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Here is a list of the top-10 equity ETFs with the largest percentage bounce back (as of April 21, 2009) from their low point of the past year.

To make the list, I first created the following filters:

  • Long-only equity ETFs and ETNs (bond, currency, commodity, asset allocation, and inverse ETFs are not compared)
  • Only ETFs and ETNs that have been trading for one year

I then determined the peak and trough of the past year. From there, I calculated the total percentage each ETF would need to gain in order to fully recover back to its one-year peak from its one-year low. I call this the Maximum DrawDown Recovery Factor (MDD-RF in the table below).

Next I calculated the percentage each fund has recaptured as compared to its overall recovery requirements. In other words, I wanted to know how much of a bounce it has actually had so far versus how much it needs for a total recovery. The table shows you the ten ETFs which have bounced the most from their low points.

You can interpret the results at least two different ways, depending on your point of view. Either 1) these are the ETFs likely to provide the leadership of the next bull market, or 2) they are the ETFs most overbought and vulnerable to a decline.

The table below was generated from the daily closing prices of the last twelve months, and has not been adjusted for dividends. The 22.6% bounce of the SPDR S&P 500 (SPY) is included for comparison. SPY has gained +25.8% from its low, which is 22.6% of the 110.0% gain needed for full recovery.

Rank Ticker Name MDD-RF % Bounce
1 PMR PowerShares Dynamic Retail 69.6% 68.8%
2 XRT SPDR S&P Retail 125.4% 55.6%
3 PXQ PowerShares Dynamic Networking 92.6% 44.9%
4 PSJ PowerShares Dynamic Software 72.3% 44.3%
5 RTH HOLDRS Retail 64.4% 44.2%
6 WMW Elements Morningstar Wide Moat Focus ETN 97.9% 43.8%
7 HHH HOLDRS Internet 152.3% 43.7%
8 GDX Market Vectors Gold Miners 210.6% 43.6%
9 FDN First Trust Dow Jones Internet 136.8% 43.4%
10 HAO Claymore/AlphaShares China Small Cap 161.9% 42.7%
SPY SPDR S&P 500 110.0% 22.6%

Last week I screened for ETFs with the largest surge in value traded. There are no overlaps between the two lists.

Disclosure: no positions

Source: Top Ten Equity ETFs with Biggest Bounce