Top Performing ETFs Year To Date

Most ETFs were in the red after a difficult third quarter but there were some surprising winners  

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Editor, etf.com Europe
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Reviewed by: Rachael Revesz
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Edited by: Rachael Revesz

By all accounts, the third quarter of the year was a horrible one for risk-asset prices. The S&P 500 dropped 6.9 percent in the July through September period, the worst quarter since 2011. On a year-to-date basis, the S&P's losses were similar, with the index losing about 6.7 percent through the first nine months of the year.

Outside the U.S., there weren't many bright spots either. The MSCI World Index lost 8.9 percent in Q3 and 7.5 percent year-to-date, while the FTSE Emerging Markets Index dropped 18.8 percent in the third quarter and 15.7 percent year-to-date.

The exchange-traded funds tied to these areas such as the SPDR S&P 500 UCITS ETF (SPX5), the iShares Core MSCI World UCITS ETF (IWDA) and the Vanguard FTSE Emerging Markets UCITS ETF (VDEM) have all been losing bets this year.

Bright Spots In A Down Year

Of the more than 1,400 ETFs in Europe, the majority are in the red for the year. Yet, as is typically the case, it's possible to find more than a handful of funds that are bucking the broader trend. This year has been no different in that regard.

Interestingly, the top 10 ETFs – measured by price performance in GBP this year to 2 October – encompass many different areas, as was discovered by data house Markit.

Technology Is The Winner

Excluding short and leveraged funds, the top spot went to the iShares TecDAX UCITS ETF (EXS2) at 19.52 percent returns, and it received healthy inflows to boot at over £65 million. The underlying index is rather concentrated at 30 German tech companies, with over 10 percent of the fund in United Internet.

Over the long term, the index has produced lesser returns, and since inception in 2001, the fund has only gained 1.14 percent.

 

Outperformers In Europe

Another region that was doing well for much of the year before the big swoon in August and September was Europe. Aided by the European Central Bank's open-ended quantitative easing program, small cap funds like the SPDR MSCI Europe Small Cap UCITS ETF (EUSC) and the iShares MSCI EMU Small Cap UCITS ETF (CEUS) have gathered in returns of 10.08 and 9.9 percent respectively. They also received a combined £100.5 million in assets.

Despite the pullback in broader large cap Europe ETFs, a few country-specific ETFs are still well in the green for the year. The Lyxor ETF FTSE Italia Mid Cap UCITS (ITAMID) has gathered over 17 percent and is the second top winner, and for investors taking a punt, the FinEx Tradable Russian Corporate Bond UCITS ETF (FXRU) has bagged third spot year-to-date at 17.3 percent.

 

Consumer Goods Is King

China is trying to reposition its economy from investment-led to consumption-led to maintain stable GDP growth. This has been a boon for funds like the Chinese-focused db X-trackers CSI 300 Consumer Discretionary Index UCITS ETF (XCHD), which has scooped 12.77 percent since 1 January and a small total of £7 million inflows.

European consumers also have more to spend this year than during the credit or Eurozone crises, which has benefitted European-focused indexes used by Source and ComStage.

Consumer discretionary is one of the biggest overlaps in the list, with three funds in the top 10 and four funds in the top 30 ETFs.

Surprising Sector ETFs

As investors are offered more targeted ways to fine-tune their exposure, sector ETFs have come into their own. Performance-wise, the top two so far this year have been Chinese-focused healthcare (db X-trackers CSI 300 Health Care Index UCITS ETF - XCHC) and UK property (iShares UK Property UCITS ETF – IUKP), which returned 14 percent and 11 percent respectively. Property was hugely popular and gathered £69 million, yet the better performing healthcare fund only took in £2 million, proving there is not always a correlation between investor conviction and performance.

 

No.

Fund

Return (%) GBP

1

iShares TecDAX UCITS ETF (DE)

19.52

2

Lyxor ETF FTSE Italia Mid Cap UCITS

17.87

3

FinEx Tradable Russian Corporate Bonds UCITS ETF (USD)

17.35

4

db x-trackers CSI 300 Health Care Index UCITS ETF 1C

14.07

5

db x-trackers CSI 300 Consumer Discretionary Index UCITS ETF 1C

12.77

6

iShares UK Property UCITS ETF

11.31

7

ComStage STOXX Europe 600 Personal & Household Goods NR UCITS ETF

10.94

8

Source STOXX Europe 600 Optimised Personal & Household Goods UCITS ETF

10.63

9

SPDR MSCI Europe Small Cap UCITS ETF

10.63

10

iShares MSCI EMU Small Cap UCITS ETF

9.90

Additional reporting by Sumit Roy

Rachael Revesz joined etf.com in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.