Best ETFs for Sectors in 2012

ETF Trends

The S&P 500 had its best first quarter since 1998, gaining 12% over the past three months. Is this a sign that investor confidence is back as analysts are raising earnings profits, and various sector exchange traded funds are rallying?

“The generally positive results from the Federal Reserve’s stress test of U.S. banks helped financial companies in the S&P 500 – the dogs of 2011 – soar more than 21 per cent from January to March, the biggest gain among the index’s 10 industry groups,” Nicholas Johnson wrote on The Globe and Mail.

Will Ashworth for InvestorPlace reports that the sectors that outperformed so far this year also lifted focused exchange traded funds. Financials gained 21.5%, outperforming information technology by around 40 basis points, according to Yardeni Research. [Emerging Markets Boost Consumer Staples ETFs]

The following sectors and ETFs had stand-out performances over the first quarter 2012:

  • Financials: Select Sector Financial SPDR ETF (NYSEArca: XLF) gained 21.5% over the first quarter in 2012. With $7.6 billion in assets, it is the largest financial ETF trading. The fund gained about $300 million in new asset under management this year. Runner up was the SPDR S&P Bank ETF (NYSEArca: KBE) gained about $400 million in AUM, and trended up about 20.3% for the same time period.
  • Technology: iShares Dow Jones US Technology Fund (NYSEArca: IYW) was the strongest technology ETF so far, up 21.77% year-to-date. Vanguard Information Technology (NYSEArca: VGT) gained 20.87% this year, beating heavyweight tech ETF Select Sector Technology SPDR ETF (NYSEArca: XLK) which gained 18.51% over the first quarter. All three funds have a top holding given to Apple (NasdaqGS : AAPL - News). [Technology ETFs with Big Positions in Apple]
  • Consumer Discretionary: International consumer discretionary stocks outdid U.S. based companies. SPDR S&P International Consumer Discretionary Sector ETF (NYSEArca: IPD) gained 20.23% over the first quarter. Interestingly, the Global X Auto ETF (NYSEArca: VROM) gained 25.92% over the first three months of 2012, beating other consumer discretionary funds. The ongoing rebound in auto sales is boosting this sub-sector of the sector. [5 ETFs to Play the Auto Industry Comeback]

Tisha Guerrero contributed to this article.

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