IAI iShares US Broker Dealers and Securities Exchanges ETF

The end of 2012 saw fiscal cliff fears resulting in heavy sell-off of risky assets. Investors then pushed their portfolios towards safe havens in order to ride out the storm.

With the fears being assuaged and the fiscal cliff averted, 2013 began on a positive note winning investor confidence in the markets. Many opted for risky assets in order to obtain higher returns. While equities have experienced a heavy inflow of funds ever since 2000, some ETFs even rallied to break the resistance level and set new highs.

The S&P 500 exhibited a solid performance at the beginning of the year. The index recorded a gain of eight consecutive trading sessions in January, the best winning streak in eight years.

Moreover, all nine industries of the S&P 500 are in positive territory. The strong momentum of the S&P 500 since the start of the year indicates that the bull may be back in the market (3 Ways to Play the S&P 500 Rally with ETFs).

While equity ETFs rallied since the start of the year, VIX which is regarded as a gauge for fear in the market, fell to its lowest level in 2013. This reveals that investor fears have been allayed and positive sentiment has spread in the market.

With the overall bias towards risky asset in the marketplace, most of the ETFs posted positive gains in the first month of the New Year. But some ETFs have been solid performers posting double-digit gains. Below, we highlight five of these top ETF performers which have exhibited solid gains to start the New Year.

Market Vectors Vietnam ETF (VNM)

Slow growth rate, higher inflation level, trade deficit and bad banking system impacted the Vietnam economy to a great extent in 2011. But new government reforms, positive demographics, and large foreign inflows led to a recovery in the economy.

The economy will be further boosted by the country’s plans to increase foreign ownership limit in several Vietnamese companies. The current quarter could see a ramp in cap limit of foreign ownership in Vietnamese companies from 49%. The State Bank of Vietnam is also considering to increase the foreign ownership limit in Vietnam banks from 30% currently (Is the Vietnam ETF Back on Track?).

In order to play the positive trend in the economy, investors can opt for Market Vectors Vietnam ETF (VNM), the lone ETF tracking the economy. After a disappointing performance in 2011, Vietnam ETF gained some strength in 2012.

And in 2013 the ETF soared to become one of the best performing emerging market funds. VNM started the year on a strong note posting a whopping gain of 18.9% in the first month of the year. And with further improvement in the economy, this ETF is certain to provide investors with hefty gains throughout the year.

VNM which manages an asset base of $385.6 million and trades at a volume level of more than 1 million shares a day. In total, the ETF also provides exposure to 31 Vietnamese stocks, allocating a big percentage to small and mid cap stocks.

Among individual holdings, Baoviet Holdings BVH VN, Jsc Bank For VCB VN and Vincom Jsc VIC VN form the top line of the fund with respective shares of 9.63%, 8.26% and 7.28%. The fund appears to be a bit pricey, charging a fee of 76 basis points annually.

PowerShares KBW Capital Markets Portfolio (KBWC)

2011 was a rough year for the financial industry in general and especially for the broker-dealer/capital markets segment of the industry. However, 2012 was a turnaround for the segment with the financial sector emerging as one of the top performers (Capital Markets ETFs For 2012?).

Now with an improving employment level, housing recovery and increase in consumer confidence, the capital segment of the market is certain to benefit from on the positive sentiment. The segment started 2013 with a bang, posting solid gains across the board as strong earnings propelled the segment higher.

The bullish trend is very much obvious from the performance of the PowerShares KBW Capital Markets Portfolio (KBWC). KBWC has been one of the solid performers in the first month of trading of the year recording a robust gain of 14.52%.

However, the fund does trade in weak volumes, so bid ask spreads could be pretty wide. Still, the product does have a relatively low fee of just 35 basis points a year.

The fund is not able to minimize company-specific risk as 61.5% of the asset base is invested in the top ten holdings. State Street Corp, Morgan Stanley and Goldman Sachs occupy the top three positions in the fund.

iShares U.S. Broker Dealers ETF (IAI)

IAI also serves the capital segment of the U.S. equity market (Does Your Portfolio Need a Financial ETF?). The fund like most of the capital market ETFs has been a solid performer in the first month of 2013. The fund posted a gain of 13.2% in the year-to-date period.

IAI is home to 24 securities in which it invests its asset base of $54.8 million. With a small exposure, the fund’s performance is largely dependent on the top ten holdings of the fund. The fund has 59.56% of the asset base in the first ten securities.

Among individual holdings, Goldman Sachs, Morgan Stanley and Schwab Corp occupy the top line of the fund with respective shares of 8.77%, 7.78% and 6.44%. The fund charges a fee of 46 basis points annually.

Market Vectors Oil Services ETF (OIH)

With a sluggish 2012, oil prices are finally climbing. The U.S. market has experienced a remarkable rise in oil production once again and if the current trend continues the U.S. may become the world’s biggest producer of oil five years down the line.

The current boom in oil production shows little sign of waning. Oil prices have mounted to a level of $98 a barrel, the highest since September last year.

In this scenario, investors who want to capitalize on the trend can invest in Market Vectors Oil Services ETF (OIH). OIH has exhibited a very strong performance since the start of the year. The ETF posted a gain of 12.87% in the first month of the year.

OIH appears to be quite popular among investors as revealed by its trading volume of more than 8 million shares a day. The fund since its inception in Dec 2011 has been able to build an asset base of $1,508.9 million (Oil Bull Market Is No Place For MLP ETF Investors).

The fund appears to invest its rich asset base in a holding of 26 securities which are mostly large cap companies. However, the fund has not been able to minimize company-specific risk as 71.2% of the asset base goes towards the top ten holdings.

The fund has assigned heavy weighting to the top two holdings namely Schlumberger Ltd and Halliburton Co. The allocation to the two companies stands at 30.4% collectively. The fund charges a fee of 35 basis points annually.

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ISHARS-DJ US BR (IAI): ETF Research Reports
 
PWRSH-KBW CMP (KBWC): ETF Research Reports
 
MKT VEC-OIL SVC (OIH): ETF Research Reports
 
MKT VEC-VIETNAM (VNM): ETF Research Reports
 
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