Improved Returns Cast Mirage on ETF Market

It paid to be in real estate and gold in December, notably via the PowerShares Active Real Estate Fund(PSR Quote) and PowerShares Global Gold and Precious Metals Portfolio(PSAU Quote). You also would have made money shorting oil using the PowerShares DB Crude Oil Double Short ETN(DTO Quote).

But what made last month different was the various fund types that generated returns. (See the table at the end of this story.) There were country-focused funds such as the Nets S&P/ASX 200 Index Fund(AUS Quote) and the Claymore China Small Cap ETF(HAO Quote).

Others include the PowerShares Dynamic Leisure & Entertainment Portfolio(PEJ Quote), which invests in companies including McDonald's(MCD Quote), International Game Technology(IGT Quote), Carnival(CCL Quote), Starbucks(SBUX Quote) and Walt Disney(DIS Quote).

Add to this a large-cap value fund, Elements (BVL Quote); an ETF that is bullish on the euro, Market Vectors Double Long Euro(URR Quote); an extended duration government Treasury fund, Vanguard Extended(EDV Quote); and a balanced fund TDX Independence(TDN Quote), and you have one of the more diverse lists of top performers I have seen in a while.

Such an eclectic group of funds signifies volatility across the board and suggests a lack of a sustainable trend. Investors unwilling and unable to take substantial risk should not play this market. They would be better served to wait until mid-2009 before making an assessment of whether to invest.

Note that at some point, after all the bad news keeps coming, an appetite for risk will return to those who have capital left, and we may see a gradual movement of investment dollars back into the markets. But for now, there are too many problems, not the least of which is that the full effect of the crisis has not yet been felt in overseas economies.

December's ETF Gainers The funds generating returns for the month ran the gamut. Ticker Name Category 1 Month Return PSR PWERSHRES ACT US REAL ESTATE Sector Fund-Real Estate 44.81 DTO POWERSHARES DB OIL 2X SHORT Commodity 44.64 PSAU POWERSHARES GLOBAL GOLD AND Sector Fund-Precious Metals 29.2 BVL ELMNTS LKD BEN GR L/C VAL TR Value-Large Cap 28.54 GDX MARKET VECTORS GOLD MINERS Sector Fund-Precious Metals 27.51 FIO ISHARES FTSE NAREIT INDUSTRI Sector Fund-Real Estate 25.56 SZO POWERSHARES DB CRUDE SHORT Commodity 24.12 ULE PROSHARES ULTRA EURO Sector Fund-Undefined Equity 21.81 HAO CLAYMORE CHINA SMALL CAP ETF Country Fund-China 21.61 EDV VANGUARD EXTENDED DUR TREAS Govt/Agency-Long Term 20.95 URR MARKET VECTORS DBLE LNG EURO Currency 19.66 PEJ POWERSHARES DYN LEISURE&ENT Sector Fund-Leisure Industry 19.45 BOM POWERSHARES DB MTLS 2X SHORT Commodity 19.31 AUS NETS S&P/ASX 200 INDEX FUND Country Fund-Australia 19.21 IPN SPDR S&P INT INDUSTRIALS SEC Sector Fund-Undefined Equity 19.15 FXR FIRST TRUST INDST/PRODUCERS Sector Fund-Undefined Equity 18.94 TDN TDX INDEPENDENCE 2030 ETF Balanced 18.92 LIS NETS PSI 20 INDEX FUND Region Fund-Geo Focused-Eqty 18.5 SCO PROSHRE U/S DJ-AIG CRUDE OIL Sector Fund-Undefined Equity 18.4 DEE PWR DB COMMODITY DOUBLE SHOR Commodity 17.92 Source: TheStreet.com Ratings