Daily ETF Roundup: EFA Surges On Europe Hopes, VXX Tanks On Strong Markets

by on October 21, 2011 | ETFs Mentioned:

Friday was another solid day for markets as investors cheered the results of a number of earnings reports and continued hopes over the European debt crisis. Every major asset class topped off the week in the black, as the Dow posted the most impressive gains at just over 2.3%. The S&P 500 raked in 22.8 points and the NASDAQ was also up about 1.5%. Likewise, oil and gold finished out the day up about 1.7% a piece, marking for a rare day with both of the aforementioned commodities and equity indexes both posting winning sessions. The strong trading session came just one day after the death of Libyan dictator Moammar Gadhafi, who was killed by rebel forces, ending a long and tumultuous journey to bring his reign to an end [see also Bright Spots In The ETF Landscape: Five Funds Holding Their Value In A Wild 2011].

Aside from the major earnings and welcomed news from the euro-zone, president Barack Obama announced a major move to pull troops from Iraq by the year’s end, which will have an interesting impact on defense spending and a number of equities tied to that respective sector. Topping off an already busy day, Groupon finally announced detailed plans for their IPO which has had a lot of trouble getting off the ground as the company has experienced a number of growing pains that hit any firm that expands so rapidly. With today’s markets moving strongly in the right direction, we outline two of the most notable performances from our ETFdb 60 Index:

One of the ETF biggest winners on the day was the MSCI EAFE Index Fund (EFA) from iShares. This product measures the performance of European, Australasian, and Far Eastern markets, giving investors healthy exposure to the developed world outside of the US. The fund features big name holdings like Nestle, BHP Billiton, and Vodafone. EFA’s impressive return came from the decision “to pay Greece its next batch of bailout loans, avoiding a potentially disastrous default” write Gabriele Steinhauser and Elena Becatoros. This next debt settlement plan will come in the form of about $11 billion and will be a major boost to Greece, which has been the subject of violent riots as impending budget and spending cuts have hit home for the local citizens. All in all, EFA clocked a 2.42% gain on the day, bringing its YTD performance to about -11%. Note that the fund also pays out a robust dividend yield of 3.3% [see also ETF Insider: Markets Take Cues From Europe].

On the other side of things, investors should see no surprises from today’s big loser, as the infamous S&P 500 VIX Short-Term Futures ETN (VXX) lost 5.5%. This volatility product tracks daily rolling positions in first and second month VIX futures and has taken investors on one wild ride this year. After starting 2011 in the gutter, VXX surged to new highs, posting gains of 121.8% in the past 13 weeks alone. Though the fund is primarily meant for trading, anyone lucky enough to have gotten into the fund early in the year should be pleased with its performance. As is tradition, the culprit for VXX’s dismal performance was the strong markets, as the fund is designed to have a negative correlation with the S&P 500 [see also Alternative Weighting Strategies & ETFs: Is Market Cap Weighting Flawed?].

Disclosure: No positions at time of writing.