Posted on 04/03/2012
The first quarter of 2012 was certainly a positive one for both the US and international equity markets as some of the most widely used benchmarks ended with double-digit gains. Looking across the major market indexes for US stocks, we find that the Dow Jones Industrial Average is up 8.14%, the S&P 500 Index is up 12%, and the NASDAQ saw its 4th best Q1 performance since 1971 with a gain of almost 19%. On the other hand, if we look at the MSCI All Country World Index, it too posted a positive gain of 11.28% while the SPDR MSCI ACWI ex-US (CWI) was up 10.44% in the first quarter.
While we are not drilling down into each asset class today, we are going to take a quick minute and look at the best and worst performing area of the US domestic equities. As per usual, not all areas of the market performed to the same degree, but there was only one broad sector to finish lower than where it began the quarter, the broad Utility Sector, as represented by the Dorsey Wright Utility Index (DWADJUTILITY). Interestingly, it was Utilities that provided the best sector performance in 2011, but has been the worst performing so far this year. The same phenomenon has occurred on the other side of the coin as well. Notice how the worst performing sector last year, Financials, is the best performing year to date, up more than 20%.
Generally speaking, we find that the market climate shifted from a "risk off" atmosphere to a "risk on" throughout Q1, favoring the higher beta area of the market as illustrated in the two tables below. In the first table, we have put together the 20 best performing ETFs in the first quarter among more than 1000 ETFs that we have in our database excluding inverse and leverage. It is worth noting that of those 1000 ETFs, there are 547 ETFs that produced a return of 10% or higher. As you can see, some of the names that go to the top of the list below are international-related ETFs as they struggled in the latter part of last year.
On the other side of the coin, we have compiled the 20 worst performing ETFs across various asset classes although most of those names are either commodity and fixed income related or low beta products. Within commodiites, natural gas got hit the hardest as ETFs that provide exposure to natural gas were down anywhere from 20% to 38% as shown in the table below.