Last year, global exchange traded products hauled in a record $247.3 billion, topping $200 billion for the second consecutive year.
Flows to U.S. ETFs and ETNs dominated at a combined $190.5 billion, but in the first quarter U.S. ETFs brought in just $15 billion. That is to say a lot of ETFs that were previously considered small still are. [A Sluggish First Quarter for ETF Flows]
It is worth remembering that evaluating ETFs on size alone is akin to saying McDonald’s serves the best hamburgers or Starbucks has the best coffee simply because there are so many of those establishments.
Translation: There are plenty of ETFs that offer big things in small packages. Or big returns often come from small ETFs. Here are some fine examples of that theme this year with year-to-date performance and assets under management totals. All ETFs on this list have double-digit gains in 2014.
Market Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK)
YTD Gain: 12.5%
Assets Under Management: $59.1 million
Comment: This has been the year of the resurgent energy ETF and FRAK is no exception. The fund tracks the growing oil boom in North America as new extraction techniques help companies produce oil from shale beds and oil sands. [Capture the U.S. Oil Boom with the Unconventional Energy ETF]
That means FRAK tilts away from large integrated oil stocks such as Exxon Mobil (NYSE: XOM), but the ETF does offer ample exposure to highly liquid independent exploration and production firms such as Anadarko Petroleum (NYSE: APC), EOG Resources (NYSE: EOG) and Devon Energy (NYSE: DVN). Those stocks combine for nearly 20% of FRAK’s weight.
iPath Dow Jones-UBS Coffee Total Return Sub-Index (NYSEArca: JO)
YTD: 94.8%
AUM: $112.3 million
Comment: With over $100 million in AUM, JO at least meets that superficial standard for deeming an ETF or ETN “successful.” However, that assets total is paltry for a product that is by far this year’s top-performing non-leveraged ETF or ETN. In fact, investors have been pulling money from JO even as it continues to rise. [Coffee ETN Saw Large Outflows Despite Huge Rally]
WisdomTree Middle East Dividend Fund (NasdaqGM: GULF)
YTD: 19%
AUM: $78.5 million
Comment: On the surface, GULF is a small ETF, but that is rapidly changing as over 57% of the ETF’s current AUM total has flowed into the fund just this year. GULF’s assets could keep increasing as Qatar and the United Arab Emirates depart a major frontier markets index next month for emerging markets status. That index swap does not affect GULF, meaning its combined 59% weight to Qatar and UAE could prove alluring to investors looking to maintain robust exposure to those countries.
Fidelity MSCI Utilities Index ETF (NYSEArca: FUTY)
YTD: 13.7%
AUM: $33.7 million
Comment: Fidelity entered an arena fraught with competition when it rolled out 10 sector ETFs in October 2013. Those funds now have over $500 million in AUM combined. FUTY has a ways to go to get the size boasted by its more established rivals, but the fund is delivering in terms of returns and was one of less than 10 ETFs to hit a new all-time high last Friday. [Fidelity’s New ETFs Put Vanguard on Notice]
EGShares India Small Cap Fund (NYSEArca: SCIN)
YTD: 18%
AUM: $17 million
Comment: A small ETF for small-caps in one of the largest emerging markets is a quick way of describing SCIN. There has not been anything small about the rebound in Indian equities this year, including the smaller stocks held by SCIN.
Financial services and consumer goods stocks dominate this ETF at almost 58% of its combined weight. Even with its 2014 surge, SCIN is not expensive with a price-to-book ratio of just 1.08, according to EGShares data.
iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL)
YTD: 14.3%
AUM: $178.8 million
Comment: ENZL is not small per se, but its AUM total is perhaps reflective of New Zealand’s status as one of the smallest developed markets.
What is not small about ENZL is its performance and dividend yield. Although New Zealand exporters, including some ENZL constituents, are grappling with the effects of a strong New Zealand dollar, the country raised interest rates earlier this year and is widely expected to do more of that as 2014 goes along. The upside is a trailing 12-month yield of almost 3.5% on ENZL. [New Zealand ETF Higher After Hike]
PowerShares S&P SmallCap Energy Portfolio (NasdaqGS: PSCE)
YTD: 14%
AUM: $60.4 million
Comment: PSCE holds a blend of smaller companies that engage in energy infrastructure and actual producers and distributors. The PowerShares ETF tracks the S&P SmallCap 600 Capped Energy Index.
The ETF focuses on smaller and more risky companies, which have helped contribute to the better performance so far this year. Small-caps make up 61.6% and micro-caps make up 38.4% of PSCE portfolio. The fund’s top holdings include Bristow Group (NYSE: BRS) 8.4%, Exterran Holdings (NYSE: EXH) 7.9% and Stone Energy (NYSE: SGY) 7%. [Small-Cap ETFs Standout in Energy Sector]