten years, companies like Amazon, Netflix, Facebook, Alphabet, and of course, Apple (the FAANG stocks) all lead the markets higher. Technology-based companies where the leading innovators over the last decade as our world has become dramatically more technology-based. So, it's no wonder why these were the leaders and why these technology-based ETFs were the best performers.
The other trend within the top five and top ten were healthcare-related ETFs with two Biotech ETFs in the top six and one medical device ETF ranking as the 7th best ETF over the last decade. Again, in hindsight, this seems very logical as baby boomers, a very large portion of the population is hitting their later years and have more medical and healthcare-related needs. But, also it's interesting that the top two healthcare-related ETFs where Biotech, which could be seen as another sign that innovation is what moved prices higher. Furthermore, the medical device ETF that was within the top ten owns a number of companies that are leading the industry in innovative new surgical devices and machines that assist with operations like Styker and Intuitive Surgical.
Another interesting thing to consider is that the largest ETF by assets, the SPDR S&P 500 ETF (SPY), was the 75th best performing ETF to own over the last 10 years.
Another thing to consider when looking at the list above and the performance of SPY is the expense ratios of the top-performing ETFs. There were two of the top 25 that charged just 0.10% and another two that charged just 0.13%. The 10-year performance figures noted above don’t account for expenses, so on an actual return basis, the results would be slightly different. However, none of the ETFs mentioned on this list had what most investors would consider outrageous expenses, especially when you consider their performance.
At the end of the day, though, the past is the past, and what we all want to know is whether these funds will continue to perform at a high level moving forward. That is, of course, the million-dollar question and one that no one can predict perfectly. However, the trends that we have seen over the last ten years, technology and healthcare, don’t show any signs of slowing.
Those two industries are driven by mainly innovation, so we don’t have any reason to believe they will not be big winning industries over the next ten years.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not own shares of any asset mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
great chart