Three Unusual ETF Leaders in 2014
Heading into 2014 the momentum was with equities, as the S&P 500 finished last year at the best level ever.
The first couple months have involved a wild swing lower, however, that caused investors to rethink the current bull market as well a rally to new highs over the last few weeks.
The list on top performing ETFs in 2014 is quite diverse -- with a heavy concentration on precious metal ETFs. After that, there is nearly zero correlation between the ETFs that have made investors the most money this year. Here are four of the winners:
iPath Dow Jones-UBS Coffee Subindex ETN (NYSE: JO) is up an astounding 61 percent in 2014, and is trading at a fresh one-year high. The index the ETN tracks consists of one coffee futures contract.
The worst drought in decades is hitting Brazil’s coffee belt and could lead to a worldwide shortage of coffee beans. The drought is so bad it has forced more than 140 cities in Brazil to ration water, with some only receiving water every three days. The ETN is an easy way to play the price of coffee -- but investors should have knowledge of the coffee market, and expect high volatility after the large rally to begin the year.
The PureFunds ISE Junior Silver ETF (NYSE: SILJ) is a basket of 24 small-cap silver miners and exploration companies. This ETF is heavily invested in Canada (74 percent) and the U.S. (25 percent), with the top four holdings making up 43 percent of the portfolio. The rise in the price of gold and silver has investors clamoring not only for related mining stocks, but more specifically the aggressive junior miners.
The 49 percent rally in SILJ this year has it at a six-month high. However, the ETF remains lower by 23 percent in the last 12 months, after it got crushed with the precious metals sell-off.
A country that has had its fair share of uprisings and political unrest in the last few years is Egypt. But it might be hard to convince someone that is the case -- if you focused on the performance of the Market Vectors Egypt ETF (NYSE: EGPT).
The ETF is up 82 percent in the last eight months and has added 23 percent in 2014. This week, the country’s cabinet announced it would be stepping down, likely paving a way for a presidential election, which in turn could create more uncertainty for the country and its stock market. The news was not enough to slow down the EGPT rally, howver, with the ETF at the best level in over two years.
All three ETFs could simply be momentum plays that are moving on trends that will not last much longer -- or they could be the in the midst of a long-term bull market. Of the three, EGPT has the highest likelihood of continuing its move higher in the months ahead.
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