Dry Bulk Shipping, Carbon and fossil fuels among top ETFs of the year

The 2021 Formula 1 championship was nerve-wracking and was won down-to-the-wire in of the most dramatic endings ever. However, that isn't the case for the best performing ETF of the year, taking the lead early on.

The Breakwave Dry Bulk Shipping ETF (BDRY) is taking the top spot of the podium, registering +215% year-to-date. The fund invests in freight futures focused on dry bulk shipping exclusively. The year saw the Baltic Exchange’s main dry bulk sea freight index rose to its highest level in 13 years in late September, bolstered by robust demand across all vessel segments, and a tight supply due to port congestions across the globe.

Coming in at second is KraneShares Global Carbon ETF (KRBN) with +105% gains. The fund invests in carbon credit futures contracts, covering the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative (RGGI). The gains come mostly from the boom in the EU’s benchmark carbon price, which reached a new all-time high of €88.88 per metric ton last week (Dec'21 contract). Demand for the allowances peaked after a natural gas supply crisis prompted utility companies to revert to oil and coal to keep up with demand. The prices were further boosted after world leaders renewed their decarbonization commitments in this year's Annual Climate Change Summit (COP26).

Ending at third position is the First Trust ISE-Revere Natural Gas Index Fund ETF (FCG*) with +94% gains. The fund invests in U.S. listed stocks of companies involved in the exploration and production of natural gas. The ETF popped after natural gas companies benefited from the overwhelming demand for the commodity amid tight supplies.

Other ETFs that made it to the top 10 this year include Invesco Dynamic Energy Exploration & Production ETF – PXE (+90%), North Shore Global Uranium Mining ETF – URNM (+78%), VanEck Vectors Rare Earth/Strategic Metals ETF – VE41 (+75%), Horizons S&P/TSX Capped Energy Index ETF – HXE (+74%), iShares S&P/TSX Capped Energy Index ETF – XEG (+74%), Horizons Enhanced Income Energy ETF – HEE (+73%) and Invesco DWA Energy Momentum ETF - PXI(+71%), clear domination of the conventional oil & gas sector this year.

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