This time of year is when many choose to reflect on what they have done over the last 12 months, and what they hope to achieve in a new year. Here at ETFdb we are doing the same, by looking back at our 12 Rapid Fire ETF Ideas For 2012 and what we expected from the year compared to what happened. Make sure to check back tomorrow for our predictions for 2013 [for more ETF ideas, sign up for the free ETFdb newsletter]:
1. WisdomTree Emerging Markets Local Debt Fund (ELD) +13.4% YTD
“This fund offers exposure to debt from issuers in emerging markets that is denominated in the local currencies, positioning ELD to benefit from any weakness in the U.S. dollar next year and potentially bringing geographic diversification to the fixed income side of greenback-heavy portfolios” – Rapid Fire 2012
This emerging markets debt fund has been a solid performer in 2012, adding about 13% so far on the year. For investors looking for ways to round out their international portfolio with some fixed income holdings, ELD could be a nice addition.
2. EGShares Small Cap India ETF (SCIN) +32.6% YTD
“The Indian economy is expected to eventually become the second-largest in the world, posting growth rates over the next several decades that surpass even China. Small cap companies that rely on growth in local consumption should be ideally positioned to profit from a swelling middle class, ongoing urbanization, and general increases in wealth and improvements in quality of life.” - Rapid Fire 2012
This fund had amazing returns at the beginning of the year, topping out at 40% growth since January in the middle of February, but that spring it took a major turn for the worst. SCIN toughed through a hard summer to still finish the year higher than the S&P 500.
3. PowerShares Dynamic Media Portfolio (PBS) +24.4% YTD
“Some changes to the regulatory environment over the last couple of years have virtually guaranteed that campaign spending in 2012 will shatter all previous records. Loosened restrictions on advertising spends will result in various organizations flooding the airwaves with campaigns for their candidates and issues, beginning with what are expected to be hotly-contested primaries and continuing through November.” - Rapid Fire 2012
How right we were, with campaigns spending record amounts, especially on air time and producing YouTube videos to reach younger voters. PBS consistently outperformed the general market, taking off in August just when the campaigns started to buckle down.
4. E-TRACS Alerian MLP Infrastructure ETN (MLPI) +2.10% YTD
“This ETN targets Master Limited Partnerships, companies that own oil and gas pipelines in North America. This pick is intriguing because it presents an opportunity for big dividend payments without forcing investors to take on excessive risks” – Rapid Fire 2012
MLPI was not expected to produce huge gains in 2012, but such small returns were less than expected. 2012 has been a long year for natural gas, and after President Obama’s reelection in November their outlook worsened as investors were spooked by tax uncertainty.
5. Market Vectors Agribusiness ETF (MOO) +12.0% YTD
“A number of agencies have warned in recent years that food crises will become increasingly common and severe in coming decades as the global population continues to grow. With the populations of emerging markets simultaneously expanding and increasing their standard of living, demand for protein and other “high quality” food staples has been climbing.” – Rapid Fire 2012
After one of the worst global droughts in recorded history, it is no surprise that a global food crisis because reality. MOO did eventually turn around in the fall, but never really made up the lost ground from earlier that year.
6. Global X FTSE Greece 20 ETF (GREK) +20.0% YTD
“This ETF pick is purely a contrarian play–and an admittedly risky one at that. While the recent past has been catastrophic, there is opportunity to capture some material gains if Europe is able to pull Greece back from the brink. The developments in the ongoing debt saga have actually been quite positive in recent weeks, as private investors have agreed to haircuts on bond holdings and efforts to implement badly-needed cuts to government spending have gained some momentum” – Rapid Fire 2012
There were good times and terrible times to invest in Greece during 2012, proving that this fund was not for the faint of heart. Investors who were lucky enough to get in June have been enjoying the slow climb back, where GREK has finished the year just above the S&P. These funds also help illustrate how steady the US market has been compared to the credit tight EuroZone.
7. Market Vectors High Yield Municipal Bond ETF (HYD) +12.3% YTD
“This ETF was one of our picks for 2011, and delivered such an impressive return that we felt compelled to include it once again for the upcoming year. Given the anxiety over the health of the muni bond market–especially high yield muni bonds with less-than-perfect credit ratings–it shouldn’t be surprising that HYD can make a potentially attractive payout.” – Rapid Fire 2012
HYD proved to be a long term and slow growth fund with very little volatility in 2012. While its yield to date return is not as high as the general market, with a 30 day SEC yield of 4.5% its hard to say that HYD was not a valued addition to any portfolio.
8. S&P Global Nuclear Energy Index Fund (NUCL) -0.6% YTD
“In the wake of the Japan crisis, several governments began to reassess their commitment to nuclear power. We like this ETF because the backlash against nuclear power has no choice but to be short-lived. With solar and wind power struggling to gain traction and become economically viable on a large scale, nuclear power is the obvious answer to what is becoming a more serious issue globally.” Rapid Fire 2012
While nuclear and other alternative energy funds tried to keep up with the market, they fell prey yet again to a difficult summer and failing investor interest. One of the few funds on our list to show negative returns, it is unlikely that next year will bring any better luck for energy funds.
9. Guggenheim BulletShares 2012 High Yield Corporate Bond ETF (BSJC) +3.1% YTD
” BSJC is linked to an index comprised of junk bonds scheduled to mature during 2012, meaning that the principal amounts on the underlying notes will be repaid during the upcoming calendar year. Instead of reinvesting the proceeds in new debt, BSJC will pay it out to shareholders–meaning that this ETF will generally replicate the experience of holding an individual bond while still providing diversification across sectors and individual issuers” - Rapid Fire 2012
This fund did about as expected, delivering a gain of about 3% with very little credit risk or interest rate risk. Given the low rates in the current environments–short-term Treasury yields are close to zero–we’re quite pleased with the 3% yield.
10. VelocityShares Inverse VIX ETN (XIV) +186.3% YTD
“Given that XIV utilizes a futures-based strategy to deliver inverse exposure, this ETN probably isn’t appropriate for risk-averse investors who aren’t willing or able to regularly monitor their positions. But for those who grasp the complexities associated with XIV, the current environment might just be perfect for this ETN. XIV might not be a good ETN to own throughout 2012, but it certainly seems to be positioned nicely for a strong start to the year.” – Rapid Fire 2012
The biggest winner of 2012, XIV had a field day with the improving economic conditions in the US. Ending the year yielding almost 200%, investors who took a risk with this fund wont be skimping on presents this December.
11. iShares MSCI Malaysia Index Fund (EWM) +11.5% YTD
“EWM has delivered one of the most impressive returns over the last five years. This ETF is a bet that the Malaysian economic expansion continues in to the new year, since there is no compelling reason why it would slow down anytime soon. Even after the strong performance of recent years, Malaysian stocks are still quite cheap (EWM has a P/E of about 18x) so the upside potential seems considerable.” – Rapid Fire 2012
Always just a beat under the S&P, the Malaysian equity market enjoyed a great year of renewed foreign interest and exports. While they did not enjoy the fall bump the US did, EWM still managed to hold its own, especially considering that other foreign markets like struggled mightily in 2012.
12. IQ Canada Small Cap ETF (CNDA) -4.6% YTD
“CNDA has a heavy tilt towards materials and energy companies, allowing investors to tap into the compelling natural resource story that has been a driving force behind the Canadian economy. After a less-than-stellar 2011, CNDA could be positioned to thrive in the new year if resource prices remain firm–even if growth is elusive for the U.S. and Europe.” – Rapid Fire 2012
This commodity rich country started the year off stronger than the US, but suffered during the summer when the drought and oil demands were at their worst.
[For more ETF ideas, sign up for the free ETFdb newsletter and make sure to check back for our Rapid Fire Ideas for 2013.]