The last couple of years did not go well for the global
markets. Besides economic troubles in Europe, sequestration and
the fiscal cliff in the U.S. had caused temporary disruptions to
the Wall Street rally.
Despite these issues, markets haven't really 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.
Market Trends in Q1
The first quarter of the year proved to be a strong comeback
for the U.S. equity market. While a fresh wave of
European worries once again threatened the market, strong housing
data and the Federal Reserve's announcement to continue its
monthly purchases of $45 billion in Treasury bonds and $40
billion in mortgage-backed securities, yet again pushing
investors into riskier assets (
Homebuilders ETFs Continue to Rally
In fact, the market saw a big increase in jobs for February.
The economy created 236,000 more jobs in February.
This came in better than the expected increase of 160,000 new
jobs. The unemployment rate dropped to 7.7% in February from 7.9%
in January, marking the lowest drop since December 2008.
Supporting this strong data, the Dow Jones Industrial Average,
as represented by
, recorded the longest winning streak in March since 1960.
Euro-zone worries reemerged after E.U. leaders announced they
would impose bank levies on Cypriot deposits. The news not only
brought a halt to Wall Street gains but impacted the equity
market globally as well.
But like any other European news, the impact of this news on
the market did not last long and the Wall Street again headed for
an upside. In fact, DIA recorded a solid gain of 11.9% for the
SPDR S&P 500 (
ended the first quarter of the year with a gain of 10.5%.
that recorded strong gains or losses in the first quarter of the
year, we highlight some of the ETFs that turned out to be the top
performers in the quarter below (
3 ETFs Beating the S&P 500
Among the top performers, Indonesia ETFs put up a remarkable
show in the first quarter. The
Market Vectors Indonesia Small-Cap ETF (
recorded an impressive year-to-date gain of 31.2%. After a dismal
performance in 2012, the recovery in the New Year has been
As the name suggests, the recently launched IDXJ offers a
targeted exposure to the small-cap segment of the Indonesian
market thereby providing a better opportunity to tap domestic
IDXJ manages an asset base of $8.5 million and provides
exposure to 27 small-cap securities of Indonesia. The fund
charges an expense ratio of 61 basis points annually.
The ETF appears to be concentrated in the top ten holdings as
it allocates a hefty 58.02% of the asset base to them. Among
sector allocations, Financials dominates the list with a 42.3%
share while Industrials and Consumer Staples get the next two
positions sharing 27.3% and 13% of the asset base,
The Indonesian economy, the biggest in Southeast Asia, appears
to be poised for good growth in 2013 attributable to healthy
domestic consumption, a good investment climate and more
infrastructure development. Low inflation and interest rates
should also support economic growth (
Indonesia ETFs Leading the Pack in 2013
The biggest drag on the economy in 2012 was declining exports
to weaker developed markets. However, in 2013, the growth of the
economy is expected to be supported by both strong domestic
consumption and some recovery in export demand. Political
uncertainty related to elections still remains a matter of
concern though, suggesting big cap plays like
could be more stable choices in Q2.
Another ETF which turned out to be the best performing ETF in
the quarter is
SPDR S&P Transportation ETF (
. In the year-to-date period XTN has produced a remarkable return
Transportation ETFs represent a good investment opportunity
during an upswing in the markets. This is why they are often
considered to be a barometer of the broad market as it indicates
that more goods are being moved around, and business activity is
While 2012 was a year of slow growth for the U.S. economy,
broad stock markets have risen to a remarkable level this year.
Additionally, positive trends in the economy suggest that there
is rising demand for the movement of goods across many economic
sectors. This has resulted in the transport sector reaching the
present level (
Transport ETFs: Can the Surge Continue?
XTN holds roughly 39 securities in its basket charging
investors just 35 basis points in fees. The fund manages an asset
base of $39.1 million.
This fund is also heavily exposed to trucking and airlines as
they make up roughly 60% of the total. Beyond this, close to 35%
of the total goes to both air freight & logistics, and
railroad companies, which pretty much round out the entire fund
except for a 4% allocation to marine firms (read
Two Sector ETFs Posting Incredible Gains
In terms of individual holdings, US Airways Group, Alaska Air
Group Inc, and Hunt J B Transportation Services Inc occupy the
top three positions in the fund with a share of 3.70%, 3.61%, and
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SPDR-DJ IND AVG (DIA): ETF Research Reports
ISHARS-MS INDON (EIDO): ETF Research Reports
MKT VEC-INDONES (IDX): ETF Research Reports
MKT VEC-INDO SC (IDXJ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
SPDR-SP TRANSPT (XTN): ETF Research Reports
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