The unfriendly economic landscape from 2011 has been gradually evolving into a much more optimistic environment in the new year as confidence has improved across the board. Better-than-expected corporate earnings, manufacturing output, housing sales, and encouraging employment reports have all paved the way higher for stocks as investors are rejoicing over clear cut signs of economic recovery on the home front. Sentiment overseas has also improved considerably as European lawmakers continue to take measures that ensure stability in the currency bloc going forward. Although the bulls haven’t quite staged a stampede on Wall Street just yet, 2012 is off to a hot start and several ETFs have posted stellar returns in the first month of trading alone [see 100 Highest YTD ETF Returns].
Below we highlight ten of the best performing products year-to-date, highlighting some obvious winners as well as covering several funds flying under the radar for most investors (returns as of 1/24/2012; some ETFs similar to those included below have been omitted):
10. First Trust BICK Index Fund (BICK): +16.23%
Investors’ risk appetite has started to gradually increase thanks to encouraging economic developments across the globe, which has translated into growing demand for emerging markets exposure. BICK has appreciated nicely in the first month of 2012 thanks to improving confidence that emerging markets are still steaming with action. This ETF holds 90 of the largest and most liquid public companies that are domiciled in Brazil, India, Mainland China and South Korea.
9. EG Shares Industrial GEMS ETF (IGEM): +16.89%
Interest in sector-specific emerging market exposure has grown in the new year thank to improving confidence in the global economic recovery. Investors looking to tap into the booming industrials sector across the developing world have made good use of IGEM, as this product is the only targeted ETF on the market capable of delivering such exposure. This fund tracks the 30 largest emerging market companies in the industrials sector and features heavy allocations to China, Indonesia, South Africa, Malaysia, and Mexico.
8. UBS E-TRACS Long Platinum ETN (PTM): +17.00%
With interest rates expected to remain at historically low levels for the foreseeable future , its not much of a surprise to see that precious metals are off to a great start this year. Platinum is leading the way higher, bolstered by ongoing concerns for inflation coupled with increasing industrial demand [see Ultimate Guide To Platinum Investing]. PTM measures the collateralized returns from a basket of platinum futures contracts; the underlying contracts are targeted for a constant maturity of three months.
7. Barclays iPath Dow Jones-UBS Tin Total Return Sub-Index ETN (JJT): +17.27%
Industrial metals have also been able to bounce back after a brutal fight to keep afloat in the final quarter of 2011. Tin is off to an impressive start and is leading the way ahead of copper and aluminum prices. JJT is the only product on the market that offers targeted exposure to this corner of the commodities market. Few investors have enjoyed JJT’s rise to start off 2012; this ETN has amassed only about $8 million in assets under management since launching in mid-2008.
6. UBS E-TRACS ISE Solid State Drive Index ETN (SSDD): +18.15%
With bullish sentiment sweeping over Wall Street, its not too surprising to see this hyper-targeted tech ETN take on appeal. Investors looking to round out their exposure to Technology Equities ought to consider an allocation to companies involved in the booming solid state drive market. SSDD tracks a benchmark that consists of firms operating in the solid state drive industry, while also employing an equal weighted allocation strategy across the underlying holdings.
5. Van Eck Egypt Index ETF (EGPT): +18.53%
After enduring a grueling period of instability in 2011, Egypt is back on the board and many investors are probably surprised to see this beat-down ETF post one of the most impressive performances early in the new year. EGPT consists of 30 stocks that are domiciled and primarily listed on an exchange in Egypt or that generate at least 50% of their revenues in Egypt. Top holdings from a sector breakdown perspective include: communication services, financial services, and industrials [see EGPT Holdings].
4. Guggenheim Solar ETF (TAN): +18.63%
With tension in Iran creating more and more uncertainty surrounding fossil fuel prices, investors have been prompted to reconsider opportunities in alternative energy. TAN is a popular option for investors looking to tap into solar energy; this ETF consists of 35 companies in the solar industry, featuring allocations to solar cell and module producers as well as companies that supply raw materials or components to solar power equipment producers.
3. VelocityShares Daily Inverse VIX Short-Term ETN (XIV): +26.42%
Uncertainty has begun to evaporate from the markets thanks to better-than-expected economic data releases and positive corporate earnings at home. Likewise, this inverse volatility product has staged an impressive bounce back following its gruesome sell-off in the final months of last year. XIV has accumulated $430 million in assets under management since launching in late 2011, showcasing the demand for products that offer exposure to volatility as an asset class.
2. Global X Uranium ETF (URA): +26.86%
Despite the backlash against nuclear power in 2011 given the catastrophic events in Japan, many investors are still very bullish on this corner of the energy market. URA consists of close to 30 companies which are active in the uranium mining industry; top holdings include Cameco Corp., Urnaium One Inc., and Hathor Exploration. This ETF offers global exposure across Canada, Australia, the United States, and the United Kingdom.
1. Van Eck India Small-Cap Index ETF (SCIF): +30.13%
The booming Indian economy has begun to attract assets yet again thanks to improving expectations for economic growth and an increasing risk-appetite amongst many investors [see Evaluating India ETFs: Three Important Factors To Consider]. SCIF is made up of over 120 individual holdings, and only about a quarter of its total assets are allocated to the top ten companies alone, resulting in a well-balanced portfolio. This ETF has been able to profit from local, favorable demographic and consumption trends given its heavy allocation to consumer cyclical companies in India. SCIF also rounds out exposure to the industrials, financial services, basic materials, and technology sectors.
Disclosure: No positions at time of writing.
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