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The Five Best ETFs of 2017

Identifying the best ETFs of 2017 is a good predictor of what sectors have plenty of momentum heading into 2018. Here are five that stood out.

What is an ETF or Exchange Traded Fund?

Stacks of coins with the letters ETF isolated on white background

Photographer: Lim Yong Hian

There’s an exchange-traded fund (ETF) for just about everything these days—including bitcoin! Virtually every niche sector and currency is tracked by an ETF. So it can be difficult to identify the best ETFs for the upcoming year.

Instead, since we’re big believers in momentum and good-looking charts here at Cabot Wealth Network, I’ll give you the list of the five best ETFs of 2017 as a way of informing you which sectors could potentially produce some strong stocks in 2018. As a qualifier, I have not included any currency ETFs, including bitcoin. We almost never recommend them.

So, without further ado, here were the five best ETFs of 2017, measured by share price appreciation:


The Best ETFs of 2017

Best ETF of 2017 #1: iShares U.S. Home Construction ETF (ITB)

2017 Return: +59.1%

The U.S. housing market is cooking, and single-family homebuilding reached a decade high in 2017. That was great for construction stocks like D.R. Horton (DHI), PulteGroup (PHM) and Toll Brothers (TOL), which are three of this homebuilder-heavy ETF’s five largest holdings.

Best ETF of 2017 #2: Global X Robotics & Artificial Intelligence ETF (BOTZ)

2017 Return: +58%

I had never heard of this one, and it’s only been in existence since September 2016. But BOTZ is off to a great start, capitalizing on two new-age technology sectors that are just scratching the surface of their immense mainstream potential.

Best ETF of 2017 #3: Global X Social Media ETF (SOCL)

2017 Return: +52.4%

Social media stocks had a great year, highlighted by the turnaround in Twitter (TWTR) and the continued growth of Facebook (FB), both of which are SOCL holdings. On the downside, Snap, Inc. (SNAP) is the social media ETF’s fifth-largest holding at 5.4% of assets. But the disastrous Snapchat IPO has done little to weigh it down.

Best ETF of 2017: SPDR S&P Biotech ETF (XBI)

2017 Return: +43.4%

To explain why this biotech ETF had a good 2017, I’ll defer to something Tyler Laundon, our small-cap biotech stock expert, told me last month about the sector.

“I think (biotech stocks) are looking better and better,” Tyler said. “Acquisition activity (starting with Gilead Sciences (GILD), combined with a big correction, seems to have reset the clock, so to speak. And I think investor enthusiasm is coming back gradually.”

XBI had a great finishing kick, up 5.7% in the last month of the year. It counts Juno Therapeutics (JUNO), AbbVie (ABBV) and United Therapeutics (UTHR) among its top holdings.

Best ETF of 2017: First Trust Dow Jones Internet ETF (FDN)

2017 Return: +37.6%

This is more of a meat-and-potatoes fund. It includes only the heaviest of internet heavies: the FANGs (Facebook, (AMZN), Netflix (NFLX), Google (GOOG), PayPal (PYPL), Twitter and eBay (EBAY). All of them had a good year in 2017.

If you’re going to track one ETF in 2018, this is the one that’s probably most worthy of your attention. Those internet stocks that comprise the FDN are the stocks that drive the market these days. If the FDN starts to collapse, so might the market. While it will be difficult for the ETF to match its 2017 return, if it manages even half those gains in 2018, chances are it will be another solid year for the market.


Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week and Cabot Value Investor .