Here Are the 3 Best ETFs to Buy in 2018

Trade war anxieties, rising interest rates, and overvaluation fears have driven the CBOE Market Volatility Index (VIX) up nearly 100% in the last four months. With many investors looking for a smart way to protect their investments, we're bringing you three best ETFs to buy in 2018.

You see, one of the easiest ways to protect your investments is to diversify your portfolio by owning a wide range of stocks. Exchange-traded funds (ETFs) are an easy way to own a diverse range of stocks and insulate your wealth from market volatility.

ETF

Our three best ETFs to buy come from the technology sector. While the tech sector hasn't been immune from volatility, it's still producing some of the market's best returns.

Covering everything from cloud computing to cybersecurity, these are industries that are not only set for huge growth in the near future, but likely to serve as a welcome shelter against increasingly market volatility.

With market volatility on the rise, here are three of our best ETFs to buy in 2018....

Best ETFs to Buy in 2018, No. 3: First Trust Cloud Computing

The First Trust Cloud Computing ETF (Nasdaq: SKYY) is among the best ETFs to take advantage of the cloud computing revolution.

Today, most companies, consumers, and governments use the cloud in some form, whether to store information, process data, or as a source for software services.

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This ETF includes 30 stocks that are instrumental in cloud computing services. One is Microsoft Corp. (Nasdaq: MSFT), whose Azure service is the second most used cloud platform in the world, and another is the world leader, Amazon.com Inc. (Nasdaq: AMZN).  IBM Corp. (NYSE: IBM), whose supercomputer-driven artificial intelligence platform is now being used in industries from healthcare to education, is also included.

Alphabet Inc. (Nasdaq: GOOGL), Apple Inc. (Nasdaq: AAPL), and Netflix Inc. (Nasdaq: NFLX) all make an appearance as well.

Over the past three years, this ETF has gained approximately 67.73%, which is more than double the S&P 500's performance over the same period. During this last correction period, SKYY beat out the S&P 500 by 2.44%.

However, our second-best ETF has performed even better...

Best ETFs to Buy in 2018, No. 2: ETFMG Prime Cyber Security

The ETFMG Prime Cyber Security ETF (NYSE: HACK) is the first fund of its kind that is completely focused on cybersecurity.

Cybercrime has soared in recent years, creating a $230 billion cybersecurity industry. Cybersecurity Ventures reports that industry spending could be as high as $1 trillion by 2021.

Instead of just choosing one cybersecurity company as an investment, this fund gives you the benefit of investing in a basket of 47 cybersecurity firms. Every company included is involved in developing the software, hardware, and consulting services necessary to effectively combat cybercrime.

The ETF also includes companies that provide cybersecurity services for defense and aerospace, application software, and IT services, including Symantec Corp. (Nasdaq: SYMC) and Cisco Systems Inc. (Nasdaq: CSCO).

Since this time in 2016, HACK is up 50.44%, nearly doubling what the S&P 500 has produced. And during the latest correction, it outperformed the market by 3.41%.

Our top pick is a defense ETF that has outperformed both of our other favorite ETFs. In just the last two years, it's gained 60%.

Here it is...

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Best ETFs to Buy in 2018, No. 1: PowerShares Aerospace & Defense

The PowerShares Aerospace & Defense ETF (NYSE: PPA) is one of the best ETFs to buy in 2018.

This ETF's top 10 holdings are some of the defense sector's largest companies and have generated phenomenal returns regardless of market conditions.

Raytheon Co. (NYSE: RTN) is one of the world's top defense contractors that provides must-have systems for advanced radar, electronic warfare, military training, and laser rangefinders. The company also has billions in defense contracts with some of the world's largest military powers. Northrup Grumman Corp. (NYSE: NOC) is another defense giant that delivers products ranging from missile defense to advanced sensors to cybersecurity systems.

Some of the frontline small-cap defense stocks in this fund include AeroVironment Inc. (Nasdaq: AVAV), which is a leading provider of drone technology, supplying the Pentagon with robotic systems that are employed to gather intelligence on the battlefield. Another is FLIR Systems Inc. (Nasdaq: FLIR), a world leader in the design and manufacture of thermal imaging systems for commercial applications.

PPA gained over 60.76% in the last two years - that tops the S&P 500 by 30.98%. And this fund's performance during the recent correction was 3.18% better than that of the S&P 500.

And the sector is primed to continue growing. The recent omnibus spending bill that passed Congress earlier this year added another $700 billion to the Pentagon's budget, which is excellent news for investors of defense stocks.

Taken together, these three ETF's will help you insulate your investments from volatility by providing portfolio diversity. However, if you're looking for an even stronger returns, you need to check this out...

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