March 9, 2009 is a date etched into the memories of many investors. After months of unprecedented volatility, depressing statistical releases, and countless false bottoms, that’s the day most equity markets finally hit their lows. It also marked the beginning of an impressive rally that saw most major indexes climb steadily for the remainder of the year, reclaiming big chunks of the ground lost during the downturn. While the “great rally of ’09″ boosted most asset classes (and their related ETFs), some performed far better than others.
Below, we highlight the ten non-leveraged ETFs that have delivered the best performances in the twelve months following the bear market lows hit in March 2009:
10. Market Vectors Russia ETF (RSX): +176%
China and Brazil are often held out as examples of the success emerging markets have experienced during the recovery, but it is another member of the BRIC bloc that is among the best performing ETFs since the markets bottomed.
Russia’s resource-intensive economy has surged this year as demand for raw materials around the world has surged. This ETF is heavy on the oil and gas industry (it accounts for more than 40% of assets), as well as iron and steel stocks (which make up another 17%).
9. RevenueShares Financials Sector ETF (RWW): +182%
On the way down, the financial sector was one of the hardest hit. But since bottoming out, this sector has led the way, reclaiming much (but not all) of the ground lost during the recession.
This ETF is comprised of the same securities as the S&P Financials Index, but each security in the fund is weighted by top line revenue instead of market capitalization. This seemingly minor detail has a surprisingly large impact on bottom line performance, as RWW has outperformed other financials ETFs by a wide margin over the last year (see a more in-depth analysis of revenue-weighted indexes here).
8. iShares MSCI Turkey Investable Market Index Fund (TUR): +184%
Investors looking to add international equity exposure to their portfolios generally don’t turn towards Turkey, but this Eurasian nation, home to one of the world’s youngest populations, has surged over the last year, thanks in large part to to a strong financial sector (financials account for just over half of TUR’s assets).
TUR hit a rocky patch recently when revelations of a plan to overthrow the government surfaced. The plan, which involved blowing up mosques and provoking Greece into shooting down a Turkish plane over the Aegean Sea, was ultimately foiled, but it raised questions about the stability of the Turkish government.
7. Market Vectors Steel Index ETF (SLX): +185%
Steel mills were among the first casualties of the global economic downturn, as users of this raw material cut off purchases and began to reduce inventories. As factories cut back production, SLX lost more than half of its value in a few months.
Bolstered by strong demand from emerging markets (especially China), SLX has surged over the last year, but remains well below pre-recession levels. SLX invests in companies engaged in a variety of activities related to steel production, including manufacturing mills, fabrication, and the extraction and reduction of iron ore.
6. HOLDRS Merrill Lynch Regional Bank (RKH): +194%
The presence of another ETF from the Financials Equities ETFdb Category highlights the impressive rebound in this sector over the last year.
Most investors think of regional banks as small financial institutions, but RKH has holdings in a number of household names, including Bank of America, US Bancorp, JP Morgan, and Wells Fargo. Like most HOLDRS, RKH is relatively concentrated; this fund has 17 holdings, and the top three make up nearly 60% of assets.
5. Rydex S&P 500 Pure Value ETF (RPV): +194%
Most of the funds on this list maintain either an international or targeted sector focus, but RPV is a relatively broad-based fund that focuses on U.S. stocks with low P/E multiples and high dividend yields. There are a number of ETFs that claim to have tilts towards value or growth equities, but RPV is one of the “pure style” ETFs from Rydex. Whereas most value and growth screens produce a number of stocks that are included in both sub-indexes, the “pure style” funds avoid overlap; none of the stocks found in RPV are also found in the S&P Pure Growth ETF (RPG).
Read more about “pure style” ETF options in this feature.
4. Rydex S&P MidCap 400 Pure Value ETF (RFV): +201%
The appearance of another pure value ETF among the top performers of the last 52 weeks illustrates the unique risk and return profile offered by this screening technique.
RFV seeks to replicate the performance of the S&P MidCap 400/Citigroup Pure Value Index, a benchmark that contains only those S&P MidCap 400 companies with strong value characteristics as selected by S&P.
3. Market Vectors Indonesia ETF (IDX): +205%
Indonesia joins Russia and Turkey as the top performing international equity ETFs since the bear market lows, surging more than 200% over the last year. IDX is designed to replicate the performance of the Market Vectors Indonesia Index, and maintains significant allocations to the financial services and materials industries.
Indonesia is one of the lesser-known emerging markets, but also one of the fastest-growing. The resource rich nation is home to numerous valuable commodities, including coffee, palm oil, rubber, and rice.
2. Market Vectors Coal ETF (KOL): +228%
As the recession set in during the second half of 2008, few industries were hit as hard the coal sector, as dimming economic prospects translated into a reduced need for the energy source that powers many of the world’s factories and manufacturing operations. KOL closed near $56 per share in June 2008 and then slid to nearly $11 five months later. But over the last year, this ETF, which includes coal miners and producers, equipment makers, and technology firms, has surged. KOL has gained about 228% over the last 52 weeks.
1. PowerShares Financial Preferred (PGF): +261%
This ETF is linked to the Wachovia Hybrid & Preferred Securities Financial Index, a benchmark that tracks the performance of U.S. listed preferred stocks of preferred stocks issued in the US market by financial institutions such as Bank of America, Wells Fargo, and JP Morgan.
At the height of the financial crisis, preferred stock issued by big banks became a very risky asset that some investors feared would lose all of its value. The wave of irrational fear that swept over markets punished this fund too severely, setting it up for a huge run following the market bottom. For investors who were able to identify PGF as a buy near the market bottom, the reward has been a significant one: this fund is up more than 261% over the last year.
Disclosure: No positions at time of writing.