ETFs show their stuff with impressive 5-year returns
By Dian Vujovich
These five-year birthday celebrations for a bull stock market really get to me. Why? Well, if I’m celebrating my 5th birthday, there is more than a reasonable chance that I’ll have a 6th, 7th and dozens more yearly birthdays going forward. Not so for stock market returns where the bulls and the bears battle it out year in and year out in hopes of gaining some modicum of bragging rights—like a 5-year celebration.
Now that that’s off my chest, five years is a reasonable amount of time to look back and review how one’s investments have performed.
To do so, instead of looking at market indices and specific stock prices I’ve decided to look at the performance of exchange-traded funds (ETFs). These investment products have proven to be popular with both the individual and institutional investing audience because of the diversity their offer and there low cost of ownership.
According to ETF data from the Bespoke Investment Group, here’s an overview of market returns for the 5-year period ending March 9, 2014:
• All 16 of the US index-related ETFs from the S&P 500 (SPY) to DJ Divided (DVY) fund returned impressive results to shareholders. Gaining the most was the S&P Smallcap 600 (UR) up 272.37 percent, followed by the Nasdaq 100 (QQQ) that gained 253.17 percent and the Russell 2000 (IWM), up 248.07 percent.
• The Consumer Discretionary ETF (XLY) was up the most with a 5-year gain of 318 percent, the Smallcap Growth ETF (IJT) was in second position with a gain of 288 percent, and coming in third was the Smallcap 600 ETF (IJR) with its gain of 272 percent.
• In country ETFs, Mexico (EWW) gained 180.6 percent giving it top performance honors and next in line was Germany (EWG) up 144.46 percent. The puniest country return was from the Brazil ETF (EWZ) moving ahead just +22.9 percent.
• In commodity-related ETFs, silver (SLV) gained the most, up 57 percent, gold (GLD) 42.5 percent and commodities (DBC) 37.7 percent. Oil (USO) gained 28 percent while natural gas (UNG) was a big loser—down nearly 80 percent at 79.81 percent.
• Fixed-income ETFs returned modest gains with T.I.P.S. (TIP) gaining the most at 15.48 percent and t 1-3 year Treasuries (SHY) the least at 1.37 percent.
The coming five years are sure to produce different results. So before investing, don’t forget that Wall Street’s two sisters—risk and inflation—will be, as always, ever present. That means invest wisely and with purpose.
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