Last year was a good year for most asset classes, as investor portfolios continued to recover from the recent recession. The difference in performance between many comparable funds was significant, and many of the best performers of 2010 are relatively small funds that maintain considerably smaller asset bases than their more popular competitors. Below, we profiled the top performing ETFs in more than 60 ETFdb Categories covering all major asset classes. ETFs that launched in 2010 were excluded, as were those that stopped trading during the year [for more ETF insights, sign up for our free ETF newsletter]:
Many equity ETFs turned impressive performances in 2010; below, we profile the best of the best:
All Cap Equities: The First Trust Multi CG AlphaDex (FAD) added 25.2% last year, besting the more popular VTI (up 17.4%) and IWV (up 16.8%) by a wide margin.
Large Cap Blend Equities: The Rydex S&P Equal Weight ETF (RSP) gained 21.4% last year, more than 600 basis points ahead of the ultra-popular SPY (up 15%).
Large Cap Growth Equities: The Rydex S&P 500 Pure Growth ETF (RPG) added 26.9% in 2010; interestingly enough, the iShares S&P 500 Growth Index Fund (IVW) added 14.9%.
Large Cap Value Equities: Again, it was a Rydex “pure style” fund leading the way; the S&P 500 Pure Value ETF (RPV) was up 22.5%. The iShares S&P 500 Value Index Fund (IVE) gained about 15% on the year.
Mid Cap Blend Equities: The Vanguard Extended Market ETF (VXF) added almost 28% last year, narrowly beating out a handful of mid cap funds.
Mid Cap Growth Equities: The Rydex S&P MidCap 400 Pure Growth ETF (RFG) added almost 35% last year, about 400 basis points better than the iShares S&P 400 MidCap Growth Index Fund (IJK).
Mid Cap Value Equities: The WisdomTree MidCap Earnings Fund (EZM) was the only product in this ETFdb Category to gain more than 25% in 2010.
Small Cap Blend Equities: The iShares Russell Microcap Index Fund (IWC) was the winner here, beating out the Schwab Small Cap ETF (SCHA) by a small margin.
Small Cap Growth Equities: The iShares Morningstar Small Growth Index Fund (JKK) added just more than 31%, taking the crown in this competitive category (the worst performer gained a little over 27%).
Small Cap Value Equities: Another win for Rydex, as the S&P SmallCap 600 Pure Value ETF (RZV) was the best performer here.
Asia Pacific Equities: The iShares MSCI Malaysia Index Fund (EWM) had a great year, gaining almost 40% and taking top honors in this category.
China Equities: Despite significant economic expansion, Chinese equities didn’t perform all that well last year; the best performer here was the iShares MSCI Hong Kong Index Fund (EWH), which gained almost 25%. Next best was the Chindia ETF (FNI), which added about 18%.
Commodity Producers Equities: This ETFdb Category turned in some big winners last year; the average gain for the 16 funds around since the beginning of 2010 was almost 25%. The best was the Junior Gold Miners ETF (GDXJ), which added more than 66% on the year.
Communications Equities: The best-performing telecom ETF was the iShares Dow Jones U.S. Telecommunications Index Fund; IYZ added almost 21% last year.
Consumer Discretionary: The PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ) was one of the best equity ETFs of 2010, gaining almost 40%.
Consumer Staples: Another PowerShares ETF was the winner here; the Dynamic Food & Beverage Portfolio (PBJ) gained 30%, beating the next closest fund by more than 10%.
Emerging Markets: In an always competitive category, the big winner in 2010 was the iShares MSCI Thailand Index Fund; THD gained more than 55%, a good 15% better than any other fund.
Energy Equities: Two PowerShares ETFs topped this ETFdb Category; the Dynamic Energy Exploration & Production Portfolio (PXE) added 40%, while the Dynamic Energy (PXI) was just 40 basis points behind.
Europe Equities: Last year was a rough one for much of Europe, but the iShares MSCI Sweden Index Fund (EWD) was up more than 35%.
Financials Equities: The SPDR KBW Insurance ETF (KIE) was up more than 26% last year.
Foreign Large Cap Equities: The PowerShares DWA Developed Markets Technical Leaders (PIZ) added more than 21%, almost 13% ahead of EGA on the year.
Foreign Small & Mid Cap Equities: The SPDR S&P International SmallCap ETF (GWX) was up 25% on the year, reflecting a stellar year for small caps.
Global Equities: The Vanguard FTSE All World ex-U.S. Small Cap ETF (VSS) was up more than 25% on the year, more than 700 basis points ahead of the rest of this ETFdb Category.
Health & Biotech Equities: The First Trust Amex Biotech Index Fund (FBT) added almost 37%, well ahead of other biotech ETFs.
Industrials Equities: Another Dynamic PowerShares fund won this ETFdb Category; PRN was up 33% last year, about 5% better than the industrial SPDR.
Japan Equities: The iShares MSCI Japan Small Cap Index Fund (SCJ) added 19% last year.
Latin America Equities: The iShares MSCI All Peru Capped Index Fund (EPU) was up more than 57%, slightly better than the Colombia ETF (GXG was up an even 50%).
Materials Equities: The iShares Dow Jones U.S. Basic Materials Index Fund (IYM) was up about 31% last year.
Miscellaneous Sector Equities: The Market Vectors Gaming ETF (BJK) was up almost 38%, tops in this category.
Preferred Stock: The PowerShares Financial Preferred (PGF) was up 16% last year.
Quantitative Methodology: The First Trust Value Line 100 Fund (FVL) added more than 28% last year.
Technology Equities: The B2B Internet HOLDRS (BHH) added a whopping 107% last year, tops among all non-leveraged equity ETFs.
Transportation Equities: The Guggenheim Airline ETF (FAA) was up almost 30% in 2010.
Utilities Equities: Utilities struggled last year as risk appetite returned; the Rydex S&P Equal Weight Utilities ETF (RYU) added almost 13% in 2010.
Some fixed income ETFs turned in stellar performances in 2010, while others struggled:
California Munis: The PowerShares Insured California Municipal Bond Portfolio (PWZ) added less than 1%, but that was tops in the category.
Corporate Bonds: The iShares 10+ Year Credit Bond Fund (CLY) gained just over 10% last year; the broad-based LQD was up almost 9%.
Emerging Markets Bonds: The PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) was up almost 11% in 2010, just edging out the more popular EMB.
Government Bonds: The Vanguard Extended Duration Treasury ETF (EDV) was up almost 10% in a good year for long-dated securities.
High Yield Bonds: The well-known JNK from State Street was up almost 12%; HYG trailed just behind.
Inflation-Protected Bonds: PIMCO’s 15+ Year U.S. TIPS Fund (LTPZ) was up 8.5%, about 250 basis points ahead of TIP.
International Government Bonds: The SPDR Barclays International Treasury Bond ETF (BWX) was up only about 3%, but beat all other funds in this category.
Money Market: PIMCO’s Enhanced Short Maturity Strategy Fund (MINT) added about 1.5%.
Mortgage Backed Securities: The iShares Barclays MBS Bond Fund (MBB) was up almost 8%, more than doubling other MBS options.
National Munis: The PowerShares Build America Bond Portfolio (BAB) added 9.4%, reflecting a strong year for this endangered asset class.
New York Munis: All the ETFs in this category were in the red for the year, but the PowerShares Insured New York Municipal Bond Portfolio (PZT) lost the least ground in 2010.
Total Bond Market: Vanguard’s Long-Term Bond ETF (BLV) was up more than 9% in 2010; AGG added about 6%.
Commodities in general surged in 2010, but some performed better than others:
Agricultural Commodities: The iPath Dow Jones-UBS Agriculture ETN (JJA) was up about 38% last year.
Commodities: The iPath Cotton ETN (BAL) was up 96% in 2010; it was one of four in this ETFdb Category to add at least 50% on the year.
Metals: The iPath Nickel ETN (JJN) surged 32% last year.
Oil & Gas: Thanks to a big run-up in crude prices, the top ETF in this category, the United States Gasoline Fund (UGA)–was up more than 15%.
Precious Metals: The iShares Silver Trust (SLV) was up 82% last year; this ETF just barely beat out the ETFS Silver Trust (SIVR).
Most currency ETFs were up in 2010; the biggest winner was the WisdomTree Dreyfus South African Rand Fund (SZR) was up almost 34%.
Real Estate ETFs
This asset class considered its recovery from the bloodbath of the last recession:
Real Estate: The iShares FTSE NAREIT Retail Index Fund (RTL) was up an impressive 36%.
Global Real Estate: Most international real estate ETFs lagged behind U.S. counterparts except for one; the SPDR Dow Jones Wilshire Global Real Estate ETF (RWO) was up 24% on the year beating out all others in the Category.
Many investors are familiar with the risks associated with holding leveraged ETFs for multiple trading sessions, but many of these funds turned in huge gains throughout 2010:
Leveraged Bonds: The Direxion Daily 10-Year Treasury Bull 3x Shares (TYD) gained about 23% last year.
Leveraged Commodities: The ProShares Ultra Silver (AGQ) was the top-performing ETF in 2010, gaining a whopping 182%.
Leveraged Currency: The ProShares Ultra Yen (YCL) was up 25% in 2010.
Leveraged Equities: About half of this ETFdb Category was up in 2010; the biggest winner was the Direxion Mid Cap Bull 3x Shares (MWJ), which added 71%.
Leveraged Real Estate: The Direxion Daily Real Estate Bull 3x Shares (DRN) added 63%; its bear counterpart (REK) lost 72%.
With most asset classes up in 2010, it isn’t surprising that many inverse ETFs struggled in 2010:
Inverse Commodities: The PowerShares DB Crude Oil Short ETN (SZO) was down 8% on the year.
Inverse Equities: The ProShares Short MSCI EAFE (EFZ) was down 14% in 2010, but that was best in this ETFdb Category.
Best Of The Rest
The biggest winners among the rest of the asset classes and multi-asset ETFs includes:
Diversified Portfolio: The iShares S&P Aggressive Allocation (AOA) was up about 17% in 2010; its conservative counterpart (AOK) was up about 7%.
Target Retirement Date: The iShares S&P Target Date 2040 (TZV) was up almost 15%.
Hedge Fund: The IndexIQ Hedge Macro Tracker ETF (MCRO) was up about 5%.
Long/Short: The KEYNotes First Trust Enhanced 130/30 Large Cap ETN (JFT) was up 31% in 2010.
Volatility: The iPath S&P 500 VIX Mid-Term Futures ETN (VXZ) lost about 14%; the short-term version (VXX) lost more than 70%.
Disclosure: Long JNK, photo is courtesy of Caldwella.