5 High-Flying 2013 Niche ETF Sectors

December 26, 2013

High-flying ETFs in several sectors eclipsed the S&P 500 gains.

The big run-up in the equity markets this year fueled by historic low interest rates and the Federal Reserve’s economic stimulus lifted major indexes into record territory this year. The rally has also yielded a spate of sector-related ETFs that made even more impressive returns, including a popular fund that focuses on social media companies like Facebook.

Year-to-date, the S&P 500 index, Dow Jones industrial average and the Nasdaq Composite are up 28.5 percent, 24.7 percent and 37.5 percent, respectively, helped by the Fed’s zero-interest-rate policy and its ongoing quantitative easing stimulus program.

In turn, ETFs focusing on solar energy, biotech, social media and broker/dealer companies have all made the list of top-performing funds in 2013, according to data compiled by IndexUniverse.

We’ll leave the list of duds, dominated by gold miner ETFs, for our next piece.

 

Without further ado, the highest-flying niche ETF sectors, and some of the reasons why, are as follows:

5. FAN gained 65.8 percent year-to-date

Over the next three decades, world energy consumption is projected to increase by 56 percent, driven by growth in China and India, according to the U.S. Energy Information Administration’s “International Energy Outlook 2013.”

Clean-fuel technology is also playing an important role in the outlook, with renewable energy and nuclear power expected to grow faster than fossil fuels over the forecast period at a clip of 2.5 percent per year.

And with the Obama administration calling for more development of clean energy in the U.S., investors have caught on to this long-term trend in 2013.

Reflecting all these dynamics, the First Trust ISE Global Wind Energy ETF (FAN | C-14) has risen 65.8 percent this year.

5_FAN_vs._GEX_YTD_Peformance

 

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