Best And Worst Sector ETFs Of 2012

by on December 26, 2012 | ETFs Mentioned:

Though nothing compared to recent years, this past year has still been marked by uncertainty, prompting investors to return in droves from safe haven accounts to the U.S. stock market. Investors have their eyes fixed on major indexes and other indicators to judge the overall health of our economy, but another judge of market sentiment is watching which ETFs have taken off since last year. Needless to say, some industries have evolved with the changing economic climate, while others have fallen far behind [For updates on all new ETFs, sign up for the free ETFdb newsletter].
Below, we highlight a handful of ETFs that have surged over the past year (note that inverse and leveraged ETFs are excluded from this list; see the full list of Sector ETFs including leveraged and inverse for the complete picture):

Ticker ETF YTD Return
 ITB Dow Jones US Home Construction Index Fund  77.3%
 TAO Guggenheim China Real Estate ETF  53.7%
 BBH Market Vectors Biotech ETF  49.0%
  1. Dow Jones U.S. Home Construction Index Fund (ITB, A-), Up 77.3%: Though the homebuilding industry has perhaps not fully recovered from the most recent recession, it has done pretty well over the past year. This ETF is linked to an index that holds about 28 homebuilding companies, as well as stocks tangentially related to new homes (such as Home Depot and Lowe’s). It’s worth noting that ITB has beat the other homebuilder ETFs by a wide margin over the past year.
  2. Guggenheim China Real Estate ETF (TAO, C), Up 53.7%: This ETF is designed to measure and monitor the performance of publicly-traded companies and REITs deriving a majority of their revenues from real estate development, management and/or ownership of property in China, Hong Kong and Macau. As the middle class grows in these areas it is likely that homes, office buildings and shops will also go up in price.
  3. Market Vectors Biotech ETF (BBH, B-), Up 49.0%: Offering investors an opportunity to benefit from companies developing treatments for various health conditions, these stocks can be tricky to navigate alone, but bundled into an ETF they can have dramatic returns. This year-old fund tracks the overall performance of 25 of the largest publicly-traded biotech companies, such as Amgen, Gilead and Biogen [see Baby Boomers ETFdb Portfolio].

Below are five of the biggest non-leveraged losers over 2012:

Ticker ETF YTD Return
 KWT Market Vectors Solar Energy ETF  -33.8%
 GLDX Global X Gold Explorers ETF  -32.5%
 KOL Market Vectors Global Coal Index  -21.9%
  1. Market Vectors Solar Energy ETF (KWT, C), Down 33.8%While alternative energy might be good for the environment, it has proved problematic for investors. The index this ETF follows provides exposure to publicly-traded companies from around the world that derive at least 66% of their revenues from solar power products and services, which have not performed well since the global economic slowdown. Guggenheim Solar ETFs (TAN) has also fallen prey to sluggish solar funds, losing 32% since the beginning of 2012 [see 1,400+ ETFdb Realtime Ratings].
  2. Global X Gold Explorers ETF (GLDX, B-), Down 32.5%: With gold prices dipping for the first time since the financial crisis, mining corporations and precious metal producers have not performed as well in 2012 as in the past. GLDX was not the only fund affected, as the First Trust ISE Global Platinum Index (PLTM) also fell 18% by the end of the year.
  3. Market Vectors Global Coal Index (KOL, B), Down 21.9%: By providing exposure to publicly-traded companies worldwide that derive greater than 50% of their revenues from the coal industry, KOL proved to be a risky investment this year. Recent moves by the EPA and the Obama administration are under way to kill coal use by power plants in the United States, and yet some are still predicting its use will only increase in the next few years. [See more at our sister site, Commodity HQ and their 13 High Yielding Commodities for 2013].

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Disclosure: No positions at time of writing.