Energy, Materials ETFs Jumped in May

Energy, natural resources and basic materials proved to be a winning combination of asset categories, as funds in those areas dominated the list of best performing exchange traded funds for May.

Seven of the funds on the accompanying table of top performing ETFs for the month cover a wide array of the energy/natural resources/basic materials fields. The Market Vectors Russia ETF(RSX Quote) arguably belongs with the group, as its top holdings include the energy giants Lukoil, Rosneft Oil and Gazprom.

With oil and natural gas making up 39.6% of its portfolio and metals amounting to 24.5% of its holdings, energy and basic materials account for just under two-thirds of the RSX's total net assets.

Specialized energy ETFs on the list include coal (the Market Vectors Coal ETF(KOL Quote)), gasoline (the United States Gasoline Fund LP(UGA Quote)) and nuclear energy (Market Vectors Nuclear Fund ETF(NLR Quote)).

As would reasonably be expected with energy, natural resources and basic materials, the international diversification is a natural byproduct of these funds. KOL, for example, is 45% invested internationally, while more than 80% of NLR's holdings are domiciled outside the U.S.

KOL's largest domestic investments are Consol Energy(CNX Quote), Peabody Energy(BTU Quote) and Joy Global(JOYX Quote).

For NLR, the biggest U.S. holdings include Exelon(EXC Quote), Constellation Energy Group(CEG Quote) and Cameco(CCJ Quote).

The trio of technology ETFs that share the top-10 ETF list with the energy/natural resources/basic materials funds also represent diversification in that sector. Telecommunications and semiconductor ETFs share the stage with a holdover from the tech bubble "business-to-business internet" days -- the HOLDRS B2G Internet(BHH Quote).

The top holdings of the leveraged ProShares Ultra Telecommunications ETF(LTL Quote) include AT&T Inc.(T Quote), Verizon Communications(VZ Quote) and Sprint Nextel(S Quote).

The major investments of the leveraged ProShares Ultra Semiconductors ETF(USD Quote) are Intel Corp.(INTC Quote), Texas Instruments(TXN Quote)TXN and Applied Materials(AMAT Quote).

Best-Performing Exchange-Traded Funds for May
Name, Ticker & TheStreet.com Ratings grade	May '08 total return (%)	Year-to-date total return (%)	12-Mo. total return (%)
HOLDRS B2B Internet (BHH) C-	25.00	42.86	48.16
Market Vectors Coal ETF (KOL) U	22.04	N/A	N/A
Market Vectors TR Russia ETF (RSX) C	17.59	14.84	55.88
ProShares Ult Telecommunications (LTL) U	15.39	N/A	N/A
United States Gasoline Fund LP (UGA) U	14.76	N/A	N/A
SPDR S&P Metals & Mining ETF (XME) B+	14.71	26.86	33.04
United States 12 Month Oil Fund (USL) U	14.61	N/A	N/A
PowerShares DB Energy Fund (DBE) B-	14.58	40.48	82.19
ProShares Ultra Semiconductors (USD) E-	14.37	-14.66	-18.55
Market Vectors Nuclear Fund ETF (NLR) U	14.30	0.59	N/A
Source: TheStreet.com Ratings - Data as of 5/31/2008. For an explanation of our ratings, click here.