The first half of 2013 is behind us and the exchange traded fund industry has managed to maintain growth. The industry gathered about $73 billion over the past six months.
A way to approach one’s investing strategy is to look at the basic trends that prevailed over the past few months. While this is not a guidebook as to what will happen over the next 6 months of the year, it can indicate possible market movements and the general sentiment going forward.
Eric Balchunas for Bloomberg looks back at the past 6 months and analyzes basic trends taking place in the ETF industry. He reports on the following 5 ETF strategies and what they indicate going forward.
The SPDR Gold Trust (NYSEArca: GLD) has been reduced down to half of the fund it was last year. Previously, GLD touted $76 billion and was on a tear as the biggest ETF in the industry. Today, the ETF has $38 billion in assets and is now the fifth-largest fund in the world. Still, GLD has a 158% return since the start of trading, which compares to the S&P 500’s 63% return for the same time period. [Gold ETF Investors Test the Waters After Huge Q2 Sell-Off]
Conversely, ETFs that track Japan equities have been on fire in 2013, attracting about $13 billion in new assets under management. The biggest money maker was an ETF that hedges the yen exposure out of equity returns. The WisdomTree Japan Hedged Equity ETF (NYSEArca: DXJ) received the lion’s share of assets poured into Japan equities and returned 22% year-to-date. The $8.1 billion in inflows has since beat out all other ETFs this year. [Why Retail Investors Still Like Japan ETFs]
The threat of rising interest rates and the caution investors have taken to protect against this is evidenced through the $3.2 billion in new inflows in the Vanguard Short-Term Debt ETF (NYSEArca: BSV). The ETF has a negative total return and a small yield but the short-term government and corporate debt provides investors the closest thing to safe haven for their capital. [ETF Spotlight: Vanguard Short Duration Bond]
Clean energy has proven most wrong who thought the run-up in focused stocks and ETFs would be short, reports Balchunas. The Guggenheim Solar Energy ETF (NYSEArca: TAN) is up 51.8% this year, and is the top-performing ETF. TAN is still down 89% since its launch in 2008.
Lastly, frontier markets have outpaced emerging market performance from a stock market perspective. The iShares Frontier 100 ETF (NYSEArca: FM) has earned 10.8%, compared to a 10% loss that the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) has taken. [A Frontier ETF That’s Outpacing Emerging Markets]
Tisha Guerrero contributed to this article.