Top-Performing Non-Leveraged ETFs This Year

Key Points

• Three top-performing non-leveraged ETFs this year include CRPT, GBTC, and DEFI.
• Each of these funds is focused in some way on the cryptocurrency space.
• CRPT takes a broad view of the cryptocurrency industry, while GBTC and DEFI each target Bitcoin using different strategies.

In the world of exchange-traded funds (ETFs), the most outsized returns typically go to products employing leverage. However, while ETFs like the GraniteShares 2X Long NVDA Daily ETF NASDAQ: NVDL—a highly specialized vehicle aiming to provide two times the daily returns of NVIDIA Corp. NASDAQ: NVDA, the semiconductor giant and largest company in the world by market value—may appear to have made tremendous growth of nearly 600% this year, they in fact employ investment strategies that strongly disfavor long-term buy-and-hold approaches.

Many such leveraged funds are designed to be traded on a daily basis, making them most suitable for active investors with a high risk tolerance.

Looking to ETFs that do not use leverage, the total return figures this year drop significantly, though they still manage to outpace the growth of the S&P 500 far. Notably, many of the leading non-leveraged ETFs for 2024 have themes centering around Bitcoin and cryptocurrencies more broadly.

This list of winning funds for the year includes Grayscale Bitcoin Trust NYSEARCA: GBTC, Hashdex Bitcoin Futures ETF NYSEARCA: DEFI, and First Trust SkyBridge Crypto Industry and Digital Economy ETF NYSEARCA: CRPT, among several others.

Though these funds all focus on the same industry, and they each provide investors the peace of mind of accessing the volatile crypto space through an ETF, they offer different strategies and risk/reward profiles.

CRPT: Broad Access to the Crypto and Digital Finance Spaces

CRPT focuses on both the cryptocurrency industry as well as the wider digital economy, meaning that it holds shares of companies involved in cryptocurrency mining and technology, ETFs and similar products that target cryptocurrencies via spot price or futures methodologies, and a larger array of fintech firms. This strategy allows CRPT access to a more diverse pool of names than either of the other funds on this list.

As of mid-November 2024, this diversification is reflected in CRPT's top holdings, including shares of crypto exchange platform Coinbase Global Inc. NASDAQ: COIN, crypto miner Mara Holdings Inc. NASDAQ: MARA, and the iShares Bitcoin Trust ETF NASDAQ: IBIT, among others. CRPT's expense ratio of 0.85% is within the expected range for a fund of this kind, though with assets under management (AUM) of just $78 million and a 1-month average trading volume of under 64,000, liquidity may be an issue for investors. On the other hand, as the fund has returned more than 211% in the last year, many investors may be happy to hold CRPT for a long time.

GBTC: Strong Performance From First Spot Bitcoin Fund

The Grayscale Bitcoin Trust holds passive investments in Bitcoin. It was the first spot Bitcoin ETF available in the U.S. and remains one of the largest even as the field has grown more competitive. With nearly $17 billion in AUM and a 1-month average trading volume of just under 3.5 million shares, GBTC offers investors an attractive liquidity proposition. This is partially offset by the fund's high expense ratio of 1.5%, which is substantially above several alternative Bitcoin funds.

In the last year, GBTC has returned about 110%, even as the fund underwent a spinoff in July that created the new Grayscale Bitcoin Mini Trust NYSEARCA: BTC. This performance is shy of the gains to Bitcoin tokens, which are up almost 149% in the same period. However, investors in GBTC do not have to worry about storing, safeguarding, and transferring tokens or any of the other considerations particular to crypto investments.

DEFI: Hybrid Spot and Futures Strategy

DEFI uses an unusual approach that combines Bitcoin holdings with Bitcoin futures, cash and equivalents to attempt to replicate the price performance of the token itself. Given its focus on futures contracts, DEFI is structured as a commodity pool in order to combined investor assets.

DEFI has a lower expense ratio that GBTC, at 0.90%, though with only $11 million in AUM and very low trading volume, liquidity is a larger problem for this fund and may be enough to prompt investors to look elsewhere. Still, for those willing to take the chance, the fund has provided nearly 94% returns in the last year.

All three of the funds above have benefited from the rise in cryptocurrency prices throughout the last year. Much of this took place early in 2024, but crypto tokens have gotten a major boost in November following the U.S. presidential election. If this upward trend continues, these funds could continue to outperform into the new year.