By Michael Johnston of ETF Database
March 9, 2009 is a date etched into the memories of many investors.
That was the day most equity markets hit their lows following months of unprecedented volatility, depressing statistical releases and countless false bottoms.
It also marked the beginning of an impressive rally that saw most major indices climb steadily for the remainder of the year, reclaiming big chunks of the ground lost during the downturn.
While the "great rally of '09" boosted most asset classes (and their related exchange-traded funds), some performed far better than others.
Below, we highlight the 10 nonleveraged ETFs that have delivered the best performances in the 12 months following the bear market lows of March 2009:
No. 10: Market Vectors Russia ETF
are often held out as examples of the success emerging markets have experienced during the recovery, but it is the ETF that tracks another member of the
-- Russia -- that ranks among the best performers since the markets bottomed.
Russia's resource-intensive economy has surged this year as demand for raw materials around the world has surged. This ETF is heavy on the oil and gas industry (it accounts for more than 40% of assets), as well as iron and steel stocks (which make up another 17%).
No. 9: RevenueShares Financials Sector ETF
On the way down, the financial sector was one of the hardest hit. But since bottoming out, this sector has led the way, reclaiming much (but not all) of the ground lost during the recession.
This ETF is made up of the same securities as the S&P Financials Index, but each security in the fund is weighted by revenue instead of market capitalization. This seemingly minor detail has a surprisingly large impact on performance, as RWW has outperformed other financials ETFs by a wide margin over the last year (see a more in-depth analysis of revenue-weighted indices
No. 8: iShares MSCI Turkey Investable Market Index Fund
Investors looking to add international equity exposure to their portfolios generally don't turn toward Turkey, but this Eurasian nation, home to one of the world's youngest populations, has surged over the last year, thanks in large part to to a strong financial sector (financials account for a little more than half of TUR's assets).
when revelations of a plan to overthrow the Turkish government surfaced.
The plan, which involved blowing up mosques and provoking Greece into shooting down a Turkish plane over the Aegean Sea, was ultimately foiled, but it raised questions about the stability of the Turkish government.
No. 7: Market Vectors Steel Index ETF
Steel mills were among the first casualties of the global economic downturn, as users of this raw material cut off purchases and began to reduce inventories. As factories cut back production, SLX lost more than half of its value in a few months.
Bolstered by strong demand from emerging markets (especially China), SLX has surged over the last year, but remains well below prerecession levels. SLX invests in companies engaged in a variety of activities related to steel production, including manufacturing mills, fabrication, and the extraction and reduction of iron ore.
No. 6: HOLDRS Merrill Lynch Regional Bank
The presence of another ETF from the
highlights the impressive rebound in this sector over the last year.
Most investors think of regional banks as small financial institutions, but RKH has holdings in a number of household names, including
Bank of America
. Like most HOLDRS, RKH is relatively concentrated; this fund has 17 holdings, and the top three make up nearly 60% of assets.
No. 5: Rydex S&P 500 Pure Value ETF
Most of the funds on this list maintain either an international or a targeted sector focus, but RPV is a relatively broad-based fund that focuses on U.S. stocks with low price-to-earnings ratios and high dividend yields. There are a number of ETFs that claim to be tilted toward value or growth equities, but RPV is one of the "pure style" ETFs from Rydex. Whereas most value and growth screens produce a number of stocks that are included in both subindices, the "pure style" funds avoid overlap; none of the stocks found in RPV are also found in the
S&P Pure Growth ETF
Read more about "pure style" ETF options in
No. 4: Rydex S&P MidCap 400 Pure Value ETF
The appearance of another pure value ETF among the top performers of the last 52 weeks illustrates the unique risk-return profile offered by this screening technique.
RFV seeks to replicate the performance of the
, a benchmark that contains only those S&P MidCap 400 companies with strong value characteristics as selected by S&P.
No. 3: Market Vectors Indonesia ETF
Indonesia joins Russia and Turkey as the top performing international equity ETFs since the bear market lows, surging more than 200% over the last year. IDX is designed to replicate the performance of the
, and maintains significant allocations to the financial services and materials industries.
Indonesia is one of the lesser-known
, but also one of the fastest-growing. The resource rich nation is home to numerous valuable commodities, including coffee, palm oil, rubber and rice.
No. 2: Market Vectors Coal ETF
As the recession set in during the second half of 2008, few industries were hit as hard as coal, as dimming economic prospects translated into a reduced need for the energy source that powers many of the world's factories and manufacturing operations.
KOL closed near $56 per share in June 2008 and then slid to nearly $11 five months later. But over the last year, this ETF, which includes coal miners and producers, equipment makers and technology firms, has surged. KOL has gained about 228% over the last 52 weeks.
Another coal ETF, the
PowerShares Global Coal Portfolio
is up an almost as impressive 175% over the last year.
No. 1: PowerShares Financial Preferred
This ETF is linked to the
, a benchmark that tracks the performance of U.S.-listed preferred stocks.
At the height of the financial crisis, preferred stock issued by big banks became a very risky asset that some investors feared would lose all of its value. The wave of irrational fear that swept over markets punished this fund too severely, setting it up for a huge run following the market bottom. For investors who were able to identify PGF as a buy near the market bottom, the reward has been a significant one: This fund is up more than 261% over the last year.
At the time of publication, Johnston had no positions in securities mentioned.
Michael Johnston is the senior analyst and founder of ETF Database, a Web-based investment resource providing actionable ETF investment ideas and an
for investors analyzing potential ETF investments. Johnston oversees ETF Database's free
, one of the most popular sources for news and commentary focusing exclusively on the exchange-traded fund industry. Johnston also maintains and develops content for
, a line of analyst reports and model portfolios designed to help investors utilize ETFs to meet their investment goals.
Johnston has completed the Chartered Financial Analyst (CFA) program, and obtained his bachelor's degree in finance from the University of Notre Dame. Prior to founding ETF Database, Michael worked in a private client service group performing valuations of companies operating in a wide range of industries.