The US stock market enjoyed another Santa Claus Rally in 2013
as the major U.S. benchmarks saw the biggest jump in the final
days of the year, leading to multi-year record high levels.
The S&P 500 added 0.8% in the final four trading sessions of
the calendar year and 2.3% in December, clearly outpacing the
historical average returns of 1.9% (read:
Santa Claus Rally: 3 ETFs on the Nice List
). The string of positive data in the economy such as strong home
sales and durable goods data as well as improving jobless claims
also supported the rally.
While many ETFs emerged winners from this trend, some generated
above-average returns between Christmas and New Year. Below, we
have highlighted three ETFs that benefited the most from the
Santa Claus Rally. In fact, these funds are from different
corners of the ETF space and could continue their outperformance
in the New Year as well:
Market Vectors Solar Energy ETF (
This is the top performing ETF of the Santa rally, adding 5.7% in
the same period. The fund has amassed $21.8 million in its asset
base and charges investors 66 bps in fees per year. Volume is
however light as it exchanges under 8,000 shares per day in
Solar ETFs Stay White Hot, What's Behind the
The product provides broad exposure to global solar stocks by
tracking the Market Vectors Global Solar Energy Index. Holding 21
securities, the fund puts nearly 60% of assets in top 10 holdings
and focuses more on mid and small caps. In terms of country
exposure, U.S. firms take roughly 37% of the portfolio, closely
followed by China (26.5%) and Taiwan (19.5%).
ProShares Global Listed Private Equity ETF (
This fund offers wide exposure to the world of private equity and
gained 5.6% in the last four trading sessions of 2013. The ETF
follows the LPX Direct Listed Private Equity Index, holding 30
stocks in its basket. It is heavily concentrated in its top 10
holdings with more than 69% of assets (read:
Inside ProShares' New Private Equity ETF
The top three holdings - 3i Group, Ares Capital and Onex Corp. -
make up for a combined 31% share. American firms dominate the
fund's portfolio at 48%, followed by double-digit exposure to
United Kingdom (19%) and France (11%).
PEX is unpopular and illiquid with AUM of $4.3 million and
average daily volume of under 1,000 shares. The product is the
high cost space in the ETF world, charging 3.13% in annual fees.
Hedged SmallCap Equity Fund (
This fund offers exposure to small cap Japanese stocks while at
the same time provides hedge against any fall in the Japanese
yen. This is done by tracking the WisdomTree Japan Hedged
SmallCap Equity Index. The fund has amassed $48 million in its
asset base in its six months of debut while sees moderate volume
of nearly 22,000 shares a day. It charges 58 bps in fees and
In total, the product holds 518 securities in its basket, which
are widely spread across each security. None of the securities
holds more than 0.91% of the total assets, suggesting no
concentration risk. From a sectors look, industrials and consumer
discretionary take the top two spots with a combined 51% share.
Further, in terms of currency hedge, the fund looks to enter into
forward currency contracts or futures designed to offset exposure
to the Japanese yen. Thus, the fund looks to outperform when the
yen is sliding, and underperform unhedged benchmarks when the yen
is strengthening (read:
Time to Bet on Japan Hedged Equity ETFs?
Though these products have easily outpaced the broad market funds
by wide margins in the final four days of 2013, they slid at the
start of the New Year. However, this dip seems to be short lived
7 ETFs to Buy in 2014
As the economy continues to show gradual improvement driving the
stock market higher, these products could be exciting choices for
investors in the coming weeks.
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WISDMTR-JP HSCF (DXJS): ETF Research Reports
MKT VEC SOLAR (KWT): ETF Research Reports
PRO-GLBL LPE (PEX): ETF Research Reports
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