The Top Performing ETFs in H1 2024

The first half of 2024 has been a banner year for certain ETFs, with those heavily invested in semiconductors and notable tech giants leading the pack. This article delves into the key drivers behind their impressive performance.

Note that we exclude leverage, inverse, and crypto-related funds for the analysis.

The Semiconductor ETFs

• Rank #1: VanEck Semiconductor ETF (SMH)
• Rank #8: Invesco PHLX Semiconductor ETF (SOXQ)
• Rank #10: iShares Semiconductor ETF (SOXX)

Fueled by the red-hot race in Artificial Intelligence (AI), companies are pouring money into developing and deploying AI tools. This has sent shockwaves through the semiconductor industry, with Nvidia reigning supreme as the technological vanguard.

Nvidia's stock has soared almost 150% in H1 2024, reaching a market cap of over $3 trillion, placing it among the world's top 3 companies. This surge is fueled by the insatiable demand for their advanced graphics processing units (GPUs), the workhorses for training and running AI systems.

Industry experts are raving about Nvidia's newest offering, the Blackwell platform. Analysts predict a complete sell-out for its B100, B200, and GB200 products well into next year.

The AI boom isn't a one-horse race. While Nvidia leads the charge, other semiconductor companies like AMD and Micron Technology are also reaping the rewards. AI hardware providers like Super Micro Computer are experiencing a similar windfall.

Turkey ETF

• Rank #7: iShares MSCI Turkey ETF (TUR)

Turkey's tumbling Lira (down 20% in a year) and skyrocketing inflation (71% in June) have ignited a stock market surge. Seeking a hedge against a weakening currency and rampant inflation, Turkish investors have flocked to equities, sending the BIST 100 index to record highs (up 44% year-to-date in Lira terms, 27% in USD). This flight to Turkish stocks benefits ETFs like the iShares MSCI Turkey ETF (TUR).

Launched in 2008, TUR tracks the performance of 97 Turkish companies across key sectors (industrials 24%, financials 20%, consumer staples 17%, materials 11.55%) via the MSCI Turkey IMI 25/50 Index (USD). With over $250 million in assets, TUR offers a convenient and cost-effective way (0.59% expense ratio, trades on Nasdaq) to invest in the Turkish market.

In terms of past performance, a hypothetical $10,000 investment since inception would be worth $12,600 as of the end of June 2024. However, those who bought in three years ago have seen their investment more than double.

Magnificent Seven-Heavy ETFs

• Rank #2: AXS Esoterica NextG Economy ETF (WUGI)
• Rank #3: Roundhill Magnificent Seven ETF (MAGS)
• Rank #4: Invesco S&P 500 Momentum ETF (SPMO)
• Rank #5: Gabelli Growth Innovators ETF (GGRW)
• Rank #9: Clockwise Capital Innovation ETF (TIME)

AI's rise extends beyond chipmakers. Tech giants like Meta, Google (Alphabet), Microsoft, Amazon, and Apple (the "Magnificent 7" excluding Tesla) have soared in 2024 due to their heavy investments in AI development and AI-powered services.

This focus on AI keeps them ahead in the tech race. Their strong positions in innovation, cloud computing, and digital services, fueled by AI advancements, have led to robust financials, R&D growth, and market adaptation. 

ETFs like WUGI, MAGS, SPMO, GGRW, and TIME offer significant exposure to these high-flying tech stocks. This heavy weighting has fueled their performance, propelling them to the top ranks of best-performing ETFs in 2024.

The NUKZ ETF

• Rank #6: Range Nuclear Renaissance Index ETF (NUKZ)

What is NUKZ ETF?

The Range Nuclear Renaissance Index ETF (NUKZ) offers an opportunity to invest in the potential growth of the nuclear energy sector. This ETF tracks a specific index that invests across the entire nuclear energy chain, including companies developing next-generation reactors (advanced reactor companies), established utilities that generate nuclear power, and firms involved in construction, maintenance, and fuel services (construction & services and fuel companies).

Currently, over half (51.4%) of the fund is invested in the United States, with significant allocations also going to Canada (13.64%), Japan (7.92%), and South Korea (7.65%). NUKZ holds shares in 38 companies, with a focus on industrials and utilities.

The top 10 holdings, which include Cameco Corp, Constellation Energy Corp, nuclear power specialist NuScale Power, Hitachi Ltd, and Vistra – among other names – make up nearly half (48%) of the fund. Launched in January 2024 on the NYSE, NUKZ has an expense ratio of 0.85%.

Why NUKZ is doing well this year?

Looking at NUKZ's top holdings this year, we see some impressive performers driving the ETF's overall performance:

• NuScale Power Corporation (255% increase): The U.S.-based NuScale Power Corp., a developer of innovative small modular reactors (SMRs), saw its shares surge this year due to a confluence of positive developments. Firstly, the U.S. government's commitment to funding small modular reactor (SMR) technology, NuScale's area of expertise, provided a major boost. Additionally, NuScale holds a distinct advantage as the first company with a U.S. Nuclear Regulatory Commission-certified SMR design.
• Vistra Corp. (123% increase): The U.S. energy company Vistra's stock soared this year following strong financials (thanks to the Energy Harbor deal), a massive share buyback program, and bullish analyst sentiment.
• Constellation Energy Corporation (71% increase): U.S. energy firm also delivered strong Q1 2024 results, highlighting clean energy commitment and community focus in its Sustainability Report. Strategic growth plans, including extension efforts for clean energy hubs like Dresden, showcase long-term vision. Moody's credit upgrade reflects policy tailwinds and surging clean energy demand.
• Nuclear Power: A Long-Term Investment Despite Short-Term Uranium Hiccups
• While uranium prices have dipped in the first half of 2024 (down 5.7%), the future for nuclear energy remains bright. This is especially true for diversified ETFs like NUKZ, which invest beyond just uranium miners.

Here's why nuclear power is a compelling long-term investment:

• Energy Security: Nuclear plants provide a reliable and consistent electricity source, unlike some weather-dependent renewables. This stability is vital for a nation's energy independence and economic well-being.
• Clean Energy: Nuclear power generation boasts very low greenhouse gas emissions during operation, making it a clean alternative to fossil fuels.
• Global Interest: There's a surge in international interest in nuclear power, with multiple countries forging agreements to significantly expand nuclear energy production.
• Technological Advancements: New nuclear technologies, like small modular reactors (SMRs), are on the horizon. These advancements promise improved safety, affordability, and potentially wider adoption of nuclear energy in the future.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.