Energy-Sector ETFs Cleaned Up

"Counterintuitive" would seem to be a great word to describe how the energy group took the top spot among exchange traded fund groupings in the second quarter, while an energy-consuming group captured second place.

Twice as many ETF categories lost ground than classifications that moved higher during the year's second quarter.

Only seven ETF investment objectives managed to end the three-month period with gains, versus 14 that ended the period prefaced with minus signs, as shown in the accompanying table of ETF categories and leading funds in each classification.

With the persistent gusher in petroleum prices, it shouldn't be surprising that the energy/natural resources group ended as the only ETF investment objective with a double-digit percentage gain for the quarter -- 18.17% for the average fund in that sector.

What is surprising, with all the headlines about record oil prices, is that the best performing fund in the energy group isn't a petroleum play. The Market Vectors Coal ETF(KOL Quote - Cramer on KOL - Stock Picks) ballooned 52.03% during the quarter. Its largest holdings include Consol Energy(CNX Quote - Cramer on CNX - Stock Picks), Peabody Energy(BTU Quote - Cramer on BTU - Stock Picks) and Joy Global Energy(JOYG Quote - Cramer on JOYG - Stock Picks).

Perhaps equally surprising is that while the top ETF grouping was comprised primarily of energy producers, the runner-up category was heavily represented by energy users. The utility sector, with an advance of 6.05% for the average member, captured second place among the ETF investment objectives.

The top utility ETF was the leveraged ProShares Ultra Utilities(UPW Quote - Cramer on UPW - Stock Picks), top holdings of which include Exelon Corp.(RXC Quote - Cramer on RXC - Stock Picks), Dominion Resources Inc.(D Quote - Cramer on D - Stock Picks) and FPL Group Inc.(FPL Quote - Cramer on FPL - Stock Picks).

The remaining five sectors that managed to stay above water all ended the quarter within a percentage point of where they started.

At the south end of the performance array, the ongoing credit crunch drove the average financial services ETF 14.35% lower during the quarter. But the "inverse-leveraged" ProShares Ultra Financials(SKF Quote - Cramer on SKF - Stock Picks) surged 33.28% for the quarter. The fund is up 57.22% for the first half of the year and is ahead 114.89% over the past 12 months.

The columns of data on the top performing ETFs in the various categories underscores the importance of selectivity in investments. While the non-U.S. equity group sagged 3.17% during the quarter, the iShares MSCI Brazil Index Fund(EWZ Quote - Cramer on EWZ - Stock Picks) vaulted 16.74%. Similarly, the global equity category surrendered an average of 2.13%, but the group's top performer, Market Vectors Agribusiness ETF(MOO Quote - Cramer on MOO - Stock Picks) -- propelled by the explosion in food prices -- spurted 15.15%.

MOO's top holdings include Monsanto(MON Quote - Cramer on MON - Stock Picks) and Deere & Co.(DE Quote - Cramer on DE - Stock Picks).

SECOND QUARTER SUMMARY OF EXCHANGE TRADED FUND INVESTMENT OBJECTIVE CATEGORIES
INVESTMENT CATEGORY	3-MO. AVG. GROUP RET'N (%)	LEADING FUND: NAME, TICKER & TheStreet.com RATINGS GRADE	3-MO. TOTAL RET'N (%)	YR.-TO-DATE TOTAL RET'N (%)	12-MO. TOTAL RET'N (%)
Sector - Energy/Natural Res	18.17	Market Vectors Coal ETF (KOL) U	52.03	N/A	N/A
Sector - Utilities	6.05	ProShares Ultra Utilities (UPW) E+	18.22	-6.66	3.21
Growth - Domestic	0.88	Ishares Morningstar Mid Growth (JKH) B+	9.10	4.89	-0.50
Municipal - High Yield	0.68	PowerShares VRDO Tax-Free Weekly Port. (PVI) U	0.68	1.50	N/A
Sector - Precious Metals	0.41	Market Vectors TR Gold Miners (GDX) B-	1.87	6.02	30.32
Sector - Health/Biotechnology	0.21	HealthShares Neuroscience ETF (HHN) D-	13.01	4.83	-4.14
Municipal - National	0.08	PowerShares Insured National Muni Bond (PZA) U	2.46	-3.48	N/A
Municipal Single State	-0.55	iShares S&P California Municipal Bond (CMF) U	0.08	-0.10	N/A
Corporate - High Yield	-0.59	SPDR Lehman High Yield Bond ETF (JNK) U	0.52	-4.73	N/A
General Mortgage	-0.84	iShares Lehman MBS Fixed-Rate Bond (MBB) B+	-0.84	1.30	7.27
Equity Income	-1.00	SPA Market Grader 40 (SFV) U	12.41	-1.79	N/A
Corporate - Investment Grade	-1.17	iShares Lehman 1-3 Year Credit Bond (CSJ) A-	-0.38	2.26	5.74
Government Bond	-1.66	iShares Lehman Short Treasury Bond (SHV) B	0.29	1.50	4.12
Emerging Market Income	-2.02	iShares JPMorgan USD Emerging Mkts Bond (EMB) U	-0.73	0.25	N/A
Global Equity	-2.13	Market Vectors Agribusiness ETF (MOO) U	15.56	7.83	N/A
Emerging Market Equity	-2.26	SPDR S&P Emerging Latin America ETF (GML) C+	7.82	8.96	25.04
General Bd - Investment Grade	-2.28	SPDR Lehman Aggregate Bond ETF (LAG) B+	-0.80	1.22	7.65
Non-US Equity	-3.17	iShares MSCI Brazil Index Fund (EWZ) B-	16.74	11.43	48.66
Global Income	-4.20	SPDR Lehman International Treas. Bond (BWX) U	-4.20	3.70	N/A
Growth & Income	-5.35	First Trust Value Line Equity Alloc (FVI) C	1.53	-8.21	-10.54
Sector - Financial Services	-14.35	ProShares Ultra Short Financials (SKF) C	33.28	57.22	114.89
Source: TheStreet.com Ratings - Data as of 6/30/2008. For an explanation of our ratings, click here.