Last Year’s ETF Laggards Rise in2014

January 22nd at 8:00am by Todd Shriber

Towards the end of every year, chatter starts about that year’s laggards turning into the following leaders.

Call it a dash to trash, call it a resurgence, and yes, call it comeback as five of the top-11 non-leveraged exchange traded funds to start 2014 are funds that were savagely punished last year. Translation: Nearly half of this year top-11 ETFs are precious metals mining funds. The “friending fear” trade was proffered up by some astute minds on Wall Street late last year and included the idea of being long the Market Vectors Gold Miners ETF (NYSEArca: GDX), an ETF that lost 54% in 2013. [Embrace Fear With ETFs]

The trade has worked. With Tuesday’s 1.6% gain, GDX, the largest gold miners ETF by assets, is up 12% this year as traders have embraced the notion that this might be a truly rare buying opportunity in mining stocks. [A Rare Opportunity in Gold Miners]

The two best non-leveraged ETFs to this point in 2014 are two funds that spent significant time on last year’s 10 worst list: The PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ) and the Global X Gold Explorers ETF (NYSEArca: GLDX) lost an average of about 58% last year, but both are up more  than 24% in 2014. Another one of last year’s worst offenders, the iShares MSCI Global Silver Miners ETF (NYSEArca: SLVP) is higher by 14% this year. [Silver Miners Outperforming as Metal Rises]

The Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) should not be overlooked. GDXJ plunged 61% last year and was reverse split along the way. This year, the ETF is up nearly 15%.

Other examples of materials and mining ETFs that sank last year but are on the mend this year include the Market Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX) and the Global X Uranium ETF (NYSEArca: URA). Those ETFs lost an average of 26% last year, but both are in the green this year. In fact, URA gained almost 4.2% Tuesday on volume that was more than eight times the daily average. [Uranium ETF Looks Hot]

The caveat is that not all of last year’s laggards have morphed into 2014’s winners. Take the example of the Market Vectors Coal ETF (NYSEArca: KOL). KOL lost almost 21% last year and is already off 6.3% to start 2014.

Another point worth noting is that some of 2013’s star performers are burning bright again this year. For example, five of this year’s top-11 ETFs are either biotech or solar funds. At the end of last year, both solar ETFs and four biotech ETFs were found among the top-10 non-leveraged ETFs.

Market Vectors Junior Gold Miners ETF