5 Top-Ranked ETFs That Beat the Market in March (2024)

Market participants have reasons to cheer market movement in March as the major stock market indices are ending the month in green. The Dow Jones Industrial Average is up 4% in the month. The other two broad market indices, the S&P 500 and the Nasdaq Composite, have also gained around 5% in March.

The upside has been witnessed despite several factors adding volatility to the investment environment. The ongoing Russia-Ukraine crisis, the high inflation levels, super-hawkish Fed and resurging COVID-19 cases in China causing the country to take strict actions are some developments that kept investors on edge in March.

The Fed’s aggressive stance has been going down well with the market participants for some time as they believe it will assist in controlling the hot inflation levels over the longer term. Investors also believe that the strong U.S. economic fundamentals might have supported Fed’s decision.

Against this backdrop, let’s take a sneak peak at some top-ranked ETFs that could beat the Wall Street run in the volatile March:

Vanguard Energy ETF VDE — up 11.6% in the past month

Investors have been closely tracking the energy sector for a while,which issteadily showing strength as global demand and economic growth levels are on the path of recovery from the pandemic-led slump. The energy sector is attracting investor attention to the latest oil price rally. Oil prices have been rising since the beginning of 2022. The upsurge in crude oil prices is triggered by factors like easing Omicron-variant concerns, supply shortages and geopolitical tensions. Oil prices have been strongly rallying amid the Russia-Ukraine geopolitical crisis.

The fund seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. With AUM of $8.34 billion, the fund charges 10 basis points (bps) in fees (read: 5 ETF Areas Shining Bright as US Economy Looks Strong).

First Trust Materials AlphaDEX Fund FXZ — up 10.9%

The materials space has remained strong as improving labor market conditions, growing consumer spending, accelerated coronavirus vaccine rollout and the passage of the much-awaited $1.2-trillion infrastructure bill are pointing toward a faster-recovering economy.

The coronavirus vaccine rollout is gradually controlling the spread of the outbreak across the globe. The optimism surrounding the gradual reopening of global economies and increasing demand is painting a rosy picture for cyclical sectors. The progress in coronavirus vaccine rollout presents a strong case, favoring a rapid return to normalcy and economic recovery.

The First Trust Materials AlphaDEX Fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant Materials Index. With AUM of $1.74 billion, the fund charges 64 bps in fees.

First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN — up 9.1%

The Russia-Ukraine war saga continues to see new twists and turns. The war has been inducing a spike in oil, gasoline and natural gas prices so far. Thus, the current situation intensifies the focus on solar and clean energy spaces. Furthermore, favorable government policies, impressive renewable investments, falling overall cost of generating renewable electricity and the growing adoption of electric vehicles (EV) might keep supporting the momentum in the space in 2022.

Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been bumping up demand for renewable energy.

The First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an equity index called the NASDAQ Clean Edge Green Energy Index. With AUM of $2.38 billion, the fund charges 60 bps in fees (read: Alternative Energy ETFs Shine as Oil Prices Rally Amid War).

The Health Care Select Sector SPDR Fund XLV — 6.8%

The healthcare sector is a good defensive investment option as several investors believe consumers will have to purchase healthcare products even during tough and uncertain times. Currently, the Russia-Ukraine war crisis and the Fed’s hawkish stance on rate hikes have caused a lot of uncertainty in the markets. Undoubtedly, the pandemic also triggered a race to introduce vaccines, tests and treatment options, opening up investment opportunities in the healthcare sector.

The Health Care Select Sector SPDR Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Health Care Select Sector Index. It has AUM of $37.48 billion and charges 0.10% in fees (read: China's COVID-19 Lockdown Brings Back Focus on Healthcare ETFs).

iShares MSCI USA Min Vol Factor ETF USMV — 6.4%

The demand for low-volatility products remained at a high in March as there was too much uncertainty clouding the investment world. Investors resorted to these seemingly-safe products as they usually do not surge in bull market conditions but offer more protection than the unpredictable ones. These funds are less cyclical, providing more stable cash flow than the overall market.

The iShares MSCI USA Min Vol Factor ETF seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market. With AUM of $28.29 billion, the fund charges 15 bps in fees (read: Filling ETFs in March Madness "Sweet 16" Brackets).