Six months have passed in 2013 and the financial world has had plenty to buzz about. From a bull run in U.S. to worries over the stability of the global economy, the first half of the year has been one of the most memorable stretches the investing world has seen in a long time. Already, we have seen 65 new ETFs debut, as the industry continues to expand and offer more ways to slice-and-dice the market. With two quarters of the year on the books, we take a look back at some of the wildest charts in the ETF world to have surfaced in 2013 [for more ETF news and analysis subscribe to our free newsletter]:
1. SPY vs. EEM
2013 got off to a roaring start for U.S. benchmarks, as the S&P 500 ETF (SPY, A) saw one the of best stretches in recent memory. The same cannot be said, however, for the MSCI Emerging Markets Index Fund (EEM, A-). As the U.S. economy made major strides forward, the emerging nations of the world entered a slide, pushing prices lower as the weeks went on. In the first half of the year, EEM lost over $8 billion in assets. For investors looking to buy on a beaten-down sector, EEM and the emerging market space are good candidates for the second half of the year.
It was not long ago that the SPDR Gold Trust (GLD, A-) was a market darling and even briefly held the title as the largest ETF in the world. That all changed in 2013 as gold hit a rough patch, propelling this fund lower. Mid-April marks a notable point when GLD took a tumble of 13% in just three trading sessions, this just after Goldman Sachs issued a bearish short-term outlook on the metal. The ETF has surrendered more than $18 billion in assets this year and fell to the fifth largest ETF by assets; the Vanguard Emerging Markets ETF (VWO, A) snatched the second place title by a sizable margin [see also The Best Gold ETF…Isn’t An ETF].
3. FXY vs. DXJ
Japan has been one of the biggest stories of the year, as its stock market began to show signs of life. The same cannot be said for the yen, however, as the currency has taken a beating. The following chart compares the CurrencyShares Japanese Yen Trust (FXY, C+) to WisdomTree’s Japan Hedged Equity Fund (DXJ, A-), which hedges its yen exposure, and the difference is quite steep. At one point in the year DXJ was up 45%, though May saw the fund cool off a bit. DXJ has seen its assets grow by more than 650% in just six months, marking an incredible stretch for the fund and its issuer.
4. WisdomTree Investments (WETF)
Speaking of WisdomTree, the ETF issuer is not only responsible for a number of popular funds, but has a publicly traded stock price of its own. WETF marks the ticker for this provider and the stock has been on an absolute tear thanks, in part, to DXJ’s 2013 success. WETF started the year off just over $6 per share, but has skyrocketed more than 75% to see a price of just under $12 per share. WisdomTree is home to 48 ETFs with six products holding more than $1 billion in assets under management.
5. QQQ vs QQQE
The following chart rehashes the age-old debate over weighting methodology. The QQQ Fund (QQQ, B+) tracks the NASDAQ-100 with a market cap weighting for its holdings. The NASDAQ-100 Equal Weighted Index Shares (QQQE, C+) tracks the same companies, but instead applies an equal weighting across all holdings. The difference is quite stark, as QQQE has been able to outperform its larger counterpart. QQQ’s downfall likely comes from its major allocation to Apple (AAPL) which has had a tough year, capping the gains of this mega-fund [see also 3 Tech ETFs with 20% Holdings in Apple (and 3 with less than 2%)].
6. KWT 2012 vs. KWT 2013
Solar energy has been a tough investment to navigate over the past few years, as it is no stranger to big run-ups and periods of harsh losses. This time last year, the Market Vectors Solar Energy ETF (KWT, C+) had lost around 33% for the year, after coming out of the gate hot. 2013, however, has been an entirely different story. KWT was relatively quiet for the first few months until it began a massive run-up in April. Now, the ETF is up more than 25% for the year, a complete turnaround from the same timeframe in 2012.
7. CARZ vs. TSLA
One of the biggest stocks of the year has been Tesla Motors (TSLA), as it has seen its price make an unprecedented jump of more than 200%. But the majority of ETF investors missed out on the gains, as TSLA is not even represented in the top 10 holdings of the NASDAQ Global Auto Index Fund (CARZ, C+), the only pure-play auto ETF currently on the market. Though CARZ has had a strong year on its own, jumping more than 15%, the following chart displays a very clear disconnect and a missed opportunity for the auto ETF.
8. DUST vs GDX
2013 has so far proven to be one of the worst years to be a gold bug as the precious metal has failed to evade bearish pressures amid all of the talks about the Federal Reserve scaling back on stimulus measures. Likewise, gold miners have taken a hit as spot prices for their product have plunged, blanketing the entire producers corner of the market with uncertainty. Those who spotted the short opportunity in the Market Vectors TR Gold Miners ETF (GDX, B+) are sitting on gains of nearly 50% from the beginning of this year, while those brave enough to hold onto the Daily Gold Miners Bear 3x Shares Fund (DUST, B-) are enjoying an eye-popping gain of more than 300%.
9. SCIN vs IDXJ
Emerging markets have taken a hit since the start of Summer, but interest in the India Small Cap ETF (SCIN, C) had fallen off far before then. The small-cap view of the Indian equities market was one of the first funds to slip in 2013, with slowing GDP and industry reports coming from the once essential emerging market. The Market Vectors Indonesia Small-Cap ETF (IDXJ, C) on the other hand, was on the way up, and even after taking a loss from the massive sell offs in June, this ETF is still outpacing the U.S. market [see also Seven Factors Every Investor Needs To Know About Emerging Market ETF Investing].
10. SPY vs FXI
While upbeat economic data releases have kept investors’ confidence elevated on the home front, the exact opposite has been the case in China. Investors overseas remain on edge given the ongoing slump in manufacturing, while sluggish growth in Europe has further deteriorated China’s economic outlook. Talks of a potential change in monetary policy have further rattled China’s financial sector, which accounts for the bulk of the holdings in the FTSE China 25 Index Fund (FXI, B+).
11. AAPL vs. QQQ
AAPL has historically been very correlated to QQQ, seeing as how the tech bellwether is the fund’s single largest holding. This year has been a different story, however, as growth investors have largely abandoned Apple after the company had a stretch of worrisome earnings which showed it transitioning into a maturing tech company. As a result, shares of AAPL have largely drifted lower and sideways this year while QQQ has taken part in the broad-market rally thanks to impressive gains from its smaller components.
12. SPY vs. VXX
While the bulls have been piling into stocks and driving SPY higher, volatility levels have in turn been steadily declining thanks to improving confidence surrounding the domestic economic recovery. Although the iPath S&P 500 VIX Short Term Futures ETN (VXX, B+) had been sinking lower all year, this ETP started spiking higher in recent weeks; uncertainty stemming from the Fed’s exit plans have re-ignited fears over what will drive stocks higher once officials signal an official change in monetary policy.
13. U.S. Corporate Bonds (LQD) vs. EM Corporate Bonds (EMCB)
Bonds from around the globe enjoyed a nice run higher in 2012; however, the tides have started to turn against this asset class given the improving economic recovery, which has promoted many to jump ship to equities in search of more lucrative upside. Furthermore, recent talks of the Fed pulling the plug on bond-repurchases has led many to prepare for rising rates, which has resulted in a global bond market sell-off. While the Emerging Markets Corporate Bond Fund (EMCB, B-) held pace with the iBoxx $ Investment Grade Corporate Bond Fund (LQD, A-), the June sell-off hit EMCB particularly hard as it quickly lost ground on its developed market competitor [see also Using ETFs To Build A Complete Bond Portfolio].
14. Broad Asia Pacific (VPL) vs. Ex-Japan ETF (AAXJ)
Japan’s equity market has been a real roller coaster ride this year and its recent downturn has scared many away due to the sheer volatility. The MSCI All Country Asia ex Japan Index Fund (AAXJ, B+) was in negative territory prior to the Nikkei sell-off in late May, forcing this fund into the doldrums before it pulled out of its slide in late June. The FTSE Pacific ETF (VPL, A+) enjoyed a stellar run-up in the first quarter of 2013 but fell prey to the broad sell-off that began in mid-May.
15. Dollar (UUP) vs. Em. Currency (CEW)
Throughout the majority of Q1 2013, both the dollar index, DB USD Index Bullish Fund (UUP, A), and emerging market currencies, Dreyfus Emerging Currency Fund (CEW, A), showed very little movement. But by May, fears of further global monetary stimulus sparked a steep sell-off in emerging market currencies (particularly Asian currencies), causing CEW to take a big hit while UUP managed to remain in positive territory.
16. SPY vs SPGH
For the first few weeks of the year, SPY and the E-TRACS S&P 500 Gold Hedged ETN (SPGH, C+) were comparable in performance, even after gold slipped a bit in the early Spring months. But after April’s massive sell off, gold has clearly lost its standing while the U.S. market continues to slowly move up. Mid-June saw another price drop for both funds, and while SPY was left bruised, SPGH was pushed to a new low for the year.
17. Dividends (VIG) vs. EM Dividends (DEM)
Year-to-date, the Dividend Appreciation ETF (VIG, A-) has fared quite well as it has been a beneficiary of the broad market rally. But not all corners of the dividend space have performed quite as well. The Emerging Markets Equity Income Fund (DEM, A-), for example, has been in the red for the majority of the year as investments in this part of the world have struggled to stay afloat.
18. U.S. Financials (XLF) vs. China Financials (CHIX)
Throughout January, both of these financial ETFs managed to keep up with each other, posting modest returns. But as disappointing economic data continued to be reported out of China, financial equities from the powerhouse nation began to struggle. In the last month, the spread between the Financial Select Sector SPDR (XLF, A) and the China Financials ETF (CHIX, C) has widened significantly.
19. U.S. Basic Materials (XLB) vs. EM Basic Materials (LGEM)
Overall, the basic materials sector has struggled to gain momentum this year. And while U.S. materials shares, represented by the Materials Select Sector SPDR (XLB, A), have traded in a narrow range in 2013, materials stocks in emerging market economies, represented by the Basic Materials GEMS ETF (LGEM, C+) have taken a steep nosedive, shedding more than 35% YTD.
20. SPY vs. HDGE
With the Active Bear ETF (HDGE, C+) tracking the inverse of the U.S. market (SPY), it is easy to guess that the last six months have been hard on HDGE investors. With the overall market continuing to march forward into growing returns, HDGE is forced to fall further into the red [see also ETFs For Your Inner Bear].
21. XLV vs. XLB
Healthcare, represented by the Health Care Select Sector SPDR (XLV, A), has taken center stage for investors during the last five years as it has been a political hotbed. Biotech and healthcare have seen huge returns in the past few years and over the last six months XLV has nearly twice the returns of the general market. The following chart juxtaposes XLV and XLB, the best and worst performing sector SPDRs thus far in 2013.
22. UNG 2012 vs. UNG 2013
Since the 2008 recession, natural gas has not only been one of the worst performing commodities, but among the worst performing assets in general. The United States Natural Gas Fund (UNG, B-) has also earned the unfortunate title as one of the worst performing ETFs of all time, as the fund has endured multiple reverse splits just to remain open. But comparing the first half of 2012 to the same period in 2013 shows a big contrast for the fund. UNG showed some life in early 2013, though abnormal weather patterns weighed as June rolled around.
23. JNK vs. HYLD
Another battle between passive indexing and active management features the mega-popular SPDR Barclays Capital High Yield Bond ETF (JNK, A+) versus the actively managed Peritus High Yield ETF (HYLD, A-). Both funds seek to offer a high return by investing in the high-yield debt space, but HYLD features an active management team. Thus far in 2013, the active HYLD has outperformed the passive JNK. The two funds behaved similarly for most of the year, except for the end of January when JNK took a dip while HYLD held steady and charged higher until the May volatility struck both funds.
24. UNG vs. GASZ
The E-TRACS Natural Gas Futures Contango ETN (GASZ, B-) is designed to profit from the consistent contango that plagues natural gas futures markets. The fund had great success in 2012, outperforming UNG by more than 32%, but the relationship between the two has shifted this year. Natural gas futures have returned to a more cyclical pattern, causing GASZ to struggle to keep up with UNG, as its larger counterpart outperformed thus far 2013.
25. TUR 2012 vs. TUR 2013
The MSCI Turkey Investable Market Index (TUR, A-) has been a frustrating investment for many: The fund gained 25% in 2010 only to lose 36% in 2011. 2012 saw the fund jump 65% only to see it hit more roadblocks in 2013. Through the first half of 2012, TUR enjoyed gains of nearly 25%, but the same cannot be said for this year. Though the fund had some momentum behind it, protests and riots broke out in the emerging nation causing a steep drop at the end of May. There are still six months left for TUR to turn it around, but for the time being, the ETF is struggling [see also Visual Risk Analysis Of Emerging Europe ETFs].
Follow me on Twitter @JaredCummans.
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Disclosure: Long VWO.