Each week, I normally publish the past week's hottest ETFs to share some new trends and niche ETFs out there and give investors some new investing/diversification ideas. However, I wanted to provide a monthly update instead to demonstrate that over a monthly period, many non-leveraged ETFs make the list as top performers whereas on a weekly basis it's often the daily rebalancing leveraged ETFs. This is due to the value destruction that occurs over time due to daily rebalancing as further outlined in this
3X ETF risk article. So, for a more "long term" view, if you consider monthly long term, as opposed to weekly snapshots, here are some hot trends from the month of September from ETFs not employing daily leveraged returns. As a point of reference, the S&P500 was up 3.5% for the month of September.
RSX - Market Vectors Russia - Up 18% - Russia been on a tear, up 18% in September and close to 100% YTD. Viewed as on the verge of default in early 2009, with oil stabilized around $70 per barrel along with the global economy recovering, markets have viewed Russia's near-collapse in equities as overdone and investors have been buying back in in force. The ruble has recovered against the US dollar indicating the worst may be over from a devaluation standpoint. The peak trading value for RSX was close to 60 in 2008 so a double from here is at least plausible if the global economy gets back on its feet.
GXG - Global X InterBolsa FTSE Colombia20 - Up 16% - This ETF holds the most representative Colombia holdings and is deemed by some as a "frontier market" which carries even more volatility (and promise) than the proverbial BRIC/Emerging Markets. As outlined in more detail this initial
Colombia ETF launch article, the holdings are pretty concentrated energy and financials. GXG is up over 100% since launch in February vs. 22% for the S&P500.
EWZ - iShares MSCI Brazil Index - Up 16% - Brazil has staged a nice recovery out of the March lows and continued its ascent in April, up 16%. Following a stellar month, it didn't hurt to garner the
2016 Olympics award either. EWZ is up 92% on the year vs. 14% for the S&P500. While EWZ saw a slight bump on the news of the Olympics draw last week, I don't envision bringing the Olympcis to Brazil in 2016 is going to make or break ETF returns in the coming weeks. First, the news has already been digested. Next, it's likely background noise compared to the rapid ascent and volatility already tied to Brazil. If you want to buy EWZ, but it for the resurgence of the global economy, continued export of Brazil's resources, a favorable growth environment, etc., and not for the Olympics.
FAA - Claymore/NYSE Arca Airline - Up 15% - Airlines have really recovered strongly in the past few months, up 43% in the prior 3 month period vs. 14% for the S&P500. With the view of the global economy improving, cost cutting, new fees and services and a reversion back to the mean from an overreaction on the downside, airlines have rallied seemingly as a relief that they're still surviving as opposed to a miraculous change in fundamentals within the industry.
GAZ - Barclays iPath Natural Gas - Up 14% - Natural gas has been on a tear in recent weeks after being severely depressed for some time given that its demand profile is divergent from that of oil and demand in the US has been very light given the recession. GAZ has actually lost half its value YTD. However, there appears to be a break in the trend for a few weeks now with GAZ continuing to move upward strongly.
