Investors know—or should know by now—that past performance is no guarantee of future results. But right or wrong, many investors still look in the rearview mirror when evaluating securities. On the one hand, it’s kind of fun to look back to see what has or hasn’t worked. On the other hand, it can provide clues about macro trends that aren’t going away anytime soon.
That appears to be the case with the five exchange-traded funds below that have generated the highest total share price returns during the past five years, according to XTF.com. This list excludes leveraged funds that employ derivatives and debt in an attempt to boost returns that are twice or thrice that of an underlying index.
Invesco Dynamic Software ETF (PSJ):
168.4% 5-year return
21.8% annualized return
$551.4 million AUM
0.63% expense ratio
PSJ is based on the Dynamic Software Intellidex Index comprised of 30 U.S. software companies across a range of target markets.
The index methodology takes a multi-factor approach that uses various criteria to evaluate potential holdings including price momentum, earnings momentum, quality, management action and value.
PSJ is a multi-capitalization, growth-oriented fund dominated by large-cap growth (35.6% of the index weighting), mid-cap growth (30.8%) and small-cap growth (17.8%). Its top holdings are Synopsis Inc., Intuit Inc., Atlassian Corp. PLC, Microsoft Corp., Veeva Systems Inc. and Cadence Design Systems Inc. Their respective weightings range from 5.53% to 5% of the index.
iShares Expanded Tech-Software Sector ETF (IGV):
148.7% 5-year return
19.9% annualized return
$2.7 billion AUM
0.46% expense ratio
IGV invests in companies in the software, interactive home entertainment, and interactive media and services industries. Its underlying S&P North American Expanded Technology Software Index denotes a broader mix of companies across the continent, but in reality the U.S. makes up 98% of the index.
Software and programming is this fund’s largest industry weighting at 87%, and interactive media comprises just 9%. As such, big tech dominates this market-cap weighted fund with Salesforce.com.Inc., Adobe Inc., Microsoft, Oracle Corp. and Intuit making up more than 42% of the fund’s overall weighting. All told, IGV invests in 93 securities. Within the top 10 holdings, the home entertainment space is represented by video game makers Activision Blizzard Inc. and Electronic Arts Inc.
Invesco Dynamic Semiconductors ETF (PSI)
144.8% 5-year return
19.6% annualized return
$171.9 million AUM
0.61% expense ratio
As with Invesco's PSJ software-focused fund at the top of this list, PSI is based on a dynamic, multi-factor index that looks at price momentum, earnings momentum, quality, management action and value as criteria for index inclusion. In this case, the index comprises 30 semiconductor companies including chip makers and manufacturers of semiconductor equipment.
Its top holdings are Micron Technology Inc., Texas Instruments Inc., Applied Materials Inc., Qualcomm Inc. and NXP Semiconductors NV.