Market Overview

Three Sector ETFs Up 20% or More YTD

Three Sector ETFs Up 20% or More YTD

The S&P 500 continued its flirtation with the psychologically important 1,600 level Thursday with a gain of almost one percent. Including dividends paid, the benchmark U.S. index is up more than 12 percent year-to-date.

To this point, the rally in U.S. stocks has mainly one of the risk off variety as conservative, lower beta sectors have driven stocks higher. Along those lines, it may not be surprising that only a small mount of ETFs are up 20 percent to 25 percent this year.

To be precise, the number is 27, although the number of ETFs and ETNs that have gained 25 percent or more is 46, according to Bloomberg data. Those figures include leveraged funds, implying that the hunt for plain vanilla sector ETFs with big year-to-date gains is tricky. There are few that fit bill and this the following ETFs have additional upside potential through the rest of 2013.

PowerShares Dynamic Media Portfolio (NYSE: PBS)
At the end of last year, PBS was touted as one sector ETF to keep an eye on this year. The advice has proven quite profitable as the ETF has gained just over 20 percent.

One sign that PBS may have some more upside is that despite its stellar performance, one that has seen the ETF surge 35.1 percent in the past 12 months, the fund is not particularly large with just $150.4 million in assets under management.

Investors should note this is not just an old school media or cable net heavy ETF. PBS offers some exposure to growth stocks such as Netflix (NASDAQ: NFLX) and Google (NASDAQ: GOOG). The growth/discretionary nature of PBS's lineup gives the ETF a P/E ratio of 18.3 compared to 14.3 for the SPDR S&P 500 (NYSE: SPY).

Market Vectors Biotech ETF (NYSE: BBH)
Three of the four largest biotech ETFs have gained more than 20 percent year-to-date and that group is lead by the smallest of the big four of biotech ETFs: BBH. BBH has surged 29.1 percent year-to-date, putting it well ahead of its primary rivals.

Investors appear to be realizing that BBH is the leader of the pack. On March 15, the ETF had just under $205 million in assets. Six weeks later, that total is nearly $297 million as investors have been flocking to biotech shares due to the group's insulation from global macroeconomic issues.

Each biotech ETF goes about its business a little bit differently than the others. With BBH that means a heavy focus on the biotech sector's four horsemen: Amgen (NASDAQ: AMGN), Biogen (NASDAQ: BIIB), Celgene (NASDAQ: CELG) and Gilead (NASDAQ: GILD). In order, Amgen, Gilead, Celgene and Biogen combine for nearly 47 percent of BBH's weight.

First Trust Consumer Staples AlphaDEX Fund (NYSE: FXG)
Most folks would be happy with the average year-to-date return of 17.7 percent offered by the Consumer Staples Select Sector SPDR (NYSE: XLP) and the Vanguard Consumer Staples ETF (NYSE: VDC). Well, as long as they did not know that the First Trust Consumer Staples AlphaDEX Fund is up 20.6 percent year-to-date, they would be happy.

Those are all stellar performances in a short amount of time for a supposedly slow-moving sector, but FXG represents a unique case. This is not a run-of-the-mill cap-weighted staples ETF heavy on Procter & Gamble (NYSE: PG) and Coca-Cola (NYSE: KO). Since the AlphaDEX methodology uses growth and value factors to weight index constituents rather than focusing on market cap, FXG is more volatile than the average staples ETF.

FXG has a three-year standard deviation of 13 percent compared to 10.1 percent for the S&P 500 Consumer Staples Index. The ETF also has a beta of 1.03 against the S&P 500, according to First Trust data.

Still, it is hard to argue with the returns and ETF industry inflow data for April suggest investors are warming to alternative weighting methodologies.

For more on ETFs, click here.

Posted-In: Long Ideas News Sector ETFs Short Ideas Intraday Update Markets Trading Ideas ETFs Best of Benzinga


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