Although emerging markets, and for that matter some developed markets, have struggled in 2013, the year has not been a complete wash for investors that embrace global exchange traded funds.
That is assuming the right global ETFs have been embraced. ETFs linked to some of 2012’s least expensive international markets have thrived this year. Statistics indicate advisors and investors are still pouring billions into single-country ETFs as well. [The Rising Popularity of Single-Country ETFs]
We searched for the 10 best global ETFs of 2013 with an emphasis on “global” so as not to confine the search to diversified international funds. Of the following funds, there are a few surprises, but there are also several ETFs on the list that have lived up to the ample hype they have received, meaning their places here are not surprising. Hint: A few of those ETFs have ties to Asian markets. [10 ETFs That More Than Doubled in Size]
All return data courtesy Dorsey Wright & Associates.
Market Vectors Global Alternative Energy ETF (NYSEArca: GEX)
2013 YTD: 59.9%
Comment: GEX lives up to its billing as a global ETF because the U.S. only accounts for 51% of the fund’s geographic exposure. The ETF also ranks as one of this year’s best sector plays, global or otherwise, for a simple reason: For a good part of this year, the fund had one of the largest allocations among all ETFs to Elon Musk’s Tesla (NasdaqGM: TSLA). Tesla is currently the fourth-largest holding in GEX at a weight of 7.1%. [10 ETF Investments That Got the Most Bang for Your Buck]
Guggenheim China Technology (NYSEArca: CQQQ)
YTD: 52.5%
Comment: The rise of many U.S.-based Internet and social media companies has had some market observers remembering the bubble days of the late 1990s. Chinese Internet and social media stocks have not lacked for stellar returns in 2013, either. In fact, this list serves as confirmation of the intensity with which Chinese tech/Internet/social media names have rallied as you will see…
Powershares Golden Dragon Halter USX China Portfolio (NYSEArca: PGJ)
YTD: 49.5%
Comment: …Here. The Powershares Golden Dragon Halter USX China Portfolio is not a true China tech ETF, but that sector represents 56.6% of the fund’s weight. Top holdings in PGJ include Baidu (NasdaqGM: BIDU), Sina (NasdaqGM: SINA) and Ctrip.com (NasdaqGM: CTRP).
Global X NASDAQ China Technology ETF (NasdaqGS: QQQC)
2013 YTD: 45.8%
Comment: And then there was three. China ETF naysayers may not be acquainted with three funds on this list because looking at these performances makes it difficult (and inaccurate) to say 2013 has been a rough year for all China ETFs. Some smaller funds, including the ones mentioned here, have bucked that trend. The concern is that although Chinese stocks are inexpensive compared to the broader emerging markets realm, the same cannot be said of tech and Internet names, which are expensive. [A Skeptical View of China Internet ETFs]
PowerShares Global Clean Energy Portfolio (NYSEArca: PBD)
2013 YTD: 45.5%
Comment: Like GEX, PBD has benefited from the resurgence of alternative energy stocks in 2013. PBD has a lower allocation to the U.S. at 37%, but China and Taiwan combine for 17.3%, meaning PBD features decent solar industry exposure and that has been a good place to be this year.
db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP)
2013 YTD: 40.6%
Comment: One of this year’s most obvious (and profitable) trades has been to short the yen and go long Japanese equities. ETFs that do both at the same time, including DBJP, have thrived as a result. More upside could be on the way for DBJP and its rivals because at this writing, the yen has fallen to a five-year low against the dollar and some forex traders believe USD/JPY at 105 is just a matter of time. [Yen ETF Investors Say ‘Sayonara’ in Risk-On Environment]
iShares MSCI Ireland Capped ETF (NYSEArca: EIRL)
2013 YTD: 37.7%
Comment: And the honor of best Europe single-country ETF this year goes to the iShares MSCI Ireland Capped ETF. One of the members of the motley crew known as the PIIGS, Irish equities have shed that infamy and soared in 2013. EIRL has $116.2 million in assets under management, $59.5 million of which has come into the fund this year.
WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ)
2013 YTD: 38.7%
Comment: This year, few ETFs have enjoyed the widespread acclaim that DXJ. Returning almost 39% while bringing in $9.26 billion in new assets will do that. DXJ has been successful that WisdomTree introduced the WisdomTree Japan Hedged Small Cap Fund (NasdaqGS: DXJS) and could introduce as many as five sector equivalents. [WisdomTree Could Roll Out Sector Plays on DXJ]
iShares MSCI Denmark Capped ETF (BATS: EDEN)
2013 YTD: 32.3%
Comment: EDEN marries two of this year’s most prominent ETF themes: Rebounding developed Europe equity markets and the ongoing success of health care funds. The lone Denmark ETF has a 38.6% health care weight.
WisdomTree Europe SmallCap Dividend Fund (NYSEArca: DFE)
2013 YTD: 31.1%
Comment: Large-cap diversified Europe ETFs have gotten more attention, but none can say they are 2013’s best multi-country Europe ETF. DFE can say and the $517 million wears that crown with almost half its country weights residing outside the Eurozone. The U.K. and Sweden combine for nearly 40% of DFE’s geographic weight.