A Look Back At The Performance Of My Top 5 ETFs For 2011

by: Chris Katje

At the beginning of 2011 I added a new prediction article showcasing what I had picked out to be the best Exchange Traded Funds for 2011. The original article appears here: My Top 5 ETF Picks for 2011 . I had been doing a top ten list of stocks for several years and decided to give the ETF route a whirl. With careful research and several sectors and areas of investment in mind I selected five ETFs that I thought would outperform the market. The results are disappointing to say the least but I have decided to continue selecting ETFs. (That will be another article.)

2011 Picks and Results

iShares Chile (BATS:ECH)

  • Start: $79.60
  • End: $57.71 +$0.99 in dividends $58.70 Total
  • Performance: -26%
  • 52 Week: $48.25-80.27

Why I selected: At the beginning of 2011 I selected this ETF due to a rising number of people in Chile entering the middle class market.

Where the ETF is headed: ECH is made up of almost 25% utilities and nearly 20% financials. The fund seems to be more positioned based on the country’s output then the spending of middle class citizens. The ETF should enjoy a nice 2012 as the country’s GDP and status as an export country rise.

Market Vectors Agribusiness (NYSEARCA:MOO)

  • Start: $53.54
  • End: $47.15 + $0.30 dividend $47.45 Total
  • Performance: -11%
  • 52 Week: $39.86-57.93

Why I selected: With a growing world population, demand for food products is on the rise and farmers are in demand for their crops and valuable farmland. The money they profit with I had hoped would be used to buy new merchandise like tractors, and genetically engineered seeds.

Where the ETF is headed: With large stakes in seed maker Monsanto (NYSE:MON), tractor supplier John Deere (NYSE:DE), and food producers like corn maker Archer Daniels Midland (NYSE:ADM), the ETF is well positioned for a demand in food. It appears I recommended the fund at its peak and it had to have an initial drop before appearing undervalued. This ETF is hard to recommend for a fifty two week period as it is really more of a long term investment. As I begin the new year and look at opening an IRA, this would become a core holding if I was selecting ETFs.

ETFS Physical Palladium (NYSEARCA:PALL)

  • Start: $79.86
  • End: $64.56
  • Performance: -19%
  • 52 Week: $52.90-85.33

Why I selected: Palladium is a chemical element used in catalytic converters, jewelry, electronics, and photography. The many uses of this material led me to select this ETF which invests in physical holdings of palladium rather than companies who mine and use it.

Where the ETF is headed: Palladium began trading in March of 2010 and since that time had a nice climb to $85, which is unfortunately where I recommended the stock. As uses for the mineral increase and car production continues to gain ground, palladium could become more valuable helping to pace this ETF in 2012.

SPDR Select Technology (NYSEARCA:XLK)

  • Start: $25.19
  • End: $25.45 + $0.39 in dividends $25.84
  • Performance: +3%
  • 52 Week: $22.47-$27.09

Why I selected: At the beginning of the year I was bullish on Apple (NASDAQ:AAPL) shares and the growth that had not been factored in to the share price. Apple shares began the year at $310.50 and ended at $405 so it would appear that investing in Apple would have been a better bet than this ETF. I liked the exposure to large companies in technology while also gaining exposure to small growing cloud based companies that would benefit in 2011.

Where the ETF is headed: Apple now makes up 14% of the ETF and will help lead the charge in 2012. The demand for technology will continue and the large cap companies that make up the top ten holdings will benefit from a growing internet population around the world.

SPDR Select Healthcare (NYSEARCA:XLV)

  • Start: $31.50
  • End: $34.69 + $0.68 in dividends $35.37
  • Performance: +12%
  • 52 Week: $29.64-$36.57

Why I selected: As investors traded down large pharmaceutical companies in 2010 due to patent expirations I believed the whole healthcare sector was undervalued. I liked the large exposure to Johnson and Johnson (NYSE:JNJ) with 14% and Pfizer (NYSE:PFE) with 11%. I also liked the ETF’s exposure to smaller drug companies like Gilead (NASDAQ:GILD), Celgene (NASDAQ:CELG), Genzyme (GENZ), and Biogen (NASDAQ:BIIB)

Where the ETF is headed: First I have to say that Gilead and Celgene gained on the year. Biogen almost doubled in share price and Genzyme was bought out by Sanofi (NYSE:SNY) so it appears that the smaller drug companies I pointed out did okay on the 2011 year. I love the top ten holdings of this ETF with all the major drug companies involved from the United States. Gilead is now the tenth largest holding of the fund and I remain extremely bullish on the company through the next ten years. I recently wrote of how Gilead could double its market capitalization which would greatly benefit ETFs like this that hold the stock.

In 2011, I selected and recommended five ETFs that people could add to a portfolio. Unfortunately it appears that timing and selecting ETFs at the beginning of last year proved to be painful for anyone who took my advice. Three of the ETFs were down on the year including losses of -26%, -19%, and -11%. The two winners XLK and XLV with gains of 3% and 12% respectively could not do enough to make up the difference. Overall the average for the five selected ETFs was a loss of 8%. I have done much better with selecting stocks for each year and will continue to do that on Seeking Alpha as well.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.