A few could-a, should-a, would-a ETF picks from ETF.com's chief investment officer.
I don't live my life with much regret; it leads to too much stress. But I was looking at that one trade I'd made in the last little while—the iShares Spain ETF (EWP | B-94)—and that got me looking at the top-performing funds for the last 12 months.
Here's the top 10 list:
|Market Vectors Solar Energy||KWT||69.00%|
|Market Vectors Egypt||EGPT||62.39%|
|iPath Global Carbon ETN||GRN||60.17%|
|First Trust ISE Global Wind Energy||FAN||52.82%|
|Market Vectors Gulf States||MES||45.09%|
|WisdomTree Europe SmallCap Dividend||DFE||44.26%|
|iShares U.S. Aerospace & Defense||ITA||43.95%|
|iShares MSCI Denmark Capped||EDEN||43.67%|
|SPDR S&P Pharmaceuticals||XPH||42.63%|
Now, I'm not going to beat myself up about anything here. These are some pretty narrow calls—big bets on alternative energy and the Middle East. There wasn't much chance I was going to pile into Denmark, or pharma or defense stocks. I'm glad all those ETFs are there, I just don't think I'd ever have had the prescience to make a meaningful allocation to them a year ago.
The one slightly annoying one, from a regrets standpoint, is the iPath Global Carbon ETN (GRN). To be clear, this is an ETN that's had periods of such low liquidity as to be nearly un-ownable. But it's also the poster child of where the ETN structure can give investors access to previously inaccessible, and in this case, invisible, assets.
GRN is tied to an index of carbon credits, a market that's not all that efficient, and notoriously difficult to access. And, when things started heating up for alternative energy, GRN lagged. Eventually the writing was on the wall.
The window was small, but there have definitely been windows. GRN has since seen volume increase, trading as much as 100,000 shares on some days. So, a very careful, very smart trader might have been able to swoop in.
But who am I kidding? There's really no chance I would have made that kind of a tactical play. So all in all, the top 10 isn't the subject of much regret. But what if we dig into the next tier?
|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.
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.