Casting a slow January aside, U.S. stocks loved the month of love as the major U.S. indexes notched solid gains. Heading into the close Friday, the S&P 500 and Dow Jones Industrial Average were sporting February gains of more than 5%. Continuing its climb to heights last seen during the technology bubble, the Nasdaq Composite is up 7% this month.
“The Dow and S&P 500 are on track for their best month since October 2011. The Nasdaq is on pace for its best month since January 2012, and remains within striking distance of the 5,000 level, after a string of recent gains,” according to Reuters.
Regarding exchange traded funds, it was a brisk month of new product launches and the extension of prominent themes, including the ongoing dominance of the healthcare sector and currency hedged ETFs.
With that in mind, we decided to scour Internet search and traffic data to unearth the most searched ETFs on ETF Trends this month. Please note this data is fresh as of the close of U.S. markets on Friday Feb. 27. The most searched individual ETF ticker on ETF Trends was…
PureFunds ISE Cyber Security ETF (NYSEArca: HACK)
February performance: Up 15.1%
Comment: HACK is just four months old, so identifying the most memorable month in the ETF’s short lifespan is not difficult. February is most certainly that month. Sure, the 15.1% gain is enough to make 99% of the other ETFs out there green with envy, but there were legitimate catalysts propelling HACK to an almost daily series of new highs this month.
President Obama’s first ever cyber security summit, the Anthem hack and more data supporting increased cyber security spending were among the catalysts lifting HACK in February. HACK was a $100 million ETF on Jan. 6. Six weeks, it topped $231 million in assets. [Volume Surges in Cyber Security ETF]
Energy Select Sector SPDR Fund (NYSEArca: XLE)
February performance: Up 1.6%
Comment: After sliding last year, XLE, the largest energy sector ETF by assets, is trying to firm in 2015. The ETF’s February gain, though modest, is impressive when considering the United States Oil Fund (NYSEArca: USO) fell nearly 3%.
The energy sector has been an attractive play from a so-called mean-reservation perspective – the idea that prices and returns eventually move back towards the mean or average. Now that the energy sector has experienced a large pullback, traders are anticipating the sector will at the very least revert back to its historical average. [Don’t Frown, Average Down: Investors Still Chasing Oil ETFs]
Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF)
February performance: Up 5.3%
Comment: Earlier, we mentioned that currency hedged ETFs are hot again in 2015 and that is true of DBEF. Europe and Japan currency hedged ETFs have seized most of the limelight over the past two years, but DBEF has more than come into its own because it offers a significant advantage: Substantial exposure to Japanese and Eurozone companies under the umbrella of one ETF.
DBEF has more than tripled in size since mid-December. In mid-October, DBEF had just over $800 million in assets under management. That number is now over $4.6 billion. [ETFs That Have Doubled in Size]
Vanguard REIT ETF (NYSEArca: VNQ)
February performance: Down 3.4%
Comment: As the largest REIT ETF, VNQ is often a highly searched. In February, VNQ claimed that status for the wrong reasons as rate-sensitive asset classes weakened due to a jump in 10-year Treasury yields. VNQ’s weakness may be short-lived.
Fund managers argue that while the real-estate funds may experience short-term swings due to interest rate changes, the funds’ underlying outlook remains positive, pointing to a growing U.S. economy, improving employment rate and greater foreign investment demand for U.S. REITs.
Global X FTSE Greece 20 ETF (NYSEArca: GREK)
February performance: Up 10.4%
Comment: Given the previously fractious political situation in Greece and ongoing speculation regarding the country’s place in the Eurozone, it probably is not surprising that GREK was the most searched ex-U.S. ETF on ETF Trends this month.Earlier this month, Standard & Poor’s pared its rating on Greece’s sovereign debt to B- from B.
Investors would do well to not be seduced by GREK’s double-digit February gain because the ETF lost 6.5% over the final week of the month.
ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL)
February performance: Up 3.5%
Comment: NOBL features a combined weight of 36.7% to the industrial, materials, financial services and energy sectors, each of which outperformed the S&P 500 during the Fed’s last tightening cycle from 2004 to 2006. The ETF ensures exposure to dividend growth by only including companies that have increased their dividends for at least 25 consecutive years. NOBL is an ideal rising rates dividend ETF because of its light exposure to rate-sensitive telecom and utilities stocks.
Market Vectors Gold Miners ETF (NYSEArca: GDX)
February performance: Down 5.2%
Comment: GDX had to contend with slumping gold prices and a slightly stronger dollar this month, but the ETF was able to cut into its February losses in significant fashion during the month’s final days. The largest gold miners ETF gained 4.3% this week.
Health Care Select Sector SPDR (NYSEArca: XLV)
February performance: Up 3.8%
Comment: To this point in 2015, XLV is again the second-best of the nine SPDRs, trailing only the Materials Select Sector SPDR (NYSEArca: XLB). XLV’s performance is all the more impressive when noting the ETF’s largest holding, Dow component Johnson & Johnson (NYSE: JNJ), has been lethargic this year.
Fortunately, for investors XLV’s exposure to biotechnology, medical equipment and healthcare services providers is heavy enough to help the fund not only ward off some blue chip pharma weakness, but sore as well.
Speaking of the high-flying biotech group, if we were to add two more ETFs to this, search data indicate the next two would be the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) and the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB). Both of those ETFs gained more than 5.5% this month.
ETF Trends editorial team contributed to this post.