What was the top-performing ETF of 2015? The answer might surprise you.
After all the hoopla surrounding the bursting of China's stock market bubble only a few months ago, it's somewhat ironic that the No. 1-performing ETF on this list is a China fund.
China ETFs Surprise To The Upside
The Market Vectors China AMC SME-ChiNext ETF (CNXT) surged 52.6% in the year-to-date period through Dec. 22, making it far and away the best-performing ETF of 2015 (excluding leveraged and inverse ETFs). That said, the fund's ascent has been anything but smooth.
At its highest point in June, CNXT was up as much as 129% for the year; at its lowest point in September, the fund gave back essentially all of those gains.
Since then, CNXT has slowly but surely rebounded along with the broader Chinese stock market. The ETF, launched less than a year and a half ago, tracks 100 small- to medium-sized companies listed on Shenzhen's SME and ChiNext boards. The fund has nearly $62 million in assets under management.
The fund has a much heavier tilt toward technology, consumer and health care stocks than the broader China indexes, and that's served it well this year.
Interestingly, CNXT wasn't the only China ETF to perform phenomenally in 2015. The Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF (ASHS) returned an impressive 36%; the PowerShares Golden Dragon China ETF (PGJ) rose by 20.2%; and the KraneShares CSI China Internet ETF (KWEB) added 21%.
Small-Caps Outperform In China
As the name suggests, ASHS tracks the small-cap segment of China A-shares, which trade on the mainland Shanghai and Shenzhen stock exchanges. The small-cap bent of ASHS allowed it to handily outperform its large-cap counterpart, the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR), which only rose by 3.8%.
In contrast to ASHS, which holds mainland China A-shares, PGJ only holds N-shares, or those China stocks that are listed on U.S. exchanges. That gives PGJ a tremendous focus on the technology sector, which represents nearly half of its portfolio. Consumer cyclicals are another big focus, representing a fifth of the fund's holdings.