It’s been a good year thus far for equities. In spite of international and domestic macroeconomic uncertainties, stocks have continued moving in a positive direction since the market bottomed in 2009 – some say, with thanks to the huge amount of liquidity the Fed has pumped into the markets.
ETFs, too, have had a strong year. According to XTF.com, ETF assets have grown 22.8%, or $241.74 billion, in 2012, with tech, biotech, and volatility ETFs leading the way in returns. Out of more than 1,400 ETF products out there in the marketplace, here are the five best performing ETFs of 2012 so far:
VelocityShares Daily Inverse VIX Short-Term ETN (XIV)
Described by Barron’s as “a kind of backdoor bullish bet on the stock market,” XIV was up 113.36% year-to-date as of Sept 30. Seeking Alpha confirmed that “for at least the past 12 months, using XIV to trade uptrends in SPX… has provided excellent trade returns that are significantly higher than trading the indexes.” This ETF has an expense ratio of 1.35% and a net asset value of $285.52 million. Its current market cap is $285.27 million.
ProShares Short VIX Short-Term Futures ETF (SVXY)
Launched in October 2011, this ETF offers results that correspond to the inverse (-1x) of the performance of the S&P 500 VIX Short-Term Futures Index. SVXY is up 111.42% year-to-date. As Michael Johnston of ETF Database explains, the sharp gains registered by the top two ETFs can be attributed in part to the decline in stock market volatility (the "fear index") and “to the steep and consistent contango in VIX futures markets – the phenomenon whereby futures contracts are upwards sloping, with those expiring in the future being considerably more expensive than the spot VIX.” SVXY has an expense ratio of 0.95% and a net asset value of $43.66 million. Its current market cap is $43.57 million.
Direxion Daily Retail Bull 3X Shares (RETL)
RETL, which provides 300% exposure to the Russell 1000 Retail Index, is up 90.48% year-to-date. This leveraged ETF invests in 48 diverse retail companies, including hypermarkets, department stores, and specialty retail stores. Wal-Mart (WMT), Home Depot (HD), and Amazon (AMZN) are its three largest holdings. RETL has an expense ratio of 0.95% and a net asset value of $11.41 million. Its current market cap is $11.51 million.
ProShares Ultra Nasdaq Biotechnology (BIB)
Thanks to the strength of the NASDAQ Biotechnology Index (NBI) (up 36.69% year-to-date), the BIB, which offers 2x daily leveraged exposure to the index, has soared 81.40% so far this year. Key BIB components include Alexion Pharmaceuticals (ALXN), Regeneron Pharmaceuticals (REGN), and Amgen (AMGN). This ETF has an expense ratio of 0.95% and a net asset value of $38.12 million. Its current market cap is $38.1 million.
ProShares UltraPro QQQ (TQQQ)
This ProShares offering, which provides 300% exposure to the NASDAQ-100 Index (NDX), is unsurprisingly up 78.38% year-to-date, given that the Nasdaq, as measured by PowerShares QQQ (QQQ), is up 19.79% so far this year. The leading component of TQQQ is Apple (AAPL), followed by Microsoft (MSFT), Google (GOOG), and 97 others. TQQQ has an expense ratio of 0.95% and a net asset value of $225.11 million. Its current market cap is $224.56 million.
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