The top-performing ETF in 2023 returned over 214%

The biggest theme of 2023 was AI, fuelling a surge in tech stocks from March onwards. The Magnificent Seven averaged a 111% return across the year and, in market capitalisation terms, represent nearly half of the NASDAQ 100 index and close to one-third of the S&P 500.

Unsurprisingly, those investors with exposure to these stocks or other relevant technology saw their investments boom.

However, investors in other niche themes across the market also saw returns in 2023. For instance, uranium has benefitted from supply challenges and increasing interest in its use as an energy resource. It was one of the best-performing commodities with spot prices up over 50% on the year.

Despite these boons for investors, the global economy faced an ongoing slowdown with many sectors struggling such as infrastructure and consumer discretionary companies.

The top-performing ETFs for 2023 offered returns upwards of 40% for the year, with the highest offering a cool 214.5%. It’s a case of caveat emptor though, noting that even with extraordinary performance, some of the top 10 failed to recoup losses since inception.

So, who were the top performers of 2023?

Livewire Markets pulled the data on a 1-year basis to find out the top-ranked funds and it's safe to say that growth-oriented themes topped the list this time around.

How Livewire compile these lists

Performance numbers were pulled from Morningstar.

The ETFs are all listed on Livewire’s Find Funds menu. Needless to say, this is not an exhaustive list of all ETFs listed on the ASX and CBOE.

The filters used were:

• In the “Fund type” box, select “ETFs”

• We then manually filtered results based on 1-year returns.

It’s worth noting that the results can change again based on 5-year returns and it’s worth looking at longer-term performance across cycles when researching funds or making investment decisions. Half of the top-performing ETFs have less than a three-year track record.

The 10 top-performing ETFs

Note: Fund performance is typically viewed over longer timeframes than one year (i.e. three-year and five-year rolling periods). Past performance is not a reliable indicator of future return. The tables above simply capture the best-performing global funds, in their respective categories, for the past 12 months. All data is supplied by Morningstar. If you would like to conduct your own research into top-performing funds, you can do so typing the stock codes into Market Index's search bar.

Major themes

2023 was a year for thematic ETFs.

Even six months ago, you would have found technology one of the dominant themes.

Broad-based index trackers still featured in the top performers for 2023 with a tech-slant. The NASDAQ 100 index in its various iterations was a third of the list, joined by sector and thematic plays. Joining the list for the first time (and the only non-tech-related play) were uranium ETFs – with a note that the two uranium ETFs were only listed in 2022.

Of the top 10 list, two ETFs also topped the charts on a five-year basis – the Betashares Nasdaq 100 ETF (ASX: NDQ) and the Betashares Geared US Equity Fund – Currency Hedged (Hedged Fund) (ASX: GGUS).

The 5 top-performing ETFs

1. Betashares Crypto Innovators ETF (ASX: CRYP)

CRYP aims to provide exposure to global companies at the forefront of the dynamic crypto economy. It invests in up to 50 crypto leaders, such as Coinbase (NASDAQ: COIN), Riot Blockchain (NASDAQ: RIOT) and Microstrategy (NASDAQ: MSTR).

The ETF does not invest in cryptocurrency directly but rather in corporate leaders such as exchanges and developers, the ETF benefitted from a rally of more than 150% in the Bitcoin/US Dollar cross-rate. There was increased confidence in cryptocurrencies as a result of increasing regulation and court cases against bad players like FTX.

Despite a stellar year, the ETF has not completely recovered losses since its inception. The year ahead for cryptocurrency will be interesting given catalysts like the multiple SEC submissions for spot-Bitcoin ETFs to the SEC from BlackRock, VanEck, Ark, and Franklin Templeton amongst others and an anticipated Bitcoin halving event.

CRYP 1-year performance. Source: Market Index, 10 January 2024

2. Global X ETFs Australia Ultra Long Nasdaq 100 Hedge Fund (ASX: LNAS)

2023 was a fantastic year to be positively geared to the NASDAQ 100, with the Magnificent Seven offering exceptional returns. The NASDAQ 100 had its best annual performance in more than two decades with a 12-month performance of 55.1%.

LNAS aims to offer investors positively geared exposure to the NASDAQ 100 Index primarily by using futures contracts. It is also currency hedged between the US and Australian Dollar.

LNAS 1 year performance. Source: Market Index, 10 January 2024

3. Global X ETFs Australia FANG+ ETF (ASX: FANG)

In a year where it was all about the Magnificent Seven, how unsurprising that an ETF dedicated to these should make the list.

FANG aims to provide exposure to companies at the leading edge of next-generation technology including household names and newcomers. While including all of the Magnificent Seven in its holdings, it also has some additions in the form of Snowflake (NASDAQ: SNOW), Netflix (NASDAQ: NFLX) and Broadcom (NASDAQ: AVGO).

FANG 1 year performance. Source: Market Index, 10 January 2024

4. Global X ETFs Australia Semiconductor ETF (ASX: SEMI)

SEMI seeks to offer exposure to companies that stand to potentially benefit from the broader adoption of tech-enabled devices that require semiconductors. This includes the development and manufacturing of semiconductors.

This thematic ETF is benefitting not only from the AI boom but also from the ongoing green transition and interest in electric vehicles which require semiconductors. Of course, it also includes the star of the Magnificent Seven in its top holdings – NVIDIA (NASDAQ: NVDA), swelling over 247% for the year.

SEMI 1 year performance. Source: Market Index, 10 January 2024

5. Betashares Global Uranium ETF (ASX: URNM)

URNM aims to provide exposure to a portfolio of leading companies in the global uranium industry, with companies like Paladin Energy (ASX: PDN) and Uranium Energy Corp (NYSE: UEC) in the mix.

Uranium was a commodities winner in 2023 off the back of global supply disruption and renewed interest in nuclear power. Prices were up 50% on the year with the performance of this ETF accordingly up.

URNM 1 year performance. Source: Market Index, 10 January 2024