In my last couple of articles, I discussed the growth of the ETF industry and how to determine what types of ETFs are smart investments.
Now, it’s time to figure out which ETFs look promising for your 2012 investment dollars. But first, let’s take a look back at the ETF marketplace in 2011.
According to Morningstar.com, here were the 10 worst-performing ETFs for the past year:
| ETF | Ticker | 1-year return (%) |
| ProShares UltraShort Silver | ZSL | -66.31% |
| Direxion Daily India Bull 3x Shares | INDL | -64.22% |
| PowerShares DB 3x Short 25+ Year Treasury Bond ETN |
SBND | -63.78% |
| Market Vectors Solar Energy | KWT | -63.46% |
| iPath Global Carbon | GRN | -62.47% |
| C-Tracks Citi Volatility Index | CVOL | -62.32% |
| Direxion Daily China Bull 3x | YINN | -62.25% |
| Guggenheim Solar | TAN | -61.87% |
| Direxion Daily Emerging Markets Bull 3x |
EDC | -61.30% |
| Global X Uranium | URA | -57.27% |
As you can see, alternative energy and emerging markets didn’t fare too well last year.
And here are the top 10 performers:
| ETF | Ticker | 1-year return (%) |
| PowerShares DB 3x Long 25+ Year Treasury Bond ETN |
LBND | 102.71% |
| Direxion Daily 20+ Year Treasury Bull 3X | TMF | 96.95% |
| ProShares Ultra 20+ Year Treasury ETF | UBT | 65.71% |
| Direxion Daily India Bear 3X | INDZ | 58.98% |
| PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund |
ZROZ | 58.74% |
| Vanguard Extended Duration | EDV | 53.89% |
| Direxion Daily 7-10 Year Treasury Bull 3X | TYD | 44.49% |
| iPath U.S. Treasury 10-Year Bull | DTYL | 42.25% |
| iPath Treasury Long Bond | DLBL | 42.06% |
| PowerShares Base Metals Double Short | BOM | 39.34% |
Huge bets on leveraged debt and Treasuries were the golden ETFs of 2011. But as I said in my last article, leveraged ETFs are very risky and should be purchased only by experienced, sophisticated investors who well understand their risks.
However, it’s clear that in a year when most stock market sectors saw negative, or tepid returns, fixed income was the winner. Yet a couple equity sectors outperformed, as shown by the next chart, and represented by various iShares ETFs:
| Sector | Symbol | 1-year return (%) |
| Health Care | IXJ | 8.2% |
| Consumer Staples | KXI | 7.3% |
| Energy | IXC | -0.3% |
| Technology | IXN | -3.7% |
| Telecommunications | IXP | -4.8% |
| Consumer Discretionary | RXI | -5.3% |
| Utilities | JXI | -8.0% |
| Industrial | EXI | -8.9% |
| Basic Materials | MXI | -18.4% |
| Financial Services | IXG | -21.4% |
| Source: SeekingAlpha |
Both health care and consumer staples managed to eke out decent returns last year, but it certainly was not a banner year for equities or equity ETFs!
So let’s look ahead and see what 2012 might have in store for us.
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