Friday’s ETF Spotlight

Friday’s ETF Spotlight

Friday’s ETF Spotlight In what we hope becomes a weekly feature, WP looks at the five-best performing TSX-listed ETFs from the past five days.
 
Before we get into handing out the awards, it’s important that we set the rules.
 
First, and foremost, leveraged and inverse funds are excluded from the competition. While WP’s not suggesting you shouldn’t use these ETFs where appropriate they’re simply too volatile for the average investor. Secondly, only one ETF per asset or sector class is eligible each week. I.e. If one gold fund makes the list and two more performed almost as well but not quite, the duo will be excluded for the purposes of this exercise allowing for a more diverse group of funds.
 
Using data from Globe Investor, here are our findings. May the best fund win!
 
First Place – BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD) – up 15.01%
 
Investing in a total of 33 gold producers on an equal-weight basis, ZGD’s had a miserable run since its inception in November 2012, down 28.5%. Is this week’s performance a sign of things to come or a dead cat bounce?
 
Second Place – iShares S&P/TSX Capped REIT Index ETF (XRE) – up 6.48%
 
Although the index it tracks invests in 17 real estate investment trusts, the top five holdings represent 54% of the $1.3 billion in total net assets. RioCan, whose shopping malls and mixed-use properties are spread across the country, has the highest weighting at just under 20%. The XRE’s been on a roll for several years. Can it keep it up? This past week’s performance certainly helps. 
 
Third Place – iShares S&P/TSX Capped Materials Index ETF (XMA) – up 5.15%
 
Tom Caldwell mentioned in his speech to the Empire Club January 8 that material stocks should benefit at some point in the future from increased buying from China once the government there decides to take the reins off the economic engine. The last three years haven’t been good for materials stocks so recent moves suggest this could happen sooner than later.
 
Fourth Place – BMO China Equity Index ETF (ZCH) – up 4.41%
A total of 49 stocks in the ETF including the super-hot Alibaba, its third-largest holding. The line of thinking that applies to XMA also applies to ZCH and other China-related ETFs. Interestingly, CIBC economist Avery Shenfeld sees China slowing in some of the traditional growth areas putting into question the possibility of a China revival in 2015.
 
Fifth Place – BMO Low Volatility US Equity ETF (ZLU) – up 4.01%
 
The ETF is composed of 100 of the lowest volatility large-cap stocks in the U.S. All the rage these days, ZLU bettered the S&P 500 in the past week by 174 basis points. Over the past year it handily outperformed the index.