by Jim Woods | April 18, 2011 12:01 am
Over the past month, stocks have been in a decidedly bullish mood. Since falling to its March 16 lows, the broad-based S&P 500 Index is up more than 5.5%, and that includes the past week, where the market experienced several sell-offs. And while the recent move higher in the S&P 500 has investors smiling, those smiles pale in comparison to the wide grins on the faces of investors who’ve owned some of the hottest exchange-traded funds (ETFs) in the hottest sectors.
If the current trend in the recent best-of-breed sectors continues, you’ll be glad you have money invested in the following five ETFs pegged to five of the hottest current market sectors.
Things are going very well “down under,” as stocks that make up the iShares MSCI Australia Index Fund (NYSE: EWA) have powered 10.08% higher over the past month. This fund contains some major natural resources firms such as BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO), as well as some of the country’s biggest financial institutions.
If you believe in the thesis that the global economic recovery is just now picking up steam, then the natural resources-rich nation of Australia is a great place to capture that energy.
The bulk of the headlines devoted to Asian markets generally are focused on China. Yet over the past month, the hottest Asian market has been South Korea. The iShares MSCI South Korea Index Fund (NYSE: EWY), an ETF pegged to South Korea’s benchmark index, has enjoyed a 10.67% rise over the past month, placing it firmly among the top-performing sector ETFs.
Top stocks in EWY are South Korean-traded Samsung Electronics, steelmaker POSCO (NYSE: PKX) and automaker Hyundai Motor Co. (OTC: HYMTF). If investors continue their bullish stance on international equities at large, then look for EWY to continue attracting investor capital.
The small-cap segment of the burgeoning Brazilian equity market has delivered investors a one-month return of 10.79%. That stellar performance in this specialized market segment can be captured with the Market Vectors Brazil Small-Cap ETF (NYSE: BRF).
This ETF represents what’s been described as the “real Brazil,” because it contains companies that concentrate on domestic investment themes such as homebuilding and consumer goods. The fund does not include large natural resources companies such as Petrobras (NYSE: PBR) and Vale (NYSE: VALE).
It’s the hottest commodity play around, so it should come as no surprise that an ETF pegged to the spot price of silver has shone over the past month. The PowerShares DB Silver Fund (NYSE: DBS) has spiked 15.6% over the past four weeks, and this sky-high rise in the value of DBS can clearly be seen in the four-week chart of this peak-performing precious metal ETF.
If investors keep embracing the metals sector, look out for even more shine in DBS.
Atop the list of best-performing ETFs during the past month is the Market Vectors Rare Earth/Strategic Metals Index ETF (NYSE: REMX). The fund is up 22.33% over the past four weeks, and that’s chiefly due to big developments taking shape in the rare earth space. Recently, one of REMX’s biggest holdings, Molycorp (NYSE: MCP), announced a takeover of Estonia-based rare earth producer AS Silmet. The stock surged on the news, as many investors see the increase production and supply of rare earth minerals from companies in the space as a clear sign that this is the next boom sector.
Rare earth metals are used in the production of hybrid car batteries and other alternative energy devices. The recent surge in oil prices has caused a reexamination of interest in this kind of technology, and hence a surge in the value of stocks in the sector.
At the time of publication, Jim Woods held no positions in any of the ETFs mentioned in this article.
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