ETF Leaders and Laggards

August 4, 2008

SAN DIEGO (ETFguide.com) - The first seven months of they year have quickly passed and top performing areas of the market have made their mark.

Commodities, inverse performing and energy focused funds continue to rule the roost.

Among the exchange-traded fund (ETF) leaders are narrowly focused commodity sectors like Natural gas (Ticker: UNG) ahead by 20.9 percent, Energy (Ticker: DBE) up by 36.4 percent, and Oil (Ticker: DBO) up by 35.8 percent.

The ProShares UltraShort Dow 30 (Ticker: DXD) has advanced 27.6 percent and the ProShares UltraShort Semiconductors (Ticker: SSG) has jumped 29 percent. Both funds are leveraged and aim to deliver twice the daily opposite performance of their respective benchmarks.

Of the nine industry sectors within the S&P 500, Consumer Staples (Ticker: XLP), a defensive sector, has held up the best with a slight decline of 5 percent versus a 14 percent fall for the S&P 500. Other areas like Energy (Ticker: XLE) and Basic materials (Ticker: XLB) have recorded modest declines, but still continue to outperform the broader S&P 500.  

With a modest decline of 1.9 percent, broad market REITs (Ticker: VNQ) have been a haven along with theme oriented ETFs focused on Coal (Ticker: KOL) up by 16 percent.

Weak performing ETFs so far this year include Chinese stocks (Ticker: GXC) down 23.3 percent, Financials (Ticker: XLF) off by 25.2 percent, and Technology stocks (Ticker: XLK) down by 17.1 percent.

Over the past several years, emerging markets have outperformed domestic stocks but that streak seems to be in jeopardy. Broadly diversified emerging market funds (Ticker: VWO) are down about the same as major U.S. stocks indices and the only regionally focused funds fighting the downward trend has been Latin American stocks (Ticker: ILF).

Mortgage REITs (Ticker: REM) have been hit hard by the continuing weakness in the mortgage finance market and have plunged 33.1 percent.

In the bond market, High Yield Bonds (Ticker: JNK) have declined 10.5 percent, whereas TIPS (Ticker: TIP) have edged a slight gain of 0.1 percent.

*All performance figures are year-to-date through market close of August 1, 2008. Leveraged and inverse performing ETFs not included.