The First Trust Nasdaq Clean Edge Green Energy ETF (QCLN) is challenging the db X-trackers MSCI Japan Hedged Equity ETF (DBJP) for first position in a tally of top-performing ETFs year-to-date, with gains of 37.3 percent, and much of that linked to shares of Tesla, the luxury electric sports car maker.
Japan’s yen-weakening policies have been a mega theme in investment markets in recent months, so it’s no surprise that QCLN, a small $36.2 million ETF, has escaped notice until now. QCLN has the distinction of being the alternative energy equities ETF with the highest allocation to Tesla, a 13.4 percent weighting. It’s also one of only a very few ETFs to hold Tesla among its top 10 holdings.
The Market Vectors Global Alternative Energy ETF (GEX) is another Tesla-holding fund, with a 6.3 percent stake, and one that has posted gains of more than 27.6 percent year-to-date, making it No. 8 on IndexUniverse’s latest tally of year-to-date top performers.
As a quick background, Tesla’s (TSLA) stock price has risen nearly 40 percent in the past week alone, on the heels of its first-ever profitable quarter, which helped lift year-to-date performance a whopping 128 percent. Compare that with 13.8 percent gains for the S'P 500 over the same period.
The electric car manufacturer behind the Tesla Model S, now ranked as the top-scoring car according to ConsumerReports.org , reported its first quarterly profit last week—a 115 percent increase in income. Revenue hit $562 million in the first quarter from $30 million in the same year-earlier period.
Investors have poured nearly $6 million into QCLN—a sixth of its total current assets—in the past month or so, putting year-to-date net inflows at $15.4 million. Market Vectors’ GEX has attracted a net of nearly $4 million since April 1, according to IndexUniverse data.
Currency-Hedged Japan ETFs Still Shining
Japan-focused DBJP, currently the best-performing ETF year-to-date, has seen gains of 37.99 percent since Jan. 1.
Its counterpart, the WisdomTree Japan Hedged Equity ETF (DXJ)—the most popular ETFs so far in 2013 in terms of asset gathering—is not far behind, with gains of 33.4 percent since Jan. 1.
Much has been said about these funds, and their resonance with investors; namely, that they serve up currency-hedged exposure to Japanese equities at a time when aggressive monetary policies in Japan are translating into soaring equities markets and a steep weakening of the yen.
DXJ’s success, in particular, has been so massive it helped WisdomTree’s first-quarter net income jump sevenfold on the year .
Biotech ETFs Get Their Moment In The Spotlight
Finally, another pair of ETFs worth pointing out is the biotech funds populating IndexUniverse’s Top 10 Performers list.
The iShares Nasdaq Biotechnology Index Fund (IBB)—the biggest and oldest biotech-focused ETF in the market, with $3.15 billion in assets gathered since its 2001 launch—has tagged on gains of 27.45 percent year-to-date, making it the ninth-best-performing ETF of 2013 so far.
IBB is rising as successful treatment launches and what some see as a more “accommodating” U.S. approvals process for new drugs fuel the biotech sector. That’s also the case for the performance of the Market Vectors Biotech ETF (BBH), which is up 32 percent so far this year, making it the fifth-best-performing fund year-to-date.
Broadly speaking, the biotech sector is a key subsegment of the health care sector, and has recently benefited from favorable prospects for “new and novel therapies” to make it to clinical trials and commercialization, according to a research note from S'P Capital IQ.
“We are encouraged by what we view as a strong period for the reporting of late-stage clinical results for such prevalent conditions such as hepatitis C and multiple sclerosis, and rarer conditions such as cystic fibrosis,” the note said.
“In our view, we think the U.S. has become more accommodating in regard to approvals following a period of inconsistent decision making that fueled volatility across the biopharmaceutical industry,” it added.
On a more granular level, what IBB and BBH—as well as other biotech ETFs such as the $824.5 million SPDR S'P Biotechnology ETF (XBI) and the $156.7 million PowerShares Dynamic Biotech ' Genome Fund (PBE)—all share are holdings that proved to be stellar growth stocks for the better part of a decade.
Firms like Biogen, known for its multiple sclerosis drugs, and Regeneron, a drug manufacturer known for its cancer and arthritis drugs, have seen their stock prices soar on the heels of new discoveries and successful drug releases.
Biogen, found among the top 10 holdings in just about every biotech ETF, released a new, orally taken multiple sclerosis drug in April that immediately outsold competing drugs in its first two weeks, according to a MarketWatch report at the time. Biogen’s shares have gained 44.7 percent since Jan. 1.
Regeneron, another key player in the segment, has seen its share price jump fivefold in two years, as Reuters reported recently, with the latest push coming from the 2011 approval of a new macular degeneration drug. A pipeline full of other treatments in the works suggests Regeneron’s upside still has more potential, the article said.
Year-to-date, Regeneron’s stock price has tagged on gains of 58.3 percent, which puts one-year returns at 106.5 percent, according to Google Finance data.
“In 2012, the FDA approved 39 new therapies, compared with 30 in 2011, with several of these treatments approved months ahead of their scheduled dates,” S'P said in its note. “In our view, these trends have eased an overhang stemming from the FDA’s inconsistency in making timely decisions over the prior few years.”
“We think biotechnology investing carries potential for above-average performance potential, but with a higher inherent risk profile,” it said.
Top 10 YTD Performers
|Ticker||Name||YTD Performance||Weekly Performance||AUM ($, mm)|
|DBJP||db X-trackers MSCI Japan Hedged Equity||37.99||3.98||70.62|
|QCLN||First Trust NASDAQ Clean Edge Green Energy||37.27||5.81||36.28|
|IDXJ||Market Vectors Indonesia Small Cap||33.93||0.84||10.63|
|DXJ||WisdomTree Japan Hedged Equity||33.41||4.13||8,233.02|
|BBH||Market Vectors Biotech||32.04||0.34||300.43|
|KBWI||PowerShares KBW Insurance||27.70||4.25||2.71|
|GEX||Market Vectors Global Alternative Energy||27.63||4.53||60.01|
|IBB||iShares NASDAQ Biotechnology||27.45||0.52||3,157.31|
|AMJ||JPMorgan Alerian MLP ETN||26.50||3.07||5,865.81|
Disclaimer:All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.
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