Sumit’s Five (Unofficial) ETF Awards

In honor of the upcoming etf.com Awards, etf.com Senior Analyst Sumit Roy puts together five additional categories.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: Ron Day

The etf.com Awards are going to be bigger and better than ever this year. With 17 categories and dozens of ETFs in the running—from Best Thematic ETF of the Year to Best New Active ETF—the Awards cover a lot of ground.

But as comprehensive as the etf.com Awards are, it would be impossible to highlight every category of ETFs.

In this piece, I’ve come up with five additional awards categories and their winners. These categories are completely unofficial and all the winners were selected by a panel of one—me.  

So, without further ado, here they are…

Ultra Short-Term Bond ETF of the Year  

In a year in which short-term interest rates eclipsed 5% for the first time in 16 years and money market funds saw more than $1 trillion in inflows, it makes sense to put a spotlight on the closest thing to MMFs in the ETF world: ultra-short-term bond ETFs.

These funds might not be nearly as popular as their mutual fund counterparts, but assets in ultra-short-term bond ETFs are now over $100 billion and climbing fast.  

Perhaps no ETF encapsulates the torrid pace of growth in this segment that the iShares 0-3 Month Treasury Bond ETF (SGOV), the $19 billion ETF that tripled its assets under management with over $11 billion of inflows in 2023.

The fund has a competitive 0.13% expense ratio (0.07% net of waivers that extend through June) and managed to outperform the larger SPDR Bloomberg 1-3 Month T-Bill ET (BIL) by 20 basis points over the past year.

Therefore, SGOV is the unofficial winner of my Ultra-Short-Term Bond ETF of the Year Award.

Leveraged/Inverse ETF of the Year

Leveraged and inverse ETFs get a bad rap. Because of their volatility and propensity to decay over time, these funds are considered highly risky.

But for aggressive traders who are good at what they do, channeling the immense power of these products can be extremely lucrative.  

No exchange-traded fund illustrated that more than the GraniteShares 2x Long NVDA Daily ETF (NVDL). Launched at the tail end of 2022, NVDL came to market about five months after the first ever single stock ETFs debuted on U.S. markets.

But despite its later start, NVDL quickly became a powerhouse. The fund quintupled in price in 2023, while gathering over $220 million in AUM by the end of the year.  

Assets have ballooned another eightfold this year thanks to the relentless rally in shares of Nvidia, the chip giant at the center of the boom in artificial intelligence.  

Best New Leveraged/Inverse ETF of the Year

NVDL was last year’s leveraged ETF of the year, but it technically didn’t launch in 2023. One product that did launch in 2023 is the MAX S&P 500 4X Leveraged ETN (XXXX), an exchange-traded note that promises a rollercoaster ride for traders.

While not the first U.S.-listed ETP to offer 4x leverage (a suite of now-defunct currency funds launched in 2017 also gave investors quadruple exposure), as far as I’m aware, this is the first 4x product tied to the S&P 500 that actually made it onto the market (others have been proposed in the past).

Despite its flaws, that makes XXXX pretty unique.

You might think that since traders already have access to so many triple and double leveraged S&P 500 ETFs, they might not care for XXXX. But no, this product already has over $100 million in AUM after just four-and-a-half months.  

When it comes to leverage, traders just can’t get enough.  

Best New Covered Call ETF

2023 was the year of covered calls ETFs and no fund epitomized that better than the JPMorgan Equity Premium Income ETF (JEPI), which had a whopping $13 billion of inflows last year.  

But even though JEPI took off last year, it wasn’t new; it launched back in 2020.  

What it did do, however, is expose just how much demand there is for covered call ETF strategies. As other fund managers eyed JEPI’s enormous success, they launched a plethora of covered call ETFs in an attempt to take a slice of that demand for themselves.

There were so many covered call ETF launches in 2023 that it’s tough to pick just one. You had everything from covered call ETFs tied to broad indices to single stocks and everything in-between.  

Some of them were gimmicky, while some of them were legitimate.

I think the REX FANG & Innovation Equity Premium Income ETF (FEPI) has both elements. It’s a fund that writes calls on 15 large tech stocks, a group that’s performed phenomenally lately.  

Launched in Oct. 2023, FEPI picked up $23 million in AUM by the end of the year, but assets have since soared to $175 million.  

Best New Buffer ETF

Innovator pioneered an entirely new ETF category when it launched the first buffer ETFs in 2018. These funds, which give investors exposure to stock-market-like returns while limiting downside risk, gave investors access to sophisticated new strategies that were previous reserved for a select few.  

It took a while for investors to understand how these ETFs work, but once they did, assets under management in buffer ETFs took off. Today, there are dozens of buffer ETFs with tens of billions of dollars in AUM collectively.  

In 2023, Innovator took buffer ETFs a step further by launching the first fund with 100% downside protection, the Innovator Equity Defined Protection ETF (TJUL), which debuted in July 2023.

If the stock market went up, the ETF enabled investors to capture a gain of as much as 16.62% over two years (or around 15% after fees).  

But if the stock market went down, investors in the ETF wouldn’t lose any money (assuming they held it for the entire two-year holding period).  

It’s a strategy with risk-reward characteristics that are much like annuities offered by insurance companies, and one that’s completely new to the ETF space.

TJUL is easily the best new buffer ETF of 2023.  

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.