Some of the best things come in small packages. Exchange traded funds cover a range of investment segments, and in the current rally, smaller areas in the market are generating robust gains.
The S&P 500 Index rallied 25.1% year-to-date and has been hitting new historic highs. Meanwhile, other smaller sectors have raced ahead, notably green or clean energy stocks.
The renewable energy sector was one of the worst performing areas in 2012, but they are now leading the markets this year.
We are also witnessing a type of tech boom 2.0 as the new wave of social media internet stocks paves the way in the current technology sector surge.
Additionally, some ETF investors are also finding attractive returns in the insurance, energy, gambling and defense markets.
Looking at non-leveraged ETFs with less than $100 million in assets under management, here are the top performers so far this year:
SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR)
Year-to-date return: 40.9%
Total net assets: $20.6 million
Comment: Aerospace and defense stocks have performed surprisingly well after sequestration concessions earlier this year. [Aerospace & Defense ETFs: What Sequester?]
Market Vectors Gaming ETF (NYSEArca: BJK)
Year-to-date return: 44.0%
Total net assets: $61.0 million
Comment: The improving global economic health is putting more people back on the gambling floor, with Macau casinos experiencing a boom. [Gambling ETF Keeps Spinning Triple 7’s]
PowerShares S&P SmallCap Energy Portfolios (NasdaqGS: PSCE)
Year-to-date return: 45.6%
Total net assets: $44.0 million
Comment: We are in the midst of a new oil boom, with the U.S. potentially overtaking Russia as the world’s largest producer of oil and natural gas. The recent surge in U.S. output is attributed to new “fracking” techniques in shale-rock formations of oil and natural gas that were previously unmanageable. [Capitalize on the U.S. Oil Boom with Yield-Generating MLP ETFs]
PowerShares KBW Insurance Portfolio (NYSEArca: KBWI)
Year-to-date return: 46.8%
Total net assets: $9.3 million
Comment: Many insurance companies hold onto longer-duration bonds and have been hurt by low interest rates – the companies keep the holdings until maturity. Looking ahead, higher rates will help insurers earn higher returns on their investments.
Guggenheim China Technology ETF (NYSEArca: CQQQ)
Year-to-date return: 57.5%
Total net assets: $52.4 million
Comment: The technology sector has been one of the best performing areas in the emerging markets, with social media names like Tencent and Sina leading the charge. Additionally, the Global X NASDAQ China Technology ETF (Nasdaq: QQQC), which has $8.6 million in assets, is up 52.1% year-to-date. [Social Media Propels Emerging Tech ETFs to 13-Year High]
Global X Social Medial Index ETF (Nasdaq: SOCL)
Year-to-date return: 57.7%
Total net assets: $95.6 million
Comment: The new wave of internet companies are supporting the tech rally. Think Facebook (NasdaqGM: FB) and LinkedIn (NYSE: LNKD), among others. [Social Media ETF’s Pullback Could be a Buying Opportunity]
First Trust ISE Global Wind Energy Index Fund (NYSEArca: FAN)
Year-to-date return: 67.8%
Total net assets: $77.9 million
Comment: The wind industry ETF has taken off as the U.S. starts switching over more to alternative energy sources. [Wind Energy ETF Roars on Surge in Turbine Installations]
PowerShares Global Clean Energy Portfolio (NYSEArca: PBD)
Year-to-date return: 58.9%
Total net assets: $83.6 million
Comment: Imagine the potency of an ETF that can offer exposure to alternative energy stocks as well as Chinese and Japanese equities. The clean energy boom is a global phenomenon that has caught the markets by storm. Additionally, the iShares Global Clean Energy ETF (Nasdaq GIDS: ICLN), which has $46.8 million in assets, is up 58.6% year-to-date. [Clean Energy ETF May Have the Perfect Combination]
First Trust NASDAQ Clean Edge Green Energy Index Fund (Nasdaq GIDS: QCLN)
Year-to-date return: 93.9%
Total net assets:$86.0 million
Comment: Unlike the other broad clean energy ETFs, QCLN only focuses on U.S.-based companies. Looking at QCLN holdings, Tesla (NasdaqGS: TSLA) stands out with a 385.7% year-to-date return.
Market Vectors Solar Energy ETF (NYSEArca: KWT)
Year-to-date return: 113.9%
Total net assets: $22.8 million
Comment: The U.S. is increasing solar panel installations, supporting the fledgling photovoltaic industry. Moreover, China’s Ministry of Finance said it will give tax breaks to solar products manufacturers in an effort to help those companies still grappling with tepid demand. [Solar ETF’s 90% Rally May Only be the Beginning]
Max Chen contributed to this article.