Paradise Lost: Will These ETFs Ever Regain Their Lost Luster? (XLK, TAN, EWM)
As has previously been noted, 2012 has thus far been a good year for an array of ETFs, but there have been a disappointments to be found as well.
And even with the solid runs higher notched by many non-leveraged funds on a year-to-date basis, there are still quite a few ETFs out there that remain well below their 52-week and/or all-time highs.
Alright, so asking some ETFs to reclaim those lofty levels in less than two full months of trading is asking a lot so we went looking for some ETFs that are mired well below their best levels on a percentage basis to see which ones have the potential to reclaim lost glory.
Bottom line: Some have the chops to make it back to if not exceed their best levels while others will have to view their glory days in the rear view mirror.
iShares MSCI Malaysia Index Fund (NYSE: EWM) The iShares MSCI Malaysia Index Fund can easily reclaim its 52-week high as that's less than 3% away and the all-time high for this fund, set back in 1997, isn't a long shot as that's less than 10% away. The major issue for EWM this year isn't investor sentiment toward emerging markets, but domestic political headwinds. Malaysia is expected to hold elections between March and May and the larger the majority Prime Minister Najib Razak can build, the better for investors.
iShares MSCI Taiwan Index Fund (NYSE: EWT) No doubt the iShares MSCI Taiwan Index Fund has enjoyed a very nice start to 2012 with a year-to-date gain of almost 14%. From its December 2011 low, EWT is up nearly 20% and the ETF needs to jump another 13.4% to reclaim its 52-week high. Forget the all-time of just under $19 set back in June 2000.
EWT gaining another 13% this year isn't out of the realm of possibility, but there are multiple hurdles to consider. First, the obvious one is how long will Chinese stocks and ETFs keep rallying? The longer the better in the case of of EWT. Second, if Taiwan, already one of the most conservative markets with the "emerging" designation, receives developed market status, EWT could suffer immediately following that announcement.
That's a legitimate issue to consider because South Korea and Taiwan have been close to receiving developed market status for several years now and 2012 could be the year they get it.
Guggenheim Solar ETF (NYSE: TAN) That was a cute little reverse split TAN recently underwent to artificially inflate its price. Thing is that reverse split means the 52-week high on this ETF is over $84. There's not much of a chance that TAN rallies more than 200% to get back there. Let's put it this way, TAN is a fine ETF for active traders, but you don't want to get stuck holding this bag for 90, 180 days or longer.
Technology Select Sector SPDR (NYSE: XLK) Here's what gets lost in all the talk about the Nasdaq flirting with levels not seen in 11 years: Where the Nasdaq was 11 years ago were levels that were arrived at in the midst of a massive sell-off. Put another way, there's a big difference between the Nasdaq's 11-year and 12-year highs.
XLK has already made a new 52-week high today and as long as Apple (Nasdaq: AAPL) keeps on chugging, so will this ETF. For now and for the foreseeable future, forget XLK returning to its all-time high. The ETF would need to more than double to do that.
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