The S&P/TSX Composite Index is up 15.7 per cent so far this year, as of the close of trading on Monday. The S&P 500 is ahead 17.7 per cent year-to-date. That means if you invested in a plain vanilla TSX or S&P 500 index fund, you’ve done quite well so far in 2021.
The iShares Core S&P/TSX Capped Composite Index ETF (XIC-T) is up about 17 per cent year-to-date, including distributions. The iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP-T) is ahead by about the same amount. No one is likely to complain about that.
But there are some ETFs out there that have returned significantly higher gains than the TSX or the S&P 500 to date. They are sector funds so, by definition, higher risk. But if you want to roll the dice with some of your money, they are worth a look.
Here are three from the recommended list of my Internet Wealth Builder newsletter.
Blockchain Technologies Fund (HBLK-T)
This ETF from Harvest Portfolios invests in a cross section of large cap established companies and stand-alone blockchain companies. This means the portfolio is a mix of high-profile names like DocuSign Inc. and Square Inc. to more unfamiliar companies, such as Riot Blockchain Inc. and Coinbase Global Inc. About 23 per cent of the portfolio is large-cap stocks, the rest are what Harvest describes as “emerging,” which is why it is ranked as a high-risk fund.
The fund was first recommended in January, 2019, at $5.85. It currently trades at around $25.
The ETF was launched in January, 2018, and its track record so far has been impressive. As of June 30, its three-year average annual compound rate of return was 47.7 per cent. Year-to-date, it’s ahead almost 58 per cent. There have been no distributions, so this is purely a capital gains play.
HBLK has only $49.2-million in assets under management, which means not many people have discovered it yet. The management fee is 0.65 per cent.
Global X Lithium and Battery Technology ETF (LIT-A)
This ETF invests in the full lithium cycle, from mining and refining the metal, through battery production. It was first recommended in August, 2016, at US$24.56. It closed Monday at US$80.46.
Almost half the 38 companies in the fund are based in China and, unless you are a lithium junkie, you will probably have never heard of most of them. Top holdings include Albemarle Corp. (12.2 per cent), Ganfeng Lithium Co. (7.5 per cent) and Yunnan Energy New Material Co. Ltd. (6.8 per cent).
The only familiar name in the top 10 holdings is Samsung SDI Co. Ltd., at 3.8 per cent.
The fund was launched in 2010 but it has only been in recent years that it has really taken off. Over the past three years it has generated an average annual compound rate of return of 32.8 per cent. This year it’s poised to exceed that by a wide margin. It has posted a capital gain year-to-date exceeding US$18, plus investors received a small distribution of 3.6 US cents in June for a total return of around 30 per cent thus far in 2021.
Total assets under management are almost US$4.2-billion. The management expense ratio is high at 0.75 per cent.
CBRE Clarion Global Real Estate Income Fund (IGR-N).
Real estate funds were so badly battered in 2020 that it’s no surprise they have rebounded so strongly this year. As the name implies, this is an international real estate fund with about 63 per cent of its assets in the United States and the rest scattered in several countries, from Britain to Japan. In total, it has 84 holdings.
The ETF ended 2020 priced at US$6.88. It closed Monday at US$8.92, plus investors received seven monthly distributions of 5 US cents each for a total return year-to-date of 35 per cent.
The long-term track record is also impressive, with a five-year average annual compound rate of return of 10.1 per cent.
This ETF has about US$1.4-billion in assets. The management fee is high at 0.85 per cent.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
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