EGPT And Beyond: 2012’s Top ETFs So Far

September 28, 2012

Who knew Egypt would be the best ETF as the third quarter draws to a close?


With the fourth quarter set to start next week, it's a good time to review the top-performing equity ETFs so far this year.

At the top of the list is the Market Vectors Egypt ETF (NYSEArca: EGPT) which returned 66 percent year-to-date through Sept. 27.

Ticker Name Inception Date Segment AUM ($) Total Return Year-To-Date % Expense Ratio (bps)
EGPT Market Vectors Egypt 2/18/2010 Equity: Egypt - Total Market 58,319,610.21 66 94
ITB iShares Dow Jones U.S. HomeConstruction 5/1/2006 Equity: U.S. Homebuilding 1,364,307,617.28 63 47
BBH Market Vectors Biotech 12/21/2011 Equity: Global Biotech 130,576,913.97 47 35
XHB SPDR S&P Homebuilders 1/31/2006 Equity: U.S. Homebuilding 1,941,446,170.20 45 35
FBT First Trust NYSE Arca Biotechnology 6/23/2006 Equity: U.S. Biotech 255,369,432.61 41 60
TUR iShares MSCI TurkeyInvestable Market 3/26/2008 Equity: Turkey - Total Market 586,335,387.04 40 59
XBI SPDR S&P Biotech 1/31/2006 Equity: U.S. Biotech 683,801,935.80 39 35
TAO Guggenheim China Real Estate 12/18/2007 Equity: China Real Estate 25,929,047.46 35 70
IBB iShares NASDAQ Biotechnology 2/5/2001 Equity: U.S. Biotech 2,378,060,232.66 35 48
IFAS iShares FTSE EPRA/NAREITDeveloped Asia 11/12/2007 Equity: Developed AsiaPacific Real Estate 28,222,947.90 32 48


Admittedly, EGPT's ride hasn't been a smooth one. In February, Egypt's credit rating was downgraded by Standard & Poor's, which cited a plunge in foreign reserves and continued instability as the reasons.

Still, Egyptian stocks have rebounded, with the prospects of foreign aid packages as well as the return of tourism. Those two variables are crucial, because Egypt can do well if it's not starved of foreign investment and tourism.

Earlier this month, Qatari officials pledged to invest $18 billion in tourism and industry along Egypt's Mediterranean coastline. Meanwhile, the Obama administration has cobbled together a $1 billion aid package and is openly supporting the $4.8 billion loan being negotiated between Egypt and the International Monetary Fund.

Despite its amazing performance in the past few months, EGPT isn't very popular, judging from its $58 million in assets. This can perhaps be explained by the fact that the fund isn't particularly liquid or cheap.

The only other country-specific ETF to make our top 10 list is the iShares MSCI Turkey IM Index Fund (NYSEArca: TUR). At No. 6, it has returned 40 percent since the beginning of the year. The fund itself is cheap and liquid. Its concentrated portfolio offers heavy exposure to Turkish financial stocks.

Despite its proximity to Europe, Turkey has done well during the eurozone meltdown. George Friedman, the geopolitical consultant and founder of Stratfor, has been championing Turkey for many years, calling it "an island of stability in a region of chaos."


Before EGPT knocked it down from the top spot, the iShares Dow Jones U.S. Home Construction Index Fund (NYSEArca: ITB) was the best-performing fund in the first half of 2012. ITB returned 63 percent year-to-date, while the SPDR S&P Homebuilders (NYSEArca: XHB), No. 4 on the list, jumped 45 percent.

Both funds have benefited from rising homes prices in recent months. ITB offers more exposure to homebuilders, at 65 percent of its portfolio vs. XHB's 30 percent, with the remainder of ITB is scattered among various subindustries such as home improvement and construction supplies.

XHB meanwhile has a strong focus on home furnishings—companies such as Pier 1 Imports and Williams Sonoma grace its top 10 holdings.

Although homebuilders have had a good run so far, advisors like Rick Vollaro of Pinnacle Advisory Group believe this industry has even more upside potential.




It would be hard to miss the strong presence of biotech ETFs on this list. In fact, four out of five of the Top 10 list offers exposure to biotech:

  • Market Vectors Biotech (NYSEArca: BBH), +47 percent
  • First Trust NYSE Arca Biotechnology (NYSEArca: FBT), +41 percent
  • SPDR S&P Biotech (NYSEArca: XBI), +39 percent
  • iShares Nasdaq Biotechnology (NasdaqGM: IBB), +35 percent


Individually the companies in these funds are generally more volatile than, say, large drug companies. But owning many such companies in a fund offers inexpensive diversification that minimizes such risks.

This year's bull market has helped riskier health care investments, and so have an aging global population; the prospect of Obamacare fueling demand growth; and a spike in mergers & acquisitions.

Although FBT was ahead of BBH earlier this year, BBH with its global exposure has gained ground. BBH returned over 46 percent, whereas FBT, XBI and IBB returned 41 percent, 39 percent and 35 percent, respectively.

Real Estate

Last but not least, two ETFs focused on real estate in Asia—the Guggenheim China Real Estate ETF (NYSEArca: TAO) and the iShares FTSE EPRA/NAREIT Developed Asia Index Fund (NasdaqGM: IFAS)—squeezed into our top 10 list, returning 35 percent and 32 percent, respectively.

Government incentives and low interest rates have been strong incentives for homebuyers in Chinese and Japanese real estate markets.

It's possible that many of the funds on the year-to-date top returns list will still be on it at the end of the year. I'll circle back to have another look when the final 2012 numbers are in.


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