ETF Performance Report: January
January 31st at 4:00pm by Tom Lydon
Global stocks and exchange traded funds have surged out of the gate in 2013 following the last-minute compromise on the U.S. fiscal cliff. Positive economic data and higher earnings helped maintain the momentum, but the markets slowed a bit at the end of the month on poor fourth quarter growth numbers.
The Dow Jones Industrial Average posted a 7.7% gain over the past month. Meanwhile, the Nasdaq Composite added 6.2% and the S&P 500 increased 7.2%
The top performing non-leveraged ETFs over January include the Market Vectors Vietnam ETF (NYSEArca: VNM) up 24.3%, PowerShares KBW Capital Markets Portfolio (NYSEArca: KBWC) up 14.5% and Market Vectors Solar Energy ETF (NYSEArca: KWT) up 13.5%.
Vietnamese stocks rallied after the government stepped in to bolster the economy. Meanwhile, more foreign investors are investing in Vietnam because of positive reforms, a strong growth outlook and positive demographics. [Vietnam ETF Rallies on Reform Measures, Economy]
The U.S. capital markets are making a strong turnaround as robust balance sheets and expected growth across various industries will help boost business. [Financial ETF Eyes Post-Crisis High After JP Morgan, Goldman Earnings]
Alternative energy stocks also made a rebound in the New Year after government subsidies for the solar industry were left intact after the fiscal cliff budget deal. [Alternative Energy ETFs Win in Fiscal Cliff Deal]
On the flip side, the bottom performing non-leveraged ETFs over the past month include ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) down 22.3%, ProShares VIX Mid-Term Futures ETF (NYSEArca: VIXM) down 17.7% and United States Metals Index Fund (NYSEArca: USMI) down 11.6%.
The decline in volatility-linked products shows investors are growing more confident in the rally.
Positive economic data, such as better employment numbers, healthy retail sales, housing starts and better-than-expected earnings, have lifted the S&P 500 near its all-time high from 2007.
Additionally, the Federal Reserve has maintained its quantitative easing plan to buy bonds as a way to keep rates down and stimulate the economy.
Meanwhile, financial problems in Europe have abated, boosting confidence in the euro.
However, the month ended on a dour note after the U.S. government revealed an unexpected fourth quarter contraction in the economy.
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.