Top ETF Surprises So Far This Year

August 13, 2014

Junior miners, volatility and SPY outflows move the surprise meter.

Back at the beginning of the year, Matt and I made our “picks” for the year. We did so with the enormous caveat that we’re at heart long-term buy-and-hold investors, and our “picks” were as much conversation starters as convictions. Still, it’s fun to check in once in a while and see how wrong I was.

Junior Precious Metals

I was frankly surprised to see that one of my picks—the Market Vectors Gold Miners ETF (GDX | B-63)—had done as well as it has. It’s up almost 30 percent year-to-date, as the whole gold mining sector has recovered. But I’m not crowing, because boy did I miss the real winner there—the Global X Gold Explorers ETF (GLDX | D-24):

GLDX

Up more than 45 percent year-to-date, the fund’s just had an incredible ride, holding an equally weighted portfolio of just 20 predominantly North American gold wildcatters, with average market caps of just $300 million each.

It’s an enormously risky, concentrated bet—and you can see that if you tried to hop on board in March, you would have suffered an enormous gut-wrenching drop. But it’s hard to argue with the current numbers.

And GLDX isn’t even the best-performing equity fund of the year—that would go to the PureFunds ISE Junior Silver ETF (SILJ | F-25), a highly illiquid, $10 million collection of 25 tiny silver wildcatters, ranging from the Latin American focused Fortuna Silver to the $45 million Revett Mining, which is pinning its hopes on a new mine in Montana.

To suggest that these are speculative is to underuse the word “speculative,” but when it works, it works:

SILJ

These aren’t the two best-performing ETFs in the market—there are levered funds that have done better, and anything related to the highly pinched coffee futures market is up 60 percent this year, but for mainstream equity, these two are it.

 

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