10 Best Performing ETFs Year To Date

November 05, 2014

5. The single-best-performing exchange-traded product is the Elements Linked to Spectrum Large Cap U.S. Momentum ETN (EEH)

This ETN, which tracks an index of large-cap U.S. stocks aiming to outperform the S&P 500 through a momentum strategy, tops the list of year-to-date best performers. But this isn’t exactly a reflection of a strong strategy rallying on solid fundamentals.

EEH is actually a tiny ETN—as in $1.5 million—that barely traded so far all year, and one that lacks much oversight. This year, it saw a spike in volume that was enough to push it into a huge premium over fair value. EEH is now up nearly 140 percent year-to-date.

As Dave Nadig, chief investment officer of ETF.com, recently pointed out in a blog in which he called EEH the worst ETF in the world, “Big premiums on small ETFs with no liquidity aren’t that uncommon.”

What’s happening, he says, is that the action seen in EEH is most likely the result of HFT algos designed to “look for patterns and pounce on anything that moves.”

“My guess is that HFT algos don’t even recognize that EEH is an ETF, or that a thing such as fair value even exists,” he said. “Miniscule, million-dollar ETNs like EEH are enormously susceptible to this.”

Top 10 Performers (Ex Leveraged & Inverse)

Ticker Fund Asset Class YTD TRR AUM ($M)
EEH ELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN U.S. Equity 139.31 1.84
JO iPath Dow Jones-UBS Coffee Total Return ETN Commodities 64.84 81.4
CAFE iPath Pure Beta Coffee ETN Commodities 60.2 7.78
SMIN iShares MSCI India Small-Cap Int. Equity 45.29 16.07
SCIF Market Vectors India Small-Cap Int. Equity 41.32 265.72
FBT First Trust NYSE Arca Biotechnology U.S. Equity 41.2 1,747.58
SCIN EGShares India Small Cap Int. Equity 40.17 27.97
INCO EGShares India Consumer Int. Equity 39.04 10.91
ZROZ PIMCO 25+ Year Zero Coupon U.S. Treasury U.S. Fixed Income 34.45 78.47
PBE PowerShares Dynamic Biotech & Genome U.S. Equity 34.06 421.6
As of 10/29/14

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