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Energy, Natural Resources ETFs Did Best in February

The energy and natural resources category edged out precious metals for the top spot among ETF investment objectives in February.

Objectives that include an international focus captured five of the next nine positions, with the global income and emerging-market equity categories taking second and third places, respectively, among the 21 ETF fund classifications.

As can be seen in the accompanying table summarizing the averages for the ETF investment objectives, the foreign-focused categories of non-U.S. equity, emerging market income also managed positive results during the month. The global equity group averaged a slightly negative total return for the month, but was still better than the average performance of minus 0.61% for all 652 ETFs tracked by Ratings.

The credit problems spawned by the subprime implosion drove the financial services group 8.58% lower, on average, during the month, placing it at the bottom in performance. It was kept company by the single-state and national municipal bond groups, which where were hammered by problems with the bond insurance firms.

Prospects of a recession, combined with the credit crunch, drove the average corporate high-yield ETF more than 2% lower for the month.

Of the funds that led their respective categories for the month, the iPath Dow Jones AIG Natural Gas Total Return (GAZ), the iShares Silver Trust (SLV), the iShares MSCI Taiwan ETF (EWT) and the Market Vectors Steel Index ETF (SLX) all achieved total returns respectably in the double digits.

But the best performing fund for February in the table, the ProShares Ultra Short Financials (SKF), vaulted 22.64% by being both "inverse" and leveraging the worst performing financial services category. SKF has capitalized on its "mirrored" and double amplified performance of its credit-stricken grouping to leap 31.87% in the last three months and reward its holders with a 64.78% total return over the past 12 months.

Sector - Energy/Natural Res (40) 7.92 iPath DJ AIG Ntrl Gas Tl Rtr Sub In (GAZ) U 16.39 23.99 N/A
Sector - Precious Metals (14) 7.31 iShares Silver Trust (SLV) B- 16.95 41.50 39.24
Global Income (1) 3.11 SPDR Lehman Intl Treasury Bond ETF (BWX) U 3.11 5.38 N/A
Emerging Market Equity (15) 1.03 SPDR S&P Emerging Latin America ETF (GML) U 6.39 2.51 N/A
Government Bond (18) 0.72 Ameristock/Ryan 5 Year Treasury ETF (GKC) U 1.75 12.11 N/A
Non-US Equity (107) 0.39 iShares MSCI Taiwan (EWT) C 12.71 -0.38 13.85
General Bd - Investment Grade (7) 0.27 iShares Lehman Intrm Govt/Crdt Bond (GVI) A+ 0.79 3.35 9.29
Corporate - Investment Grade (4) 0.25 iShares Lehman 1-3 Year Credit Bond (CSJ) A+ 0.91 3.16 7.65
Emerging Market Income (2) 0.03 PowerShares Emrg Mkt Sovereign Debt (PCY) U 0.46 1.09 N/A
General Mortgage (1) -0.10 iShares Lehman MBS Fixed-Rate Bond (MBB) U -0.10 1.92 N/A
Global Equity (19) -0.34 Market Vectors Agribusiness ETF (MOO) U 7.68 13.08 N/A
Municipal - High Yield (1) -0.46 PowerShares VRDO Tax-Free Weekly (PVI) U -0.46 N/A N/A
Growth & Income (25) -1.17 Adelante Shares RE Shelter ETF (AQS) U 9.04 -16.07 N/A
Equity Income (158) -1.32 Market Vectors Steel Index ETF (SLX) C+ 13.84 4.91 71.75
Sector - Health/Biotechnology (41) -1.82 HealthShares European Drugs (HRJ) U 8.21 -0.97 N/A
Growth - Domestic (153) -1.99 ProShares Ultra Short QQQ (QID) C- 7.54 39.53 0.96
Corporate - High Yield (3) -2.18 PowerShares High Yield Corp Bond (PHB) U -1.28 N/A N/A
Sector - Utilities (12) -3.07 ProShares Ultra Short Utilities (SDP) E- 5.97 21.81 -0.27
Municipal Single State (2) -4.35 iShares S&P NY Municipal Bond (NYF) U -4.24 -1.94 N/A
Municipal - National (9) -5.24 Market Vectors LB AMT Fr Interm Mun (ITM) U -1.74 N/A N/A
Sector - Financial Services (20) -8.58 ProShares Ultra Short Financials (SKF) C- 22.64 31.87 64.78
AVERAGES PF 652 ETFs -0.61 -5.51 0.72
* "U" is unrated.
Note: Ratings grades are the latest available at time of publication & are subject to subsequent updating.
Source: Ratings - Data as of 2/29/2008.
For an explanation of our ratings, click here.

Richard Widows is a senior financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.

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EWT $15.73 -0.25%
SKF $50.00 0.95%
SLV $15.94 -0.25%
SLX $31.10 -1.70%
GAZ $1.20 -4.80%


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S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

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