Which equity and commodity ETFs show promise of growth over the next six to twelve months? To answer this question I use an analysis process known as the "Delta Factor." In the following table we have the historical performance of 22 ETFs over the past five years. This time frame is selected as it includes the most recent bear market plus the dramatic recovery.
The column labeled Future is a reversion-to-the-mean projection of how well the ETF is expected to perform over the next six to 12 months. The difference between Future and Historical is Delta. Using this information each ETF is then compared with a benchmark to determine if the ETF is a Buy, Hold or Sell. The reference or benchmark is Vanguard's Total Market Index Fund, VTSMX.
ETFs that show up as a Buy are those that have dipped below their mean value over the past five years and are therefore expected to return to higher values. This is nothing more than a probability argument. The above Delta Factor link shows what the Delta Factor projections were during past market inflection points.
ETFs that have done well in the past, SLV being an example, do not have the same probability of doing well in 2013. This does not mean they won't. Rather, chances are less likely of another robust performance.
In addition to the above Delta Factor analysis, investors interested in tracking broad market conditions will find current Bullish Percent Indicators (NYSE:BPI)of interest. These market and sector indicators examine larger parts of the market rather than the asset classes of the above ETFs. Both BPI and Delta Factor are designed to put investors on the right side of broad market movements.
Disclosure: I am long VTI, VTV, VOE, VBR, IWN, DBC, RWX, VNQ, DVY, IDV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.