This year shaped up to be quite kind to investors, as bullish forces prevailed despite a number of bumps in the road. 2013 started off with a bang as investors rejoiced over the fact that politicians on Capitol Hill steered the nation away from the much-feared fiscal cliff. The rally on Wall Street persisted for nearly five months without a major pullback. At the end of May, however, the Federal Reserve threw a wrench into the mix when it hinted at potentially starting to scale back its monthly bond-repurchases, inevitably triggering a correction as investors were reminded that stimulus measures will eventually stop and interest rates will rise [for more ETF news and analysis, sign up for the free ETFdb newsletter].
Nonetheless, bullish momentum was quick to return to Wall Street as bargain shoppers stepped in after the pullback, bolstering major equity indexes into previously uncharted territory for the rest of the year. From an allocation perspective, each meaningful pullback in 2013 prompted investors to rotate out of defensive sectors, namely Utilities, and into more growth-sensitive ones, including Industrials and Technology; this trend has persisted as more and more investors have been tilting their portfolios towards cyclical securities amid improving global growth prospects and accommodative monetary policy at home [see Best & Worst Bond ETFs of 2013].
Below, we highlight 2013’s best and worst Sector ETF performers. In an effort to avoid duplicates, we have profiled only the best or worst performing ETF from a particular sector; for example, if five different China technology ETFs made the list, we only feature the single best (or worst) performing one. Needless to say, 2013 was most definitely an opportune time to invest in small caps as rising risk appetites bolstered smaller companies ahead of their large-cap counterparts throughout the year [see Small Cap ETFdb Portfolio].
Please note that this list excludes inverse and leveraged ETFs (see All Sector ETFs) and the year-to-date returns are as of December 13th, 2013:
2013's Best Performing Sector ETFs China Technology ETF (CQQQ) 53.90% S&P SmallCap Health Care Portfolio (PSCH) 51.64% Dynamic Industrials (PRN) 44.53% S&P SmallCap Consumer Discretionary Portfolio (PSCD) 42.82% S&P SmallCap Consumer Staples Portfolio (PSCC) 39.79% S&P SmallCap Information Technology Portfolio (PSCT) 37.16% Financials Sector Fund (RWW) 36.92% SPDR S&P International Telecommunications Sector ETF (IST) 33.28% S&P SmallCap Energy Portfolio (PSCE) 32.97% S&P Equal Weight Technology ETF (RYT) 32.48%
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2013's Worst Performing Sector ETFs Brazil Financials ETF (BRAF) -21.79% Brazil Consumer ETF (BRAQ) -21.08% MSCI Emerging Markets Materials Sector Index Fund (EMMT) -20.73% China Materials ETF (CHIM) -13.45% India Consumer ETF (INCO) -11.60% MSCI Emerging Markets Energy Sector Capped Index Fund (EMEY) -11.46% MSCI Emerging Markets Financials Sector Index Fund (EMFN) -10.56% China Real Estate ETF (TAO) -9.85% Global ex-US Real Estate Fund (DRW) -5.96% Emerging Markets Consumer (ECON) -1.88%
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