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Cryptocurrency exchange-traded funds covered the year's best performers.

At the start of 2023, $S&P 500(.SPX)$ was down nearly 20% from its highs, while $NASDAQ 100(NDX)$ was at a bear market low, which was down about 35% from its peak. Growth stocks fell out of favor while value stocks were favored.  

However, tech and growth stocks began to outperform again in the first half of 2023, driving the whole market higher. The $Invesco QQQ Trust(QQQ)$ was up nearly 39% in the first half of 2023, while $SPDR S&P 500 ETF Trust(SPY)$ was up nearly 17%. 

The worst-hit sectors in the market led the uptrend of the price in the first half of the year, as investors became more bullish on tech stocks, fueled by the artificial intelligence boom.

Cryptocurrency ETFs Dominated the Stock Market 

Crypto ETFs benefited more from the return to growth stocks in 2023. 17 of the year's 20 best-performing ETFs (excluding leveraged and inverse funds) were tied to the cryptocurrency sector.  

These included the $Valkyrie Bitcoin Miners ETF(WGMI)$ , $ProShares Bitcoin Strategy ETF(BITO)$ , and $Bitwise Crypto Innovators ETF(BITQ)$ , all of which rose 80% or more.    

With more than 65% declination in 2022, the funds were only back to the levels they were trading at around August of last year even after their impressive gains in the first quarter. 

Despite the regulatory crackdown on the crypto industry by the SEC and CFTC, the funds have seen returns that should not be underestimated.

FANGs made a comeback  

While crypto ETFs dominated the list of top performers in the first quarter, a number of other ETFs managed to make it into the top 20, including  $MicroSectors FANG+ Index ETN(FNGS)$ and $YIELDMAX TSLA OPTION INCOME STRATEGY ETF(TSLY)$ .

Large-cap tech stocks have made a comeback this year, boosting returns for FNGS, which has large positions in companies like $NVIDIA Corp(NVDA)$ , Nifty, $Advanced Micro Devices(AMD)$ , $Tesla Motors(TSLA)$  and $Microsoft(MSFT)$

Meanwhile, TSLY has capitalized on the huge volatility in Tesla stock by selling covered calls on Tesla. The fund was up more than 61% year-to-date.  

In addition to the top 20 ETFs we've highlighted in the table at the bottom of this article, other winners this year include the $THE MEET KEVIN PRICING POWER ETF(PP)$ , up 53%; $ARK Next Generation Internet ETF(ARKW)$ , up 52%; $Global X MSCI Nigeria ETF(NGE)$ , up 50%; $VanEck Vectors Semiconductor ETF(SMH)$ , up 50%.

For a complete list of this year's 25 best-performing ETFs, please see the table below:

Top Performing ETFs of the Year (excluding leveraged/inverse)

Source: ETF.com

The worst-performing ETF

The top-performing ETFs have delivered big gains for investors this year. However, not all of them have performed well this year. Up to the end of June, about 14% of U.S.-listed ETFs were down year over year. 

The 20 worst-performing ETFs (excluding leveraged/inverse funds) had suffered great losses, ranging from 26% to 67%. 

As growth stocks return to favor in 2023, investors lost their enthusiasm for value stocks.

The best example is the energy sector, where $Energy Select Sector SPDR Fund(XLE)$ was down 5.4%. Energy was the best-performing sector in the stock market last year, with XLE up 69.3%.  

Financials was another sector that underperform in 2023, because of the banking crisis that erupted after the Silicon Valley bank collapsed in March.  

The $SPDR S&P Regional Banking ETF(KRE)$ was down 29.3% this year, being the 15th worst performing ETF this year.  

The worst performer was the $Noble Absolute Return ETF(NOPE)$ . The hedge funds in this ETF made some improper bets on Tesla, gold and bitcoin at the end of last year, leading to the lose as much as 67% in the first half of 2023.  

Meanwhile, $United States Natural Gas Fund LP(UNG)$ fell nearly 50% in the first half of the year as natural gas prices plummeted with a warm winter and increased fuel production.  

Marijuana ETFs have also underperformed so far in 2023, with funds such as $Global X Cannabis ETF(POTX)$ and $Innovation Shares Cannabis ETF(THCX)$ posting losses of around 30% to 40%.

Finally, funds tied to the Cboe Volatility Index have also been among the worst performers this year, due to the VIX falling to its lowest level since early 2020. The index's latest value was 14.5, compared with a five-year average of 21.5.

For a complete list of the 25 worst-performing ETFs this year, please see the table below: 

Source：ETF.com

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