Last couple of years have not been very smooth for the global
markets. Besides economic troubles in Italy, Spain, Greece and
Ireland, sequestration and the fiscal cliff in the U.S. had
caused temporary disruptions to the Wall Street rally. However,
Wall Street has not looked back since the start of this year.
It appears that as long as the Fed continues with its massive
asset purchases, none of the global upheavals can stop the Wall
Street advance. In fact, before the recent three-day slide, both
the Dow Jones Industrial Average Index and S&P 500 Index
inched up to their all-time or multi-year highs. (
3 Foreign ETFs Still Beating the S&P 500
However, after recording the longest winning streak since
1960, the market lost its momentum in the last three days.
Banking crisis in the tiny island nation of Cyprus was held
culprit for the fall. But like any other European news, the
impact of this news on the market will not last long and the Wall
Street will again head for an upside.
A number of market sectors have performed remarkably well in
the year-to-date period, thanks to widespread market optimism. (
Two Sector ETFs Posting Incredible Gains
Below, we highlight three
which not only have performed remarkably well, but have also led
the market in terms of impressive returns.
PowerShares KBW Capital Markets Portfolio (
2011 was a rough year for the financial industry in general
and especially for the broker-dealer/capital markets segment of
the industry. However, the financial sector emerged as one of the
top performers in 2012. (
Capital Markets ETFs For 2012?
Now with an improving job market, housing recovery and
increase in consumer confidence, the capital markets segment is
certain to benefit from the positive sentiment. The segment
started 2013 with a bang, posting solid gains across the board as
strong earnings propelled the segment higher.
The bullish trend is very much obvious from the performance of
PowerShares KBW Capital Markets Portfolio (KBWC). KBWC has been
one of the solid performers in the year-to-date period recording
a robust gain of 14.52%.
The fund manages an asset base of $10.1 million spread across
24 securities. However, the fund trades in weak volumes, so the
bid/ask spreads could be pretty wide. Still, the product does
have a relatively low fee of just 35 basis points a year.
The fund is not able to minimize company-specific risk as
61.08% of the asset base is invested in the top ten holdings.
State Street Corp, Goldman Sachs and Morgan Stanley occupy the
top three positions in the fund. (
Time to bank on Regional Bank ETFs?
PowerShares Dynamic Energy Exploration & Production
PXE represents a good bet to play the strong rebound in the
energy sector. Although it's not as big a name as XLE or IEZ in
the same sector, the gains offered by the ETF are much higher
than the other two. (
Time to Buy Energy ETFs?
While XLE and IEZ have provided respective returns of 9.34%
and 10.14% since the start of 2013, PXE appears to play the
strength in the energy sector far better by rewarding investors
with a solid gain of 16.6% year to date.
U.S. energy sector did not do so well in early 2012 only to
recover in the second half, giving some life to energy ETFs. The
sluggishness in the sector was mostly attributable to weakness in
the oil market.
However, in 2013, an increased production of oil and mounting
oil prices changed the fate of the sector. A significant rise in
oil production in the U.S. resulted in global energy firms
returning to the U.S market. And it seems that the current boom
in oil production will continue to provide a strong boost to
energy ETFs. (
Time to Buy the Oil Equipment ETFs?
PXE manages an asset base of $115.8 million and provides
exposure to 31 securities. Despite the strong gains provided by
the ETF, it appears that the product is not much popular among
investors as indicated by its trading volumes of just 19,800
shares a day.
This may be due to the expense ratio being on the higher side
of the category average. The fund charges a fee of 60 basis
points on an annual basis.
With a concentration level of 46.4% in the top ten holdings,
the fund appears to be moderately spread across the companies.
Among individual holdings, Southwestern Energy Company, Marathon
Petroleum Corp and Phillips 66 occupy the top three positions in
SPDR S&P Transportation ETF (
The first half of 2012 also did not go well for transportation
companies and ETFs, as weakness in the global market resulted in
lower demand for industrial goods. However, the transportation
industry showed some signs of recovery in the second half of
And when the global economy chugged along in 2013, leading to
improved demand for industrial equipment, the transportation
industry appeared to have benefited the most. In fact,
improvement in the global GDP growth rate should also continue to
strengthen the airline, railroads and shipping companies. (
A Technical Take on Industrial ETFs with ISM Data
Since the start of 2013, XTN has exhibited a very strong
performance and it appears that with increasing demand for
industrial goods, the ETF should continue with its outperformance
for the rest of the year.
In the year-to-date period, XTN has delivered a return of
21.7%. The fund manages an asset base of $36.1 million and
invests this asset base in a portfolio of 40 securities. XTN
charges a fee of 35 basis points annually.
The fund's concentration in the top ten holdings stands at
34.3% with US Airways Group Inc, Avis Budget Group and Swift
Transn Co occupying the first three positions in the fund.
Want the latest recommendations from Zacks Investment
Research? Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
PWRSH-KBW CMP (KBWC): ETF Research Reports
PWRSH-DYN ENRG (PXE): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
SPDR-SP TRANSPT (XTN): ETF Research Reports
To read this article on Zacks.com click here.
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for
the Next 30 Days. Click to get this free report