Q1 was a pretty volatile time for the markets as investors saw modest swings throughout the three month time period. Still, the S&P 500 managed to keep its head above water and post a gain, though the DJIA did slip into the red.
And though the market had a flat performance, investors did see some solid gains in a few of the more specialized segments of the fund world. In fact, all three of the segments outlined below not only beat the market in the first three months of 2015, but they all put up double digit gains in the time period, making them ETF leaders of Q1:
Currency Hedged
Thanks to a surging dollar and extreme weakness in the euro, the common European currency lost more than 10% of its value in the quarter against the greenback. This was a boon for a variety of hedged ETFs that strip out currency risk from portfolios but especially for German hedged ETFs. A trio of products targeting this segment, (DBGR - ETF report), (HEWG - ETF report) and (DXGE - ETF report), all gained more than 20% in the quarter (read the Guide to German Currency Hedged ETF Investing).
Clean Energy
Oil wasn’t strong but this didn’t stop a number of clean energy ETFs from surging higher on the quarter. Instead, investors focused on greater efficiency in the space as well as utility scale projects and bid up a variety of names in the space. This led to big gains for not only broad funds like (ICLN - ETF report), but also the solar-focused ETF (TAN - ETF report) in Q1 trading as both gained more than 20% in Q1.
China A-Shares
Investing in China remains a bit of an enigma, band especially with China A-Shares on the market. China A-Shares have been relatively closed off to Western investors and are now gaining attention thanks to a new link between Hong Kong and the Mainland, as well as a plethora of ETFs targeting the space. This surge in interest has also led to huge gains for ETFs tracking this market as the small cap fund for this segment (ASHS - ETF report) added 40% on the quarter while (CNXT - ETF report) led the way with a roughly 50% gain for the time frame (see 5 International ETFs Beating the S&P 500 in Q1).
Bottom Line
It is always hard to say whether this streak of outperformance will continue. To start Q1, we saw both health care and utilities outperform, but utilities quickly fell by the wayside while health care surged higher.
Personally, I like the currency hedged market and remain skeptical about China A-Shares, though both have astounding momentum heading into the summer months. For more on this topic though, make sure to watch our short video on the subject below:
3 Best Performing ETF Sectors Of Q1 2015
Q1 was a pretty volatile time for the markets as investors saw modest swings throughout the three month time period. Still, the S&P 500 managed to keep its head above water and post a gain, though the DJIA did slip into the red.
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