5 ETF Superstars of 2012

by on September 11, 2012 | ETFs Mentioned:

After stretching out the global recovery over the last four years, equity markets finally had a strong start to 2012, but it was short lived. While this summer has been tame in comparison to last year, resurfacing Euro zone worries have made for a tumultuous quarter on Wall Street. There is also the added stress to the markets of the upcoming presidential election and how the policies of each candidate will shape U.S. GDP in the future. Consumer confidence however has slowly been on the rise, and this improving sentiment has spilled over into the stock market prompting many to increase their risk appetites. Despite the laundry list of economic uncertainties, the investment landscape is ripe with opportunities for those with a keen eye and a stomach for risk [see also Why Bill Gross Thinks The Fed Is Ruining The Economy]. 

As such, below we highlight a number of “ETF Superstars” shining bright in 2012; the ETFs profiled below are outperforming the peers in their respective ETFdb Category by a wide margin year-to-date [try our Free ETF Analyzer]. 

The YTD performance of each fund is listed as well as the average return of all ETFs in its ETFdb Category (as of 9/6/2012):

Van Eck Egypt Index ETF (EGPT): +56%

Emerging Market Equities: +9.01%

Egypt’s equity market has been on fire this year after enduring a nasty decline heading into the final months of 2011. EGPT has turned in a monster performance year-to-date although perhaps even more impressive is that it has pulled ahead of its peers in the Emerging Markets Equities ETFdb category by a margin of over 4,500 basis points. This ETF makes a heavy allocation to small cap equities which has helped it rake in stellar returns thanks to the lucrative risk-return profile associated with this asset class. From a sector perspective, EGPT is well-balanced across communication services, financial services, basic materials, and industrials [see also Africa-Centric ETFdb Portfolio]. 

iShares Dow Jones U.S. Home Construction Index Fund (ITB): +58.01%

Building & Construction Equities: +33.28%

Building and construction ETFs can apparently do no wrong this year, with an average of +33.28% and only four ETFs in this category to beat that benchmark. With Americans slowly heading into a recovery mindset, many have taken advantage of cheaper housing and low interest rates, helping to fuel this sector. This ETF makes a heavy allocation to mid-cap construction equities as well as a sizable investment in small caps, resulting in a risk/return profile that has been able to capture very impressive gains on  the year. 

PowerShares DB Italian Treasury Bond Futures ETN (ITLY): +20.78%

International Government Bonds: +4.38%

Many investors were anticipating the European Central Bank to buy up Italian and Spanish bonds as part of a relief plan, and have been buying into the inexpensive bonds since early spring. Although some might be hesitant to invest in a country that is always in the news with economic problems, those who have taken that risk have been rewarded with a handsome return on their investment. ITLY is comprised of Euro-denominated government  issued debt with a remaining maturity spanning between 8 and 16 years [see also 3 ETFs For Roubini's Perfect Storm]. 

PowerShares Dynamic Energy E&P (PXE): +16.63%

Energy Equitites: -0.04%

The energy ETF space is huge and with most of the nearly 30 funds not even scrapping a 5% YTD return, PXE is an outlier that warrants a closer look. The majority of its holdings are U.S. based energy companies, covering all market caps, which gives this ETF a nice mix of both stability and risk which has paid off. There are also some minority holdings based out of Columbia that could add even more upside to the portfolio, but what makes PXE even more impressive is the fact that it has rebounded big time after taking into account its flat, lackluster performance last year [see also 15 Different Ways To Invest In Energy With ETFs]. 

PowerShares WilderHill Progressive Energy Portfolio (PUW): +13.09%

Alternative Energy Equities: -9.70%

PUW has exceeded all expectations so far this year after finishing down 20% last year,  and being one of only three alternative energy ETFs to actually have a positive YTD return at the time of writing. Most of the funds in this category are invested in green energy, but 90% of PUW’s funds are instead invested in companies looking to improve the efficiency, cleanliness, and use of fossil fuels, nuclear power, and mining operations. PUW’s underlying holdings consist of both domestic and international firms, including some allocations to stocks from South Africa, India, and Chile. 

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Disclosure: No positions at time of writing.