The end of 2012 saw fiscal cliff fears resulting in heavy
sell-off of risky assets. Investors then pushed their portfolios
towards safe havens in order to ride out the storm.
With the fears being assuaged and the fiscal cliff averted,
2013 began on a positive note winning investor confidence in the
markets. Many opted for risky assets in order to obtain higher
returns. While equities have experienced a heavy inflow of funds
ever since 2000, some
even rallied to break the resistance level and set new highs.
The S&P 500 exhibited a solid performance at the beginning
of the year. The index recorded a gain of eight consecutive
trading sessions in January, the best winning streak in eight
Moreover, all nine industries of the S&P 500 are in
positive territory. The strong momentum of the S&P 500 since
the start of the year indicates that the bull may be back in the
3 Ways to Play the S&P 500 Rally with
While equity ETFs rallied since the start of the year, VIX
which is regarded as a gauge for fear in the market, fell to its
lowest level in 2013. This reveals that investor fears have been
allayed and positive sentiment has spread in the market.
With the overall bias towards risky asset in the marketplace,
most of the ETFs posted positive gains in the first month of the
New Year. But some ETFs have been solid performers posting
double-digit gains. Below, we highlight five of these top ETF
performers which have exhibited solid gains to start the New
Market Vectors Vietnam ETF (
Slow growth rate, higher inflation level, trade deficit and
bad banking system impacted the Vietnam economy to a great extent
in 2011. But new government reforms, positive demographics, and
large foreign inflows led to a recovery in the economy.
The economy will be further boosted by the country's plans to
increase foreign ownership limit in several Vietnamese companies.
The current quarter could see a ramp in cap limit of foreign
ownership in Vietnamese companies from 49%. The State Bank of
Vietnam is also considering to increase the foreign ownership
limit in Vietnam banks from 30% currently (
Is the Vietnam ETF Back on Track?
In order to play the positive trend in the economy, investors
can opt for Market Vectors Vietnam ETF (VNM), the lone ETF
tracking the economy. After a disappointing performance in 2011,
Vietnam ETF gained some strength in 2012.
And in 2013 the ETF soared to become one of the best
performing emerging market funds. VNM started the year on a
strong note posting a whopping gain of 18.9% in the first month
of the year. And with further improvement in the economy, this
ETF is certain to provide investors with hefty gains throughout
VNM which manages an asset base of $385.6 million and trades
at a volume level of more than 1 million shares a day. In total,
the ETF also provides exposure to 31 Vietnamese stocks,
allocating a big percentage to small and mid cap stocks.
Among individual holdings, Baoviet Holdings BVH VN, Jsc Bank
For VCB VN and Vincom Jsc VIC VN form the top line of the fund
with respective shares of 9.63%, 8.26% and 7.28%. The fund
appears to be a bit pricey, charging a fee of 76 basis points
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, 2012 was a turnaround for the segment with
the financial sector emerging as one of the top performers (
Capital Markets ETFs For 2012?
Now with an improving employment level, housing recovery and
increase in consumer confidence, the capital segment of the
market is certain to benefit from on 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
the PowerShares KBW Capital Markets Portfolio (KBWC). KBWC has
been one of the solid performers in the first month of trading of
the year recording a robust gain of 14.52%.
However, the fund does trade in weak volumes, so 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
61.5% of the asset base is invested in the top ten holdings.
State Street Corp, Morgan Stanley and Goldman Sachs occupy the
top three positions in the fund.
iShares U.S. Broker Dealers ETF (
IAI also serves the capital segment of the U.S. equity market
Does Your Portfolio Need a Financial ETF?
). The fund like most of the capital market ETFs has been a solid
performer in the first month of 2013. The fund posted a gain of
13.2% in the year-to-date period.
IAI is home to 24 securities in which it invests its asset
base of $54.8 million. With a small exposure, the fund's
performance is largely dependent on the top ten holdings of the
fund. The fund has 59.56% of the asset base in the first ten
Among individual holdings, Goldman Sachs, Morgan Stanley and
Schwab Corp occupy the top line of the fund with respective
shares of 8.77%, 7.78% and 6.44%. The fund charges a fee of 46
basis points annually.
Market Vectors Oil Services ETF (
With a sluggish 2012, oil prices are finally climbing. The
U.S. market has experienced a remarkable rise in oil production
once again and if the current trend continues the U.S. may become
the world's biggest producer of oil five years down the line.
The current boom in oil production shows little sign of
waning. Oil prices have mounted to a level of $98 a barrel, the
highest since September last year.
In this scenario, investors who want to capitalize on the
trend can invest in Market Vectors Oil Services ETF (OIH). OIH
has exhibited a very strong performance since the start of the
year. The ETF posted a gain of 12.87% in the first month of the
OIH appears to be quite popular among investors as revealed by
its trading volume of more than 8 million shares a day. The fund
since its inception in Dec 2011 has been able to build an asset
base of $1,508.9 million (
Oil Bull Market Is No Place For MLP ETF
The fund appears to invest its rich asset base in a holding of
26 securities which are mostly large cap companies. However, the
fund has not been able to minimize company-specific risk as 71.2%
of the asset base goes towards the top ten holdings.
The fund has assigned heavy weighting to the top two holdings
namely Schlumberger Ltd and Halliburton Co. The allocation to the
two companies stands at 30.4% collectively. The fund charges a
fee of 35 basis points annually.
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ISHARS-DJ US BR (IAI): ETF Research Reports
PWRSH-KBW CMP (KBWC): ETF Research Reports
MKT VEC-OIL SVC (OIH): ETF Research Reports
MKT VEC-VIETNAM (VNM): ETF Research Reports
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