Best ETFs for January 2025

ETFs can help investors diversify their portfolio through a single investment product

Exchange-traded funds (ETFs) offer a way for investors to diversify their portfolios across different asset classes through a single investment product that can be bought and sold on an exchange like a stock. Top ETFs typically have a large asset base and lower operating costs. Investors can also use ETFs to mitigate investment risks and gauge the performance of an index, sector, or industry to make more informed investment decisions.

Key Takeaways

• Leading ETFs offer investors an opportunity to broadly diversify their holdings through a single investment with a low expense ratio and/or higher returns compared to competitors.
• We screened for the equity, bond, fixed income, commodities, and currency ETFs providing the highest one-month total returns for November 2024.
• These funds include ARKW, ICVT, CRDT, UNG, UUP

Below, we outline the top equity, bond, fixed income, commodities, and currency ETFs that generated the highest returns over the last month. We have excluded leveraged and inverse ETFs, as well as funds with less than $50 million in assets under management (AUM).

All data are current as of Dec. 19, 2024.

Equity ETF with the best 1-month Return: ARK Next Generation Internet ETF (ARKW)

• One-month performance: 18.7%      
• Expense Ratio: 0.82%
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 247,932
• AUM: $1.97 billion
• Inception Date: Sept. 30, 2014
• Issuer: ARK Investment Management LP

ARKW is an actively managed fund that seeks long-term capital growth by investing primarily in companies poised to benefit from advancements in internet-based products and services. This includes sectors such as cloud computing, ecommerce, big data, artificial intelligence, mobile technology, social platforms, and financial technology. As of Dec. 19, the fund’s top holding is Tesla, Inc. (TSLA), comprising 12% of the portfolio.

Bond ETF with the Best 1-Month Return: iShares Convertible Bond ETF (ICVT)

• One-month performance: 3%      
• Expense Ratio: 0.20%
• Annual Dividend Yield: 2.27%
• 30-Day Average Daily Volume: 268,214
• Assets Under Management (AUM): $2.66 billion
• Inception Date: June 2, 2015
• Issuer: BlackRock, Inc

The iShares Convertible Bond ETF aims to follow the performance of U.S. dollar-denominated convertible securities, mainly cash-pay bonds over $250 million in issue size. It offers growth potential similar to stocks while managing downside risk like traditional bonds, providing some protection in rising rate environments and potential diversification benefits due to low correlation with other bonds. As of Dec. 18, 2024, its biggest holding was in serial bitcoin accumulator Microstrategy, Inc. (MSTR)—worth 4.68% of the total portfolio.

Fixed Income ETF with the Best 1-Month Return: Simplify Opportunistic Income ETF (CRDT)

• One-month performance: 1.42%      
• Expense Ratio: 1.48%
• Annual Dividend Yield: 7.37%
• 30-Day Average Daily Volume: 4,923
• AUM: $76.7 million
• Inception Date: June 26, 2023
• Issuer: Simplify

CRDT is an actively managed fund designed to provide current income with long-term capital appreciation as a secondary goal. It employs a flexible credit strategy focused on high-yield, investment-grade, and distressed debt, using a multi-step investment process that integrates macroeconomic, quantitative, and fundamental research.

Commodities ETF with the best 1-Month Return: United States Natural Gas Fund LP (UNG)

• One-month performance: 16.2%
•  Expense Ratio: 1.06%
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 8,908,637
• AUM: $776.6 million
• Inception Date: April 18, 2007
• Issuer: Marygold

The United States Natural Gas Fund is an ETF designed to closely track the daily price movements of natural gas using its Benchmark Futures Contract, primarily the near-month natural gas futures trading on the NYMEX. UNG had a strong one-month performance, as natural gas prices have rallied under a colder-than-anticipated forecast.

Currency ETF with the Best 1-Month Return: Invesco DB US Dollar Index Bullish Fund (UUP)

• One-month performance: 2.13% 
• Expense Ratio: 0.77% 
• Annual Dividend Yield: 5.77%
• 30-Day Average Daily Volume: 852,895 
• AUM: $415.4 million 
• Inception Date: Feb. 20, 2007
• Issuer: Invesco

UUP offers investors a cost-effective way to track the U.S. dollar’s value against six major
currencies (euro, yen, pound, Canadian dollar, krona, and franc) through long U.S. Dollar Index futures contracts. UUP has mirrored the U.S. dollar’s gains as the incoming Trump administration’s policies have pushed bond yield higher on expectations of higher growth, along with higher inflation.

How We Chose the Best ETFs

We selected the best ETFs across five areas of focus (equities, bonds, fixed-income, commodities, and currencies) utilizing a screener by VettaFi. In each case, we sorted ETFs according to the specified category and ranked them by highest one-month returns. We then filtered out any ETFs employing a leveraged or inverse strategy, as well as any with under $50 million in AUM. Finally, for currencies ETFs, we excluded any funds focused on cryptocurrencies from our screen.

How to Invest in ETFs

Investors can buy and sell shares of ETFs in the same way they make traditional stock trades. Most brokerages provide access to a broad spectrum of ETFs. To begin, create and fund a brokerage account, then determine which ETFs you may be interested in purchasing. Follow the steps to initiate a buy through your particular brokerage. In most cases, it’s as easy as that.

The Bottom Line

Exchange-traded funds offer investors access to an entire professionally managed portfolio of holdings with a single transaction. Their ability to diversify and simplify a retail investor’s investing process is widely regarded. One metric that investors often look to is trailing one-month performance.

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As of the date this article was written, the author does not own any of the above ETFs.