Best-Performing ETFs Crush Stock Indexes

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The best-performing exchange traded funds in the second quarter blew away major market averages. The Dow Jones Industrial Average rose 12%, the first quarterly increase since Sept. 28, 2007. It was also the biggest quarterly gain since Dec. 31, 2003.

The broader S&P 500 Index followed suit, up 16%. The Nasdaq jumped 20%.

The 10 best-performing ETFs each gained from 60% to 100% over the same three-month period ending June 30. Four accomplished that feat without the use of leverage.

Doubling in value, the best-performing ETF was the Direxion Shares Daily Emerging Markets Bull 3X Shares(EDC) on 300% leverage to the MSCI Emerging Markets Index. The fund is allocated 19% to Brazil, 13% to China, 13% to Taiwan, 11% to South Korea and 7.1% to India.

Also targeting stocks of foreign shores, the Direxion Shares Daily Developed Markets Bull 3X Shares(DZK) landed a 79% gain by betting 22% on Japan, 20% on the U.K., 9.1% on France, 8.5% on Germany and 7.5% on Switzerland. The fund has gained back most of its losses since its December inception.

The best-performing, non-leveraged ETF, the Rydex S&P SmallCap 600 Pure Value ETF(RZV) extended a rally to 74% in the second quarter. It jumped 52% in April. Sixteen holdings more than doubled in value, while seven tripled, one quadrupled and one gained six-fold. High-flying small-capitalization stocks held by the fund include Sonic Automotive(SAH), up 535%; Lithia Motors(LAD), up 311%; and Technitrol(TNL), up 285%.

Two of the other winning ETFs in the quarter are notable for their massive trading volumes. The Direxion Daily Financial Bull 3X Shares(FAS), which gained 68%, averages a trading volume of more than 187 million shares as interest in JPMorgan(JPM), Bank of America(BAC) and Citigroup(C) remain high.