investing

Kiplinger ETF 20: Our Strategic Funds Shine

These funds focus on specific sectors, or they mirror custom indexes designed to beat pockets of the market.

Lately, stock and bond markets have moved up, down, and up and down again—sometimes in the same week. Given the roller-coaster ride, we decided to check in with the Kiplinger ETF 20, our favorite exchange-traded funds, to find out how they fared over the past 12 months.

In general, large-company U.S. stock funds held up best, small-company funds brought up the rear, and foreign-stock ETFs were in the middle. Because many of our ETFs track traditional indexes, they typically perform in line with their benchmark. IShares Core S&P 500 (symbol, IVV), for instance, managed to gain 1.1% over the past year, matching the return of Standard & Poor’s 500-stock index, despite its 0.04% expense ratio.

Some of the Kip ETF 20’s strategic stock funds shined. These focus on specific sectors, or they mirror custom indexes designed to beat pockets of the market. Ark Innovation (ARKK), for example, is an actively managed fund focused on fast-growing tech firms. Thanks to holdings such as Tesla, up 178% over the past year, Ark beat the S&P 500 with an 11.5% gain over the past 12 months. Our best-performing stock ETF, Invesco S&P 500 Equal Weight Health Care (RYH), posted a 16.3% gain. Health care stocks were the market’s best performers over the past year, followed by information technology.

Among the more-surprising results was the performance of Invesco S&P SmallCap Low Volatility (XSLV). The fund’s return matched that of its benchmark, the S&P SmallCap 600 Low Volatility index. But the ride hasn’t been smooth relative to small-company stocks in general. Bargain-priced shares, which this bogey emphasizes, have had a rougher go of it than their growth-stock counterparts. Still, over long hauls, this ETF beats the broad small-company stock index, the S&P SmallCap 600, with better annualized returns and less volatility.

The Kip ETF 20 has two foreign-stock ETFs. WisdomTree Global ex-US Quality Dividend Growth (DNL) held steady over the past year, with a 0.9% gain, by homing in on growing, high-quality firms that pay dividends. The ETF beat the MSCI EAFE index by 14.4 percentage points. A more traditional index ETF, Vanguard Total International Stock (VXUS), lost 14.3%, held back by emerging-markets stocks, which make up 23% of the fund’s assets.

Bonds cratered in early March. Over eight trading days, the Bloomberg Barclays U.S. Aggregate Bond index plunged 5.7%. The pain was brief; by mid April, the index had regained much of its loss. Two of the Kip 20’s bond ETFs, Pimco Active Bond (LDUR) and SPDR DoubleLine Total Return Tactical (TOTL), are actively managed and aim to beat the Agg index, but they fell short—despite significant holdings in Treasuries.

The recent downturn has been the first big test for many of our Kip 20 ETFs. So far, we’re happy with our lineup.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022

Recommended

8 Facts You Need to Know About Stock Market Corrections
Markets

8 Facts You Need to Know About Stock Market Corrections

Scary as they are, drawdowns are a normal part of the investing process. Having a financial plan in place and sticking to it is every investor's best …
January 23, 2022
9 Great Growth ETFs for 2022 and Beyond
ETFs

9 Great Growth ETFs for 2022 and Beyond

These growth ETFs offer exposure to higher-risk, higher-reward stocks while lessening the risk of a single stock torpedoing your returns.
January 18, 2022
Is the Stock Market Closed on MLK Day?
Markets

Is the Stock Market Closed on MLK Day?

Both the stock markets and bond markets will have Monday off as the nation honors civil rights leader Martin Luther King Jr.
January 15, 2022
Stock Market Holidays in 2022
Markets

Stock Market Holidays in 2022

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2022.
January 14, 2022