• Exchange-Traded Funds
  • The Top ETFs Over Three Years: Consumer Spending Makes an Impact

    by Charles Rotblut, CFA

    This is the third year we have compiled and analyzed the top-performing exchange-traded funds (ETFs).

    Only one ETF has made the list of the 10 best performers in all three years: SPDR S&P Retail fund (XRT). The fund’s three-year annualized gain of 30.6% ranks third among all exchange-traded funds. Its three-year performance ranked eighth in 2012 and third in 2011.

    Notably only one other ETF retained its top-10 ranking from last year: PowerShares Dynamic Pharmaceuticals fund (PJP). The ETF realized a 33.5% annualized gain over the past three years, the best performance of any ETF over that time period. Last year, the fund ranked sixth among all funds.

    What’s notable about the two funds is that they follow two very different types of indexes. SPDR S&P Retail follows an equal-weighted index. PowerShares Dynamic Pharmaceuticals follows a rankings-based index. Companies for PowerShares Dynamic Pharmaceuticals’ underlying index are selected based on a variety of criteria including price momentum, earnings momentum, quality, management action and value. The differences between the two index’s methodologies show that no one single methodology has universally proven to be the best over the past few years.

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    Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at twitter.com/CharlesRAAII.


    H Jagannath from FL posted over 3 years ago:

    I was wondered about dividend paying stock or best dividend etf to generate monthly dividend.thanks

    Winston Pearson from GA posted over 3 years ago:

    I would suggest, depending on amount of money available, various stocks that pay quarterly, but pay in different months so that you get a monthly check. You could get 12 checks a year with just 3 stocks.

    Robert Rutherford from WA posted over 3 years ago:

    Why is BAB listed under the 'Muni Nat'l Bond: Long Term Cat Average' category? Isn't it a taxable bond fund, i.e., the distributions are treated as ordinary income?

    Charles Rotblut from IL posted over 3 years ago:

    Hi Robert,

    The fund is listed under Muni Nat'l Bond because, according to Morningstar, it invests in taxable municipal bonds.


    Christophe Couallier from FL posted over 3 years ago:

    How would you screen for ETFs to build a portfolio? Looking for ways via the excel table attached with the article. Thanks.

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