10 ETFs making bank since 2014

Considered as long-term investment vehicles, ETFs allow investors to gain exposure to stocks of specific countries, sectors, industries, commodities and themes they believe will grow their bank accounts over the next few years. In this article, we look at the best 10 ETFs since 2014 and see why they made bank.

10 ETFs with the highest cumulative gains since 2014

We looked at the top 10 ETFs that existed since 2014 (as far as Trackinsight data goes back) and generated the highest cumulative returns between January 1st, 2014, and December 31st, 2021. After a quick peek at the list, you'd notice that one metal, one sector, and one industry, have crushed it over that span, Rhodium, Technology, and Semiconductors.

1. Xtrackers Physical Rhodium ETC (XRHO): +1,254%
2. Invesco Dynamic Semiconductors ETF (PSI): +752%
3. SPDR S&P Semiconductor ETF (XSD): +735%
4. iShares Semiconductor ETF (SOXX): +727%
5. VanEck Vectors Semiconductor ETF (SMH): +709%
6. ARK Next Generation Internet ETF (ARKW): +632%
7. Vanguard Information Technology ETF (VGT): +468%
8. iShares U.S. Technology ETF (IYW): +460%
9. Fidelity MSCI Information Technology Index ETF (FTEC): +451%
10. Technology Select Sector SPDR Fund (IYW): +448%

1 – Rhodium ETFs

Rhodium may be a little-known metal, but it sure delivered big +1,230% gains since 2014, compared to Gold's 45%, Silver's +12.38%, Palladium's +191%, and Platinum's -27% during the same period.

What is rhodium used for?

The silver-white metallic element, known for its high resistance to corrosion and reflectiveness — is used as a finish for jewelry, mirrors, and searchlights. It is also used in electric connections and is alloyed with platinum for aircraft turbine engines. Another use is the manufacturing of nitric acid and is used in the hydrogenation of organic compounds. However, the major use of Rhodium (80% of all usage) is in catalytic converters along with Palladium and Platinum — which are part of auto exhaust systems that reduce toxic gas emissions. Among the platinum group metals, palladium is predominately used in gasoline engines and platinum is used in diesel vehicles, but rhodium is needed for both diesel and gas engines.

The auto-sector driving rhodium prices up

In 2019, Rhodium prices increased by 143% following a growing demand from the auto sector. In 2020, the metal saw a supply deficit of 84,000 ounces, just about doubling its deficit from 2019, as tight supplies “greatly exceeded” pandemic-induced declines in autocatalysts and industrial demand. Meanwhile, production in South Africa, a top rhodium supplier, slowed down as miners were forced to close last summer to stop the spread of Covid-19.

The precious metal started 2021 at $17,300 a troy ounce and peaked at $29,800 on 23 March – an all-time high, as demand outstripped supply. Prices lost steam in the second quarter as the lower automotive production resulting from chip shortages pulled the metal lower. Fewer cars produced means fewer catalytic converters manufactured, and that weighed on rhodium demand and pushed prices down.

Going green might cool the demand for rhodium

With tightening emissions standards in China, Europe, India, and elsewhere — rhodium demand by automakers will likely remain strong. But in the long-term, the green transition will eventually phase out traditional vehicles, and the demand for battery-electric and fuel-cell vehicles (which don't require catalytic converters) will surge — soothing the metal's demand.

Invest in rhodium through XRH0

Investors betting on the metal can gain exposure through the Xtrackers Physical Rhodium ETC (XRH0), one of the best performing ETFs over the past 8 years.

The fund provides an easy way to gain exposure to the sport price of Rhodium and is backed by direct investment in the underlying precious metal. The issuer has direct and sole ownership of the rhodium which is stored in secure uniquely identifiable bottles of rhodium in sponge form in the UK.

XRH0 has a total expense ratio of 0.95% and trades on the London Stock Exchange.

2,3,4,5 - Semiconductor ETFs

Semiconductors have become vital ingredients in the current-day technology-driven economy. The digitization across industries, adoption of cloud computing, and the integration of artificial intelligence and machine learning have fueled demand for semiconductors.

According to the Semiconductor Industry Association (“SIA”), Global Semiconductor sales increased from $333 billion in 2014 to $550* billion in 2021 (*Est.). In 2022, the global market is projected to post a moderate growth of 8.8% to reach $601.5 billion in annual sales, according to the World Semiconductor Trade Statistics (WSTS).

The industry's past and current run have nurtured investors' appetite for semiconductor stocks. Over the past 10 years, the Semiconductors and Semiconductor Equipment sub-index of the S&P 500 have generated a cumulative gain of +720% compared to the S&P 500 +282% gains. This year alone, semiconductor stocks rose +48% following a global chip shortage that crippled entire industries.

The historical rally lifted Invesco Dynamic Semiconductors ETF, SPDR S&P Semiconductor ETF, iShares Semiconductor ETF, and VanEck Vectors Semiconductor ETF among the top-performing ETFs between 2014 and 2021 with over +700% gains.

The future fueled by semiconductor demand

In the long term, the accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. Apart from this, blockchain, the Internet of Things, electrical and autonomous vehicles, augmented reality/virtual reality and wearables are other growth prospects.

6,8,9 & 10 – Technology ETFs

Technology ETFs are among the top-performing ETFs since 2014. It doesn't come as a surprise considering some of the spectacular performance tech companies like Facebook, Amazon.com, Apple, and Alphabet had witnessed during that stretch. Their swiftness in expanding to new markets, creating revolutionary new services and products, and their strong financial results have redirected investors' compass towards high-growth stocks.  

Over the past 10 years, the Information Technology index of the S&P 500 generated a gain of +517%. Driving the performance are software (+781%), semiconductors (719%), and technology hardware & storage stocks (+614%).

Despite the volatility and emotional rollercoaster this industry can bring to investors, technology will continue to evolve and will become more embedded in a rapidly digitalizing world.

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