The first half of 2012 will be remembered for whipsaw trading
action at the hands of intense global macroeconomic headwinds.
Europe's sovereign debt crisis, fears of a hard landing in China
and a spate of disappointing economic data in the U.S. all took
turns weighing on global equity markets.
Still, plenty of ETFs were able to finish the first half with
positive year-to-date returns due, in large part, to the benefit
of the January/February rally and last Friday's buying spree to
close the second quarter. ETFdb
has compiled a helpful list of the best- and
in the first half.
Using that list as a starting point, investors can find a
couple of ETFs that have the potential to carry some momentum
into the second half. Note that this list does not include
leveraged and inverse funds.
iShares MSCI Philippines Investable Market Index Fund
The iShares MSCI Philippines Investable Market Index Fund turned
in a stellar first-half performance, offering returns that were
more than five times better than those of the Vanguard MSCI
Emerging Markets ETF (NYSE:
). At various points during the first six months of the year,
EPHE showed strength relative to the broader
emerging markets universe
, indicating it was one of the better bets among ETFs tracking
The Philippines is one of the primary drivers of returns
accrued by the
new CAPPT acronym
and EPHE can now be found trading just pennies below its 52-week
high. Should the fund post consecutive closes above $30 on strong
volume, it might be a bullish sign.
First Trust NYSE Arca Biotech Index Fund (NYSE:
As ETFdb notes, the First Trust NYSE Arca Biotech Index Fund was
the second-best performer in the first half among non-leveraged
funds and with good reason. The biotech sector has proven durable
in the face of macroeconomic issues. Plus, the sector has been
benefiting from new drug approvals and increased mergers and
acquisitions activity and speculation.
The reality is biotech stocks can move higher regardless of
whether or not Europe's sovereign debt crisis improves. In fact,
FBT is an excellent bet to keep its momentum going because
seasonality is about to turn in favor of the
Note the Market Vectors Biotech ETF (NYSE:
) has been on fire as well, gaining more than 29 percent through
the first half of the year. BBH touched a new 52-week high
SPDR S&P Homebuilders ETF (NYSE:
It is a big "if," but if the residential real estate market can
gain some steam in the second half, the SPDR S&P Homebuilders
ETF will build on what was a strong start to the year. There is a
caveat when it comes to XHB when the fund is compared to its
primary rival, the iShares Dow Jones US Home Construction Index
XHB's allocations to the discretionary retail side of
residential real estate, meaning stocks such as Williams Sonoma
) and Bed Bath & Beyond (NASDAQ:
), is far heavier than ITB's. Arguably, that implies XHB needs at
least some help from consumers, even those consumers that are not
buying houses, to move higher.
The exposure to discretionary retail names makes a big
difference in terms of performance. While both ETFs can perform
well in the second half, if the data is there to support bullish
action, ITB won the first half battle by almost 1,700 basis
For more on ETFs that could outperform in the second half,
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