5 Best ETFs Of 2018

Even with the benefit of Wednesday's rally, the S&P 500 is still down about 8 percent this year. With just three trading days left in 2018, the S&P 500 will need a couple of sequels to Wednesday if the benchmark U.S. equity gauge is to close the year in the green.

Of course, equity market struggles are hampering a broad swath of the U.S. universe of exchange traded funds. As of Dec. 26, just 69 U.S.-listed ETFs sported year-to-date gains of at least 10 percent and a significant portion of that group are leveraged funds, which aren't designed to be buy-and-hold instruments.

Still, some traditional, pure beta ETFs are shining bright in 2018. Here are five of this year's best.

iShares U.S. Medical Devices ETF IHI

Year-To-Date Gain: 11.27 percent

The health care sector, the second-largest sector weight in the S&P 500, is clinging to its status as 2018's best-performing sector and the iShares U.S. Medical Devices ETF is one of the leading ETFs in this group. Following a Wednesday gain of more than 5 percent, IHI is up more than 11 percent year-to-date. IHI, which tracks the Dow Jones U.S. Select Medical Equipment Index, is the largest medical devices ETF.

IHI is led by Abbott Laboratories ABT and Medtronic Plc MDT and the fund is closing in on its fourth consecutive year of outperforming the S&P 500 Health Care Index.

Click here to read about the worst ETFs of the year.

Invesco Dynamic Software ETF PSJ

YTD Gain: 13.73 percent

As has been widely documented, technology stocks have been among the worst offenders during the recent market swoon. Fortunately for the Invesco Dynamic Software ETF, the fund built up impressive gains earlier this year and never turned negative on a year-to-date basis during the fourth-quarter broader market slide.

Wednesday's 5.72 percent gain on almost quadruple the average daily volume helped PSJ, at least for one day, inch out of a bear market, but the fund is still 19 percent below its 52-week high.

PSJ components are evaluated on price momentum, earnings momentum, quality, management action, and value, according to Invesco.

Aberdeen Standard Physical Palladium Shares ETF PALL

YTD Gain: 16.2 percent

Despite the dollar being strong this year, a scenario hampering scores of commodities ETFs, the Aberdeen Standard Physical Palladium Shares ETF recently surged to record highs. The metal's recent surge has its prices flirting with those of gold, which is noteworthy because palladium usually trades at steep discounts to bullion.

Palladium's 2018 rally is the quintessential bullish commodities story: supply is not keeping up with demand.

“Usage is increasing as governments, especially China’s, tighten regulations to crack down on pollution from vehicles, forcing carmakers to increase the amount of precious metal they use,” according to Bloomberg. “In Europe, consumers bought fewer diesel vehicles, which mostly use platinum, and instead chose gasoline-powered vehicles, which use palladium, following revelations that makers of diesel cars cheated on emissions tests.”

iShares MSCI Qatar ETF QAT

YTD Gain: 16.36 percent

In a year of struggles for emerging markets stocks and ETFs, the iShares MSCI Qatar ETF really stands out. The only ETF dedicated to stocks in Qatar is up more than 16 percent while the MSCI Emerging Markets Index is saddled with a year-to-date loss.

As a member of the Organization of Petroleum Exporting Countries, Qatar should be vulnerable to oil declines, but QAT is proving otherwise this year. Qatar is leaving OPEC next year to focus on natural gas production and exports.

United States Natural Gas Fund UNG

YTD Gain: 21.05 percent

Speaking of natural gas, the United States Natural Gas Fund is one of this year's best-performing non-leveraged ETFs, but most of those gains were accrued in November and a significant portion of those gains have been given back this month. Underscoring the volatile nature of trading natural gas, even with an ETF, UNG is up 21.05 percent this year but down more than 22 percent in December.