The best performing exchange traded funds this year include some surprise moves and others adding on another stellar year.
ETFs that track the solar, alternative energy, broker dealer and biotechnology sectors have outperformed this year, writes Trang Ho for Investor’s Business Daily. [Some of 2012’s Best Sector ETFs Kept Soaring in 2013]
The Guggenheim Solar ETF (TAN) surged 119.2% year-to-date, outdistancing the S&P 500′s 27.9% increase by a long shot, after suffering from three straight years of double-digit losses on cheap supply from China and falling global demand. Nevertheless, TAN is still short of its 2008 high by almost eightfold. [Seduced by Solar ETFs]
In 2013, 13 solar stocks from TAN’s underlying index doubled or more, including Shungfeng Photovoltaic International, which shot up 1,603% this year, and Canadian Solar, which jumped 714%.
Looking ahead, the Institute for Energy Research predicts that solar will see the fastest growth and account for 7.5% of all non-hydropower renewable energy sources in 2040.
The Market Vectors Solar Energy ETF (KWT) increased 94% this year. KWT’s holdings overlaps with many of TAN’s components, but the Market Vectors ETF does nto include Shungfeng. KWT sill has to rise 10 times to regain its pre-2008 height.
The Market Vectors Global Alternative Energy ETF (GEX) rose 62.4% year-to-date. Along with solar exposure, GEX includes other alternate energy companies exposed to wind energy, technology, renewable energy and water. Elon Musk’s Tesla (TSLA) is among the top performers within the underlying indexing, rising 360%. [ETF Chart of the Day: Talking Tesla]
According to the U.S. Energy Information Administration, electricity from wind energy is estimated to expand 18% in 2013 and by 2.4% in 2014, making up over 4% of total electricity output.
The iShares U.S. Broker Dealers ETF (IAI) increased 60.7% year-to-date. S&P Capital IQ expects the sector will continue to benefit from brokers and investment banks as commission fees and institutional trading remain below 2008 levels and pick up in the future. Additionally, rising rates would help bolster earnings for investment banks and brokerage firms.
The Market Vectors Biotech ETF (BBH) gained 58.4% year-to-date after outperforming the market for three straight years. Credit Suisse believes that biotechs can continue to outperform in 2014 because of a “perfect storm” in late-stage clinical studies and drug approvals. [10 ETF Investments That Got the Most Bang for Your Buck]
For more information on market sectors, visit our sector ETFs category.