Comparing The Performance Of The World’s Largest ETFs

by on March 22, 2013 | Updated March 25, 2013 | ETFs Mentioned:

When it comes to ETF investing, it is no secret that a handful of funds dominate the universe. A first-mover advantage can pay dividends in the exchange traded world, and the largest ETFs list illustrates that concept. So when it comes time for many investors to add an ETF to their portfolio, size is often one of the most important factors in making their decision [see also How to Pick The Right ETF Every Time].

Of the nearly 1,500 products in the space, five funds stick out in particular. The SPDR S&P 500 (SPY, A), SPDR Gold Trust (GLD, A-), Vanguard Emerging Markets ETF (VWO, A), MSCI Emerging Markets Index Fund (EEM, A-) and the MSCI EAFE Index Fund (EFA, A) dominate the ETF universe, collectively making up roughly 25% of the entire space.

Fixed Income ETFsWith the five largest ETFs in the world sitting comfortably on their thrones, we shed light on how they have performed over the past six years to see which funds had a winning strategy in which year.

 

Results

Right off the bat many will notice that VWO has both the best and worst year over the stretch, losing 52% in 2008 only to surge 75% the following year. What some may have missed is the only fund to not have a down year, GLD. The physical gold ETF has been an investor favorite for years, and as gold prices have soared, so too has this ETF. Note that the commodity fund is currently amid a weak open in 2013, as it is down just over 5% YTD. Both SPY and EFA are the quieter, more stable funds of the bunch, not making as much noise as their counterparts.

The performance deltas between VWO and EEM are particularly intriguing given that they track nearly identical indexes, but VWO comes in at a lower cost to investors. VWO surpassed EEM in total assets in early 2011, and proceeded to cut its expense ratio from 27 to 22 basis points shortly thereafter.

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Disclosure: Long VWO.