What are we looking for?
Stars and dogs among exchanged-traded funds this year.
The search
We screened for the best and worst eight performers this year until Aug. 31. Leveraged bull and bear ETFs were excluded.
What did we find?
Gold and real estate equities emerged as top gainers. And natural gas ETFs stood out among the dogs.
The iShares Global Gold Index ETF outpaced all other categories with a robust 19.7-per-cent return.
This ETF is dominated by larger-capitalization companies benefiting from a rallying gold price. Keep in mind, however, that gold giants such as Barrick Gold Corp., Goldcorp Inc. and Newmont Mining Corp. make up 42 per cent of this investment.
By the end of August, gold futures for December delivery had risen to $1,250.30 (U.S.) an ounce in New York as investors piled into the metal amid growing concerns about a slowing economic recovery.
Close behind it is the iShares S&P/TSX Capped REIT ETF, which surged 18 per cent. This real estate investment trust is dominated by RioCan REIT, H&R REIT and Canadian Real Estate REIT, which together make up half of the ETF. REITs buy assets such as office towers, shopping centres and hotels, and then pay unitholders distributions from the cash their properties spin out.
REITs have done well as investors jump into them for yield because the income trust market is shrinking with many converting to corporations by the 2011 federal deadline, said Oliver McMahon, director of product management for iShares Canada. "If they want a product that gives them a similar level of income or exposure all we have got in the Canadian marketplace are the REITs."
Natural gas ETFs, which are struggling because of falling commodity prices, are not for the faint of heart. Claymore Natural Gas Commodity ETF, which gives exposure to the Alberta natural gas market through futures contracts, tumbled 48 per cent. The HBP Winter-Term Nymex Natural Gas ETF, which tracks the daily performance of the Nymex gas futures contracts for the next January delivery month, declined 32.3 per cent.