Which Industry ETFs are on a Roll?

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By Christian Magoon
CEO and Founder, Magoon Capital

In 2012 three S&P 500 sectors performing in line or better than the index include Health Care, Consumer Discretionary and Financials. Together these sectors make up about 37% of the S&P 500. A quick comparison shows how the S&P 500 ETF (SPY) has performed relative to the related sector SPDR ETFs: XLV, XLY and XLF.


S&P 500 Versus Health Care, Consumer Discretionary and Financials

What's so special about these three sectors?

Within these sectors reside the best performing industry ETFs in 2012, with several sporting total returns of over 20%. Here are the industries and the ETFs representing them that are powering Health Care, Consumer Discretionary and Financials this year.

Healthcare Sector: Biotechnology

The Health Care SPDR ETF (XLV) has a total return of 4.73% this year. It is comprised of a variety of  companies doing business in industries including health care provision, pharmaceuticals, medical devices and biiotechnology. The bitotechnology portion is the industry that has been on fire this year with three ETFs gaining over 18% this year. They are:

  • First Trust NYSE ARCA Biotechnology ETF (FBT)
  • SPDR S&P Biotech ETF (XBI)
  • iShares NASDAQ Biotechnology (IBB)

Here's the detailed chart from the NASDAQ's interactive chart center.



Consumer Discretionary Sector: Homebuilders & Leisure

The Consumer Discretionary SPDR ETF (XLY) has a very healthy total return of 10.7% in 2012. This ETF is comprised of companies in industries including hotels, retail, home building, entertainment and restaurants. Homebuilders and leisure and entertainment ETFs have been strong industry performers this year gaining double digits. These ETFs include:

  • iShares Dow Jones U.S. Home Construction ETF (ITB)
  • SPDR S&P Homebuilders ETF (XHB)
  • PowerShares Dynamic Leisure & Entertainment ETF (PEJ)

Here's the detailed chart from the NASDAQ's interactive chart center.

Financials Sector: Banks & Insurance

The Financials SPDR ETF (XLF) has a total return of just over 8% for the year. It is comprised of companies involved in areas including banking, investment and insurance. Two areas powering forward at a double digit pace year to date have been Property & Casualty Insurance companies and Banks. Here are the two ETFs leading the way this year:

  • PowerShares KBW Property & Casualty Insurance ETF (KBWP)
  • PowerShares KBW Bank Portfolio (KBWB)

Here's the detailed chart from the NASDAQ's interactive chart center.

The eight ETFs highlighted make up the top performing industry focused ETFs this year according to performance data from Index Universe's Data Tool. These examples showcase the potential opportunities available for ETF investors willing to be more focused than broad based benchmarks or sectors. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs , Investing Ideas , Stocks


Christian Magoon

Christian Magoon

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