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The 5 Best Performing ETFs of 2012 Thus Far

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Tech, biotech, and volatility ETFs lead the way.

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MINYANVILLE ORIGINAL It's been a good year thus far for equities. In spite of international and domestic macroeconomic uncertainties, stocks have continued moving in a positive direction since the market bottomed in 2009 – some say, with thanks to the huge amount of liquidity the Fed has pumped into the markets.

ETFs, too, have had a strong year. According to XTF.com, ETF assets have grown 22.8%, or $241.74 billion, in 2012, with tech, biotech, and volatility ETFs leading the way in returns. Out of more than 1,400 ETF products out there in the marketplace, here are the five best performing ETFs of 2012 so far:
  1. VelocityShares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV): Described by Barron's as "a kind of backdoor bullish bet on the stock market," XIV was up 113.36% year-to-date as of Sept 30. Seeking Alpha confirmed that "for at least the past 12 months, using XIV to trade uptrends in SPX… has provided excellent trade returns that are significantly higher than trading the indexes." This ETF has an expense ratio of 1.35% and a net asset value of $285.52 million. Its current market cap is $285.27 million.
  1. ProShares Short VIX Short-Term Futures ETF (NYSEARCA:SVXY): Launched in October 2011, this ETF offers results that correspond to the inverse (-1x) of the performance of the S&P 500 VIX Short-Term Futures Index. SVXY is up 111.42% year-to-date. As Michael Johnston of ETF Database explains, the sharp gains registered by the top two ETFs can be attributed in part to the decline in stock market volatility (the "fear index") and "to the steep and consistent contango in VIX futures markets – the phenomenon whereby futures contracts are upwards sloping, with those expiring in the future being considerably more expensive than the spot VIX." SVXY has an expense ratio of 0.95% and a net asset value of $43.66 million. Its current market cap is $43.57 million.
  1. Direxion Daily Retail Bull 3X Shares (NYSEARCA:RETL): RETL, which provides 300% exposure to the Russell 1000 Retail Index, is up 90.48% year-to-date. This leveraged ETF invests in 48 diverse retail companies, including hypermarkets, department stores, and specialty retail stores. Wal-Mart (NYSE:WMT), Home Depot (NYSE:HD), and Amazon (NASDAQ:AMZN) are its three largest holdings. RETL has an expense ratio of 0.95% and a net asset value of $11.41 million. Its current market cap is $11.51 million.
  1. ProShares Ultra Nasdaq Biotechnology (NASDAQ:BIB): Thanks to the strength of the NASDAQ Biotechnology Index (INDEXNASDAQ:NBI) (up 36.69% year-to-date), the BIB, which offers 2x daily leveraged exposure to the index, has soared 81.40% so far this year. Key BIB components include Alexion Pharmaceuticals (NASDAQ:ALXN), Regeneron Pharmaceuticals (NASDAQ:REGN), and Amgen (NASDAQ:AMGN). This ETF has an expense ratio of 0.95% and a net asset value of $38.12 million. Its current market cap is $38.1 million.
  1. ProShares UltraPro QQQ (NASDAQ:TQQQ): This ProShares offering, which provides 300% exposure to the NASDAQ-100 Index (INDEXNASDAQ:NDX), is unsurprisingly up 78.38% year-to-date, given that the Nasdaq, as measured by PowerShares QQQ (NASDAQ:QQQ), is up 19.79% so far this year. The leading component of TQQQ is Apple (NASDAQ:AAPL), followed by Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), and 97 others. TQQQ has an expense ratio of 0.95% and a net asset value of $225.11 million. Its current market cap is $224.56 million.
Twitter: @sterlingwong
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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