5 Best Performing Small-cap ETFs in 2023

Below we present the list of 5 Best Performing Small-cap ETFs in 2023. For our methodology and a more comprehensive list please see 10 Best Performing Small-cap ETFs in 2023.

5. Future Innovators ETF (BFTR)

Year-to-Date Returns: 17.2%

The Future Innovators ETF (BFTR) ranks fifth on our list of best performing small-cap ETFs, gaining over 17% this year. The BlackRock managed fund, which has a 0.80% expense ratio, seeks out innovative and disruptive small- and mid-cap companies that are expected to play vital roles in the economy of tomorrow. The fund manages $6.81 billion in assets which are spread across a concentrated portfolio of 63 holdings.

The fund’s top holding at 3.88% weighting is technology and weapons manufacturer Axon Enterprise, Inc. (NASDAQ:AXON). The company has received strong support for its new TASER 10 among law enforcement, as well as its Axon Body 4 body camera, which was released in June. The company has also been aggressively investing in AI as it fleshes out an ecosystem of cameras and sensors that collect customer data with the goal of providing insights that will lead to the creation of more advanced public safety tools.

Axon Enterprise, Inc. (NASDAQ:AXON) grew revenue by more than 30% for the sixth-straight quarter in Q2, with its cloud business growing sales by 62% year-over-year. The company is bullish on the long-term growth trajectory of its software business, which currently has low but growing adoption among customers.

The Conestoga Small Cap Strategy commented on Axon Enterprise, Inc. (NASDAQ:AXON)’s robust growth in its second quarter 2023 investor letter:

“Axon Enterprise, Inc. (NASDAQ:AXON)’s fundamentals remain robust but suffered from profit taking in the second quarter after strong performance from the stock over the last year. AXON is a public safety technology company and has been a portfolio leader in each of the three prior quarters. AXON’s fundamentals remain robust, with revenue growth of 34% in their most recently reported quarter. AXON is seeing robust growth internationally and in their Fleet product line, and the new Taser 10 is seeing the strongest initial demand in their history.”