Building a strong investment portfolio requires a careful selection of sectors that have the potential for significant growth. While picking individual stocks within these sectors can be challenging, speciality ETFs or sector ETFs offer a convenient option for investors.
In this article, we will explore some of the best-performing sector ETFs across various industries, including AI, healthcare, real estate, information technology, financials, and energy. These ETFs provide diversification and the potential for attractive returns.
Let’s dive into the details!
1. AI Sector: Global X Artificial Intelligence and Technology ETF (AIQ)
The AI sector is gaining immense popularity, driven by advancements in technology. The Global X Artificial Intelligence and Technology ETF (AIQ) is an excellent choice for investors seeking exposure to this sector. AIQ tracks the Indxx Artificial Intelligence and Big Data Index, with top holdings including tech giants like Meta, Nvidia, Tesla, Microsoft, Alphabet, and Apple.
These companies are at the forefront of AI development and utilization in their products and services. AIQ offers a broad AI play with a current price of $23.56 and an impressive five-year appreciation rate of 11.5% per year.
While the expense ratio of 0.68% is higher than average, AIQ’s assets under management of $134 million and year-to-date performance of 17.16% make it an attractive choice.
2. AI Sector: Global X Robotics and Artificial Intelligence ETF (BOTZ)
Another compelling ETF within the AI sector is the Global X Robotics and Artificial Intelligence ETF (BOTZ). This ETF capitalizes on the growth potential of both AI and robotics.
The global robotics market is expected to nearly double to $91 billion by 2026, presenting significant investment opportunities. BOTZ tracks the Indxx Global Robotics and Artificial Intelligence Thematic Index and includes companies involved in industrial automation, healthcare robotics, and more.
With a current price of $25.11, BOTZ has demonstrated a solid five-year appreciation rate of approximately 9% per year. The expense ratio is 0.69%, and the assets under management stand at a substantial $1.7 billion. Year to date, BOTZ has performed exceptionally well, with a growth rate of 21.6%.
3. Healthcare Sector: Vanguard Health Care ETF (XLV)
The healthcare sector is known for its resilience, making it an essential component of any well-rounded portfolio. The Vanguard Health Care ETF (XLV) is a top-performing healthcare ETF with a market capitalization of over $41 billion.
XLV offers exposure to 60 leading US healthcare stocks, including UnitedHealth Group, Johnson & Johnson, and Merck & Co. With a current price of $135.05, XLV has maintained consistent growth, boasting a five-year appreciation rate of 11.6% per year and a ten-year rate of over 12.7% per year.
The expense ratio is a favourable 0.10%, making XLV an attractive option for investors seeking stability and consistent returns.
4. Real Estate Sector: Vanguard Real Estate ETF (VNQ) and Schwab US REIT ETF (SCH)
Real estate, often overlooked in traditional index funds, provides diversification and income potential. The Vanguard Real Estate ETF (VNQ) is a well-established fund with a market capitalization of $22.6 billion. VNQ offers exposure to a broad range of real estate investment trusts (REITs), providing investors with stability and growth potential. With a current
price of $100.32, VNQ has delivered solid returns, with a five-year appreciation rate of 7.8% per year and a ten-year rate of over 10% per year. The expense ratio is 0.12%, making it a cost-effective choice for investors.
Another notable option in the real estate sector is the Schwab US REIT ETF (SCH). SCH tracks the Dow Jones U.S. Select REIT Index and offers exposure to a diverse portfolio of real estate companies.
With a current price of $42.78, SCH has demonstrated strong performance, with a five-year appreciation rate of 6.9% per year. The expense ratio of 0.07% is significantly lower than the industry average, making SCH an attractive choice for cost-conscious investors.
5. Information Technology Sector: Technology Select Sector SPDR Fund (XLK)
The information technology (IT) sector has been a driving force behind the stock market’s growth in recent years. The Technology Select Sector SPDR Fund (XLK) is one of the most popular and well-established ETFs in this sector.
XLK seeks to track the performance of the Technology Select Sector Index, which includes companies such as Apple, Microsoft, and Visa. With a current price of $165.23, XLK has delivered impressive returns, with a five-year appreciation rate of 22.4% per year and a ten-year rate of over 21.5% per year. The expense ratio of 0.12% is competitive, considering the fund’s performance.
6. Financials Sector: Financial Select Sector SPDR Fund (XLF)
The financial sector plays a crucial role in the economy, and the Financial Select Sector SPDR Fund (XLF) provides exposure to this sector’s leading companies.
XLF aims to track the performance of the Financial Select Sector Index, which includes major banks, insurance companies, and diversified financial services firms.
With a current price of $38.14, XLF has shown consistent growth, with a five-year appreciation rate of 12.6% per year. The expense ratio is 0.12%, making it an affordable option for investors seeking exposure to the financial sector.
7. Energy Sector: Energy Select Sector SPDR Fund (XLE)
The energy sector has experienced volatility in recent years, but it remains an important part of the global economy. The Energy Select Sector SPDR Fund (XLE) offers investors exposure to the energy sector’s largest companies, including Exxon Mobil, Chevron, and ConocoPhillips.
With a current price of $54.83, XLE has demonstrated solid growth, with a five-year appreciation rate of 3.1% per year. The expense ratio of 0.12% is relatively low compared to other energy sector ETFs.
