The semiconductor sector has dominated this year’s ETF performance, with the VanEck Semiconductor ETF (SMH) up 40.4% year-to-date through Dec. 23, according to data from etf.com’s Markets Monitor tool.
Investors are betting big on artificial intelligence and advanced computing. Technology companies have poured billions of dollars into AI infrastructure development, and semiconductor stocks have outpaced the SPDR S&P 500 ETF Trust (SPY), which has gained 25.5% this year.
The Internet and Aviation sectors also outperformed, with the First Trust Dow Jones Internet Index Fund (FDN) up 32.5% and the U.S. Global Jets ETF ( JETS) rose 31.9%.
The strength of the semiconductor industry is attributed to increasing demand for chips used in AI applications, cloud computing, and long-term growth prospects. Government support through initiatives like the CHIPS Act has provided further tailwinds to the sector.
Software companies have shown resilience throughout the year, with the iShares Expanded Technology Software Sector ETF (IGV) up 26%.
The SPDR S&P Insurance ETF (KIE) returned 25.5% as rising interest rates boosted investment returns in the sector. Meanwhile, the SPDR S&P Regional Banking ETF (KRE) rose 17.3% as higher interest rates improved profitability.
Conversely, solar and clean energy ETFs struggled in 2024, with the Invesco Solar ETF (TAN) down more than 37% and the Invesco Wilder Hill Clean Energy ETF (PBW) down nearly 32%.
The traditional energy sector has also faced challenges, with the VanEck Oil Services ETF (OIH) down 16.4% as oil prices fell throughout the year and drilling demand declined.
The VanEck Agribusiness ETF (MOO) fell 15.5% due to commodity price fluctuations and weather-related issues, and the agriculture sector ETF also fell into negative territory.
The metals and mining sector, represented by the SPDR S&P Metals and Mining ETF (XME), fell 5.3%, and the biotech sector, tracked by the iShares Biotechnology ETF (IBB), fell 2.5%.
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