Market Overview

Common Themes Among Q2's Best ETFs

Common Themes Among Q2's Best ETFs

Friday is the last day of the second quarter so now is the ideal time to have a look at the themes and ETFs that worked well for investors over the past three months.

According to simple screen that we ran on Finviz, fewer than 50 ETFs and ETNs are showing second-quarter gains of 10 percent or more.

The Direxion Daily Gold Miners Bear 3X Shares (NYSE: DUST) is on pace for a second-quarter triple, making it the best-performing ETF for the quarter. DUST's stellar second-quarter performance is nothing new. Even with a more than eight percent loss Thursday, this triple-leveraged bearish play on gold miners is up almost 450 percent in the past six months.

DUST also serves as a good segue to exploring some of the similarities among the second quarters ETF studs. Of the 20 top ETFs and ETNs after DUST in terms of second-quarter returns, five are bearish plays on precious metals, including the three best after DUST. Those three are the ProShares UltraShort Silver (NYSE: ZSL), the ProShares UltraShort Gold (NYSE: GLL) and the PowerShares DB Gold Double Short ETN (NYSE: DZZ).

Prior to Thursday, the average quarterly gain for those three products was nearly 79 percent. Of course, it must be repeated that there are significant risks involved with leveraged ETFs, particularly over long holding periods. They taketh as quickly as they giveth.

Finding non-leveraged star performers among the "Non-DUST 20" is not hard, but the group is small in number. However, investors may already be familiar with some of these ETFs as they are among 2013's best non-leveraged performers.

The four best non-leveraged ETFs in the current quarter are, in order starting with best returns, the Guggenheim Solar ETF (NYSE: TAN), the Market Vectors Solar Energy ETF (NYSE: KWT), the First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ: QCLN) and the PowerShares WilderHill Clean Energy (NYSE: PBW).

The common theme beyond alternative energy is that as of June 18, three of those four ETFs held at least one Elon Musk stock, Solar City (NASDAQ: SCTY) or Tesla (NASDAQ: TSLA). KWT was the exception.

Four of the remaining top performers are linked by the same theme as well. That being rising yields on U.S. Treasurys. Specifically, these are ETFs that are designed to go up when Treasury yields do the same. That quartet includes the ProShares UltraPro Short 20+ Year Treasury (NYSE: TTT) and the Direxion Daily 20+ Yr Treasury Bear 3X Shares (NYSE: TMV), which are up an average of 22 percent this quarter.

No surprises among some of the other non-DUST 20. Six are bearish plays on emerging markets, including three of the top seven. Inverse plays on three of the four BRIC nations are included in that group of six. India is the exception because there is no longer an inverse ETF for that country. The best bearish emerging markets ETF in the second quarter has been the double-leveraged ProShares UltraShort MSCI Brazil (NYSE: BZQ). Forget its quarterly performance, though. Even with a 3.5 percent drop on Thursday, BZQ is still up 41.5 percent in just the past month.

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