Perhaps one of the best ways to get a feel for the highlights and lowlights of any given time period is to take a look at the world of exchange-traded funds.
After all, at this point, ETFs cover just about every corner of the market, splicing and dicing Wall Street by market cap, sector, asset class and geography. So, if you want to see how gold did, for instance, take a look at the SPDR Gold Shares (GLD). U.S. large caps? Vanguard Large Cap (VV).
It’s just that easy.
The first half of 2013 is no different — a glimpse into some of the past six months’ best and worst performers are a pretty good reflection of many of the major headlines we’ve seen throughout the year, though a couple might surprise you given their relative lack of coverage.
So, without further ado, here’s a look at some of 2013’s shiners and stinkers so far:
Best: iShares MSCI Ireland Capped ETF
YTD Performance: +14%
The Celtic Tiger turned Paper Tiger is starting to show some real stripes once more. While American and Japanese equities have stolen the spotlight so far this year, the iShares MSCI Ireland Capped ETF (EIRL) — a collection of Irish stocks across the capitalization spectrum — actually is edging out the SPDR S&P 500 ETF (SPY) and iShares MSCI Japan Index (EWJ) as of this writing.
The improvement in Irish stocks has come amid the country’s generally improving economic picture, reflected in a huge yield decline in the Irish 10-year note, from its peak south of 14% in summer 2011 to just above 4% presently. Also, the country is expected to exit its EU/IMF bailout by year’s end.
Despite a flat YTD performance for building materials manufacturer CRH (CRH), which makes up nearly a quarter of EIRL’s weight, the ETF has been buoyed by strong performances from other major holdings such as biotech company Elan (ELN, +39%) and airline operator Ryanair (RYAAY, +49%).
EIRL charges 0.5% in expenses, or $50 for every $10,000 invested.
Worst: Market Vectors Egypt Index ETF
YTD Performance: -27%
The Market Vectors Egypt Index ETF (EGPT) has fallen on the other end of the international-equity spectrum.
Political unrest has been the main culprit of EGPT’s 27% bleed-out for the year-to-date. The country has been wracked by protests against president Mohammed Morsi, the country’s first Islamist president, amid economic decline and shortages of fuel and water.
Things have gotten so bad that index provider MSCI Inc. (MSCI) earlier this month said it might reconsider Egypt’s emerging-market status.
Top holdings that have sputtered this year include Commercial International Bank (CIBEY, -32%) and real estate developer Talaat Mostafa Group Holding (-13%). EGPT charges 0.96% in expenses.
Best: iShares Nasdaq Biotechnology Index Fund
YTD Performance: +27%
The iShares Nasdaq Biotechnology Index Fund (IBB) is one of two major biotech ETFs trading in the U.S., with the other being the SPDR S&P Biotech ETF (XBI), itself up a nice 19% year-to-date.
Biotechs have been buoyed by a number of major drivers for the past few years, including the market prospects of the aging baby boomers, the expansion of Medicare coverage and the real quick-hit specialist: mergers & acquisitions.
Big Pharma’s biggest names have become increasingly reliant on M&A, not R&D, to fill their pipelines as their patents expire and sales of their best products are gobbled up by generics. The smaller biotechs traditionally held by XBI and IBB are the natural beneficiaries.
This biotech fund has gotten huge boosts this year from the 40%-50% returns from top holdings Celgene (CELG), Gilead Sciences (GILD) and Biogen (BIIB). IBB charges 0.48% in expenses.
Worst: Market Vectors Coal ETF
YTD Performance: -30%
A pair of words you don’t want to hear if you’re invested in companies related to a particular commodity: “crippling oversupply.” But that’s exactly what’s facing coal — and subsequently, coal miners — as new operations have popped up across the globe without any meaningful rebound in demand.
Patriot Coal (PCXCQ) has already been claimed by the worsening coal market, filing for Chapter 11 bankruptcy protection in the middle of last year — and things have only gotten worse for coal prices since then.
Market Vectors Coal ETF (KOL) — a collection of miners and other related companies — has been understandingly pummeled, including miners Yanzhou Coal Mining (YZC, -58%) and Peabody Energy (BTU, -45%), as well as mining equipment manufacturer Joy Global (JOY, -45%). KOL charges 0.59% in expenses.
Best: Guggenheim Solar ETF
YTD Performance: +50%
Really, the Guggenheim Solar ETF (TAN) had nowhere to go but up. Even after gaining more than 50% so far in 2013, TAN remains 91% off its opening price at launch in April 2008.
But the picture for solar has been improving this year. Demand continues to head higher in the U.S., China and Japan, and while prices for panels and other components remain low, costs have dropped as well, helping buoy the manufacturers.
Also improving are the prospects for retailers such as Real Solar (RSOL) and December 2012 IPO SolarCity (SCTY), which have both tripled for the year-to-date.
TAN itself has been lifted by the strong performances of not only SCTY, but silicon wafer manufacturer SunEdison (SUNE, +154%) — formerly MEMC Electronic Materials — and photovoltaic solar module maker First Solar (FSLR, +45%).
Worst: Market Vectors Junior Gold Miners ETF
YTD Performance: -57%
At this point, it should probably be noted that Van Eck’s Market Vectors ETFs aren’t some awful cadre of inferior products — they just happen to have the biggest names in some of the worst asset classes right now.
Gold has fallen from a high of nearly $1,700 per ounce earlier this year to just below $1,200. While that 30% decline has nicked investors in direct gold investing vehicles like the GLD, it’s really brought the pain to miners of the yellow metal.
Especially hard hit has been the Market Vectors Junior Gold Miners ETF (GDXJ), which holds small- and midcap junior miners. These miners are small exploration companies focused on the discovery of precious metals and minerals, who then usually sell successful projects to larger miners.
A junior mining company is an exploration company that looks for new deposits of gold, silver, uranium or other precious minerals. These companies target properties that are believed to have significant potential for finding large mineral deposits. But when gold goes through the floor, so too do the junior miners hunting for it.
Big losers for GDXJ this year include Toronto Stock Exchange-listed OceanaGold (-60%), Sandstorm Gold (SAND, -59%) and Argonaut Gold (ARNGF, -48%),
GDXJ charges 0.55% in expenses.