In recent years previous to 2011, one of the primary trends for ETF investors was to internationalize their portfolios. This was believed to provide more diversification, and at the same time, add exposure to economies with superior growth prospects. From a performance perspective this proved rewarding until global markets, particularly debt ridden eurozone economies, suffered serious declines.
Small-cap sectors have always exhibited the highest volatility (beta) characteristics as markets trend higher or lower. When markets trend higher outperformance is generally exhibited and the opposite occurs as trends reverse. The latter held true in 2011 as markets declined and investors halted fund flow and reversed course.
Selecting the Top 10 ETFs within declining markets may seem odd but our objective is to find those issues that are well-structured and, as conditions may improve in the future, offer suitable choices given the many ETFs in this sector.
We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.
Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity
Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average To add value, we feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.