Nadig: 3 ETFs I Wish I’d Bought

May 15, 2014

Fund Ticker 1-Year Performance
SPDR Aerospace & Defense XAR 42.00%
iPath Dow Jones-UBS Nickel Total Return ETN JJN 41.10%
WisdomTree Middle East Dividend GULF 40.13%
RBS Global Big Pharma ETN DRGS 39.46%
PowerShares Aerospace & Defense PPA 38.82%
iShares MSCI Spain Capped EWP 38.09%
PowerShares Golden Dragon China PGJ 37.38%
PowerShares Dynamic Pharmaceuticals PJP 35.96%
First Trust NASDAQ Clean Edge Green Energy QCLN 35.93%
Market Vectors Global Alternative Energy GEX 35.80%
iPath Pure Beta Nickel ETN NINI 34.79%
Morgan Stanley S&P 500 Oil Hedged ETN BARL 33.56%
SPDR S&P Transportation XTN 33.41%
First Trust Industrials/Producer Durables AlphaDEX FXR 33.34%
First Trust ISE-Revere Natural Gas FCG 33.11%
iShares MSCI Ireland Capped EIRL 32.45%
PowerShares Dynamic Semiconductors PSI 32.11%
PowerShares Global Clean Energy PBD 32.04%
Guggenheim S&P 500 Pure Value RPV 31.98%
iShares MSCI Italy Capped EWI 30.79%

Here's where I'd be more likely to have tread. And, in fact, in the middle of this list you do see EWP, the Spain ETF I did buy. On that list, you also see the similar iShares products covering Ireland and Italy, giving you two-thirds of the PIIGS European recovery play.

The other major themes that play out here are old-school plays in defense, industrials and transportation, as well as more pharma. None of these is a theme I would have personally predicted for the past 12 months, and they're also rather narrow.

But there are two plays here that have been on my radar that I didn't pull the trigger on.

The first is the Market Vectors Global Alternative Energy ETF (GEX | C-20). GEX is a super-interesting thematic play on alternative energy. Unlike most of its competition, it's not just looking at solar and wind and supporting industries in those food chains, it's actually looking at how people are changing how they consume energy. So inside, you find healthy slugs of companies like Cree (it makes LEDs) and Tesla (the car manufacturer).

That unique take hits its Fit score in our analytics engine, where we compare it with a pure alt-energy benchmark. But we gave it an "opportunity pick" designation because it's really an intriguing way to play the global energy economy. It's a well-managed fund, and its only major black mark is low liquidity.

Still, I know how to put in a limit order, and I'm kicking myself for having missed the run here.

The second fund that jumps off the page is the PowerShares Golden Dragon China ETF (PGJ | A-21). I've been intrigued by this take on China since I wrote about it nearly a year ago. Back then, it was also on the top of the one-year chart for China exposure, and here it is again.

PGJ only holds U.S.-listed Chinese stocks, which gives it an enormous exposure to technology and consumer cyclical stocks, and a much higher correlation to U.S. markets than any other version of a China play. All three of those tweaks have rewarded it immensely, and I'm definitely kicking myself for not believing in the strategy. Compared with the default play (and our analyst pick) in China, the SPDR S&P China ETF (GXC | B-41), PGJ has absolutely crushed it.

PGJ

So there you have it, true confessions of failures to pull the trigger, for anyone who thought I was crowing about Spain.


At the time this article was written, the author, sadly, failed to hold or have held a long position in the securities mentioned other than EWP. Contact Dave Nadig at [email protected] or follow him on Twitter: @DaveNadig.

 

 

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