Year-To-Date ETF Performance - The Best And The Worst

November 13, 2007

BRIC countries outperformed, while home construction and financials lagged.


Editor's Note: This article originally stated that there were no ETFs covering Russia. That is incorrect: The Market Vectors Russia ETF was launched earlier this year by Van Eck Global (NYSE: RSX).

So far, 2007 is shaping up to be the year of the emerging markets in the exchange-traded fund and exchange-traded note arena. Depending on your frame of reference, eight or nine of the 10 best-performing funds (and ETNs) in the database for the first 10 months of 2007 cover emerging markets.

Not surprisingly, the top performer, hands down, is the iShares FTSE/Xinhua China 25 ETF (NYSE: FXI), which was up a rather stunning 91.70% at the end of October. Another China ETF came in third for the same period: The PowerShares Golden Dragon Halter USX China Portfolio (AMEX: PGJ) was up 86.60%. China, of course, is a very hot market right now, so the performance of these funds is about as surprising as finding sand at the beach.

However, emerging markets and the BRIC (Brazil, Russia, India and China) countries, in particular, generally seem to be doing well. The Claymore/BNY BRIC ETF (AMEX: EEB) was the fourth-best performer for the 10 months and was up 82.52%. It was followed by the iShares MSCI Brazil ETF (NYSE: EWZ), up 82.08%, and the iPath MSCI India ETN, up 63.40%. The Market Vectors Russia ETF (NYSE: RSX) began trading in April of this year, but its underlying index was up 32.18% for the first 10 months of 2007.

It looks like the BRIC countries might have been dragging other emerging markets upward. The fifth-, sixth- and seventh-best performers are also emerging markets funds. The iShares S&P Latin America 40 ETF (NYSE: ILF) was up 56.73%; of course, 17 of the underlying index's 40 stocks are Brazilian, and at the end of June, Brazil represented more than 57% of the index's market capitalization. The BLDRS Emerging Markets 50 ADR ETF (NASDAQ: ADRE) was up 56.38%. This is also not surprising given that the fund's holdings included stocks from all four BRIC countries, with Brazil weighted at almost 29% as of September 30, followed by China at 11.18%, India at 6.34% and Russia at 2.07%, for a total BRIC weighting of 48.11%.

The Vanguard Emerging Markets ETF (AMEX: VWO) returned 51.71% for the first 10 months of 2007, and it had a 41.7% weighting in BRIC countries as of September 30. Perhaps most interesting about this fund's performance is the fact that the iShares MSCI Emerging Markets ETF (NYSE: EEM), which also tracks the MSCI Emerging Markets Index, was up just 44.50% for the same time period, although its BRIC weighting was in fact slightly higher than that of VWO. Incidentally, VWO has about $6.27 billion in assets compared with $28.49 billion for EEM.

The tenth-best performer for the 10-month period was the iShares MSCI South Korea ETF (NYSE: EWY), which was up 48.58%. Although South Korea is classified as a developed market by some index providers, such as S&P and Dow Jones, others such as FTSE and MSCI classify it as an emerging market.

The second-best performer for the 10-month period was the only ETF (or ETN) in the top 10 that didn't track one or more emerging markets. The Market Vectors Steel ETF (AMEX: SLX) fully recovered from a dip that began earlier this year when the subprime mortgage market meltdown hit the stock market in July to continue its otherwise upward trend. It was up 86.75% for the first 10 months of the year, and up more than 55% from mid-August, the bottom of the dip.  

10 Best-Performing ETFs, Year-to-Date, October 31, 2007
      Returns (%)
Name Ticker Exp Ratio 1 Mo 3 Mo YTD 12 Mo
iShares FTSE/Xinhua China 25 ETF FXI 0.74 17.35 51.13 91.70 153.37
Market Vectors Steel Sector ETF SLX 0.55 8.39 30.55 86.75 98.13
PowerShares Golden Dragon Halter USX China Portfolio PGJ 0.71 16.21 46.85 86.60 132.89
Claymore/BNY BRIC ETF EEB 0.60 19.44 44.77 82.52 113.90
iShares MSCI Brazil ETF EWZ 0.74 15.31 34.58 82.08 108.34
iPath MSCI India Index ETN INP 0.89 17.01 33.66 63.40 -
iShares S&P Latin America 40 ETF ILF 0.50 10.81 23.96 56.73 76.86
BLDRS Emerging Markets 50 ADR ETF ADRE 0.30 13.54 30.11 56.38 77.44
Vanguard Emerging Markets ETF VWO 0.30 12.35 23.26 51.71 69.78
iShares MSCI South Korea ETF EWY 0.74 7.15 10.00 48.58 56.07

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