The Top Performing Canadian ETFs Of The Last 5 Years
Reviewing the top-performing Canadian ETFs over the past five years offers insights into trends that could shape their future performance.
The adage ‘life is understood backward, but lived forward’ connotes the idea that understanding the past is valuable, as those learnings can be insightful guides in one’s future actions. In recollecting over the past five years, COVID-19 and inflation naturally come to mind as the leading themes that influenced the macroeconomic landscape. However, with the impact of those themes now dissipating (i.e., inflation is going down, the beginning of a low-interest rate environment) or being no longer influential (i.e., COVID-19 is no longer prevalent), new themes are shaping the global landscape.
This article will focus on some of the top-performing Canadian ETFs over the past five years (as of September 2024) and the market developments that could influence their performance going forward. As a qualifier, solutions that utilized leverage or an inverse strategy were not included.
Top Performing ETFs Over The Past 5 Years
Global X Uranium ETF (Ticker: HURA)
HURA’s 5-year return as of September 2024 was 32.94%. The ETF is a pure-play solution focused on uranium mining, exploration for uranium, and technologies related to the uranium industry. Up to 25% of the portfolio provides direct exposure to the price of uranium.
The need for cleaner and non-intermittent energy sources has brought nuclear power back into the forefront as a viable energy source, particularly given the increasing energy demands of artificial intelligence development. As mentioned in a recent article, Microsoft Inc. has brokered a deal with Constellation Energy Corp., the biggest US operator of reactors, to reopen the Three Mile Island nuclear plant in Pennsylvania. Constellation Energy Corp. will invest $1.6 billion to revive the plant, and Microsoft has agreed to purchase the energy generated from the plant for two decades exclusively. This is an example of the growing demand for nuclear power – and, by extension – uranium in the future.
It should be noted that the fund’s year-to-date performance has been less than ideal; as such, the common investment adage ‘past performance is not indicative of future results’ should be taken into consideration.
Global X Big Data & Hardware Index ETF (Ticker: HBGD/HBGD.U)
HBGD and HBGD.U’s respective 5-year returns as of September 2024 were 30.81% and 30.28%. The ETF is a passively managed solution that tracks the Solactive Big Data and Hardware Index, a portfolio of global companies focusing directly on data development, storage, and management-related services and solutions as well as hardware and hardware-related services used in data-intensive applications such as blockchain.
The index takes a three-tier approach selecting one-third of its components from companies focusing on the development of blockchain technologies, one-third from the semiconductor industry which is at the heart of much of the hardware required for mining, and lastly third from industries that directly supply other relevant hardware (e.g., memory and storage producers) or provide services increasingly important to large-scale cryptocurrency mining on a commercial level (e.g., Data Center REITS).
Given the fund’s particular focus and the developments currently occurring in the technology industry, investors in this fund are poised to capitalize on the future developments occurring within the technology landscape. While the year-to-date performance (i.e., 2.19% and 4.13%, respectively) of the fund has been underwhelming, the 1-year performance of the fund has been strong (i.e., 49.16% and 48.52%, respectively).
Harvest Tech Achievers Growth & Income ETF (Tickers: HTA.U/HTA)
The USD currency version HTA (i.e., HTA.U) is among the best-performing ETFs over the past five years, returning 22.58% as of September 2024. Furthermore, the fund has attained industry recognition, being named the Refinitiv Lipper Fund Awards Canada 2023 Winner – Best Sector Equity Fund over 5 years.
As an actively managed fund, HTA.U holds equal weight to 20 of the largest capitalized technology-focused firms worldwide. Given the prominent role and returns of the technology sector over the past five years, the fund’s specific focus and concentrated nature have benefited investors. At present, the fund’s year-to-date and one-year performance has been 22.44% and 41.75%, respectively. Looking forward, the influence and essentialness of the technology sector will not diminish in any way; as such, this investment solution should continue to be an additive component within investor’s portfolio.
Takeaway
Given the dominance of tech firms over the past decade, it is not surprising that investment solutions that focus primarily on this sector would be among the best performers. As the macroeconomic landscape shifts to a lower interest rate environment, it is plausible the firm will grow stronger – with the costs of capital now being lower – allowing for innovation via increased research and development spending or consolidation to occur. As such, the leaders in this industry are poised to grow their market share. For investors, maintaining exposure to these firms would be beneficial going forward.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
