Which Hot Funds Have Staying Power?
A hot year is easy to find, but very few funds can sustain top-quartile performance over the long haul.
A three-year return of +292% is the kind of performance that gets noticed, but it raises a crucial question for your money. Is that run a flash in the pan, or a sign of something more durable? This analysis isolates the rare funds that landed in the top quartile of their peers for both the last year and the last three years, a test of persistence most funds fail.
Here Are The Persistent Few
Out of 131 US-focused equity funds, only 13 passed this demanding two-part test. The VanEck Semiconductor ETF (SMH) leads this pack, proving its recent strength is built on a longer-term foundation of high performance. The table below shows the top five qualifiers from this select group, ranked by their three-year return.
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| Ticker | Fund | AUM | 1Y Return | 3Y Return | Sharpe | Beta |
|---|---|---|---|---|---|---|
| SMH | VanEck Semiconductor ETF | $73.6B | +113% | +292% | 1.35 | 1.61 |
| SOXQ | Invesco PHLX Semiconductor ETF | $2.6B | +128% | +248% | 1.19 | 1.60 |
| SOXX | iShares Semiconductor ETF | $47.6B | +137% | +239% | 1.17 | 1.60 |
| SPMO | Invesco S&P 500 Momentum ETF | $22.0B | +38% | +184% | 1.56 | 1.00 |
| MTUM | iShares MSCI USA Momentum Factor ETF | $27.4B | +37% | +126% | 1.18 | 0.93 |
Of the 13 funds that qualify, the table shows the top five by 3-year return.
SMH Delivered Market-Beating Returns
The VanEck Semiconductor ETF (SMH) has generated a 3-year alpha of +11.1% per year against the S&P 500, meaning its returns have significantly outpaced the market even after accounting for its risk. That risk is notable; with a beta of 1.61, the fund swings much more sharply than the broader market. For holders, this has been a rewarding trade-off, turning higher volatility into higher return.
SOXQ Carries A Higher Price Tag
The Invesco PHLX Semiconductor ETF (SOXQ) also cleared the bar, but it presents a different picture on valuation. Its holdings trade at an aggregate 37.82 times earnings, a figure that is 27% above its own historical norm. This suggests you are paying a premium for its recent performance, a stark contrast to SMH, whose valuation sits 4% below its own historical average.
The Catch Before You Chase
Before chasing the returns of a fund like the Invesco PHLX Semiconductor ETF (SOXQ), note that its valuation is 27% above its own historical norm. That premium price for its underlying stocks is a key factor to weigh against its strong performance history. Considering a fund’s history before acting on a recent move is a useful discipline across any sector. The value of this analysis is not to find the next hot streak, but to add a layer of diligence. If you are tempted by any fund’s recent run, first check whether it also sits in the 3-year top quartile; if it only has the hot year, you are likely buying the streak, not the durable fund.
Want To Run A Different Screen?
This is one screen among many, tuned to a single question. If what you care about is a different angle – momentum in a sector, income without the decay, skill without the leverage – the same underlying data answers those too, and it can score any fund you already hold on the exact measures above.
Our ETF Valuation and Performance Scorecard puts every one of these measures – alpha, beta, Sharpe ratio, valuation versus its own history, cost, and concentration – side by side for every major US equity ETF. Run this exact check on any fund you own; it takes seconds, and the result is often not what the fund’s marketing suggests.
The Fund Diversifies. Does The Rest Of Your Wealth?
A fund like this spreads risk by design – which makes it easy to forget the single stock sitting outside it that has quietly grown into a large share of your net worth. That one position is the real exposure, and selling it to diversify hands a slice of the gains to the IRS. There is a way to cap its downside and unwind it tax-efficiently.