Thu 25 Jan 2007
Today the National Association of Realtors reported that sales of existing homes fell by 8.4% in 2006, the biggest annual decline since 1989, when existing home sales fell by 14.8%. In spite of the drop in sales, the median price of an existing home sold in 2006 rose 1.1%. By comparison, he median home price rose 12.4% in 2005.
I mention this because I find it an interesting contrast to what I am going to tell you next. Over the past 30 days, four of the top six performing exchange-traded funds (ETFs) were real estate funds. Their gains ranged from a low of 8.67% to a high of 9.8%. That is a pretty decent gain for one month. And the past month hasn’t exactly been a fluke. Over the past six months these funds have gained about 25%, substantially better than the impressive 14% gain turned in by the S&P 500 over the same time.
What is really unusual is that this has occurred during a period when all the headlines have been about a serious real estate slump. I’m not smart enough to explain exactly how real estate can be both a strong and weak sector at the same time. I suspect it is because there really is not a national real estate market. Instead, national real estate is really a conglomeration of regional markets. And while there are certainly areas where real estate prices have nosedived, throughout much of the country the real estate market is stable.
The black line on the chart below shows how iShares Cohen & Steers Realty (ICF) has fared over the past six months. The other lines provide some interesting comparisons. The gold line is the S&P 500. The red line is United States Oil (USO). The blue line is iShares S&P 40 Latin America (ILF).
International funds–particularly emerging market funds–continue to outperform the general U.S. market. Over the past 30 days the top performing ETF was iShares MSCI Malaysia EWM, up 15.36%. But there are many other international ETFs that are producing steady gains.
I’m including a list of the top 60 ETFs over the past month so you can see what sectors are doing the best. The worst performing funds over that time are energy funds and short funds.
| Symbl | Fund | Return 12/22/2006-01/24/2007 |
| EWM | EXTRADED MSCI Malaysia(iS) | 15.36% |
| ICF | EXTRADED Cohen & Steers Realty Major(iS) | 9.80% |
| IYR | EXTRADED DJ US Real Estate(iS) | 8.86% |
| RWR | EXTRADED DJ Wilshire REIT(stTr) | 8.84% |
| EWH | EXTRADED MSCI Hong Kong(iS) | 8.67% |
| VNQ | EXTRADED REIT(VIPER) | 8.56% |
| EWS | EXTRADED MSCI Singapore(iS) | 8.55% |
| PGJ | EXTRADED Golden Dragon USX(PowShr) | 8.49% |
| KCE | EXTRADED KBW Capital Markets(stTr) | 8.10% |
| IAI | EXTRADED DJ US Broker Dealers(iS) | 7.87% |
| EEB | EXTRADED BNY BRIC(Claym) | 7.19% |
| SLX | EXTRADED Market Vector Steel(VanEk) | 7.03% |
| BBH | EXTRADED Biotechnology(HLDRS) | 6.96% |
| IYT | EXTRADED DJ Transportation Average(iS) | 6.79% |
| EWW | EXTRADED MSCI Mexico(iS) | 6.70% |
| FXI | EXTRADED FTSE/Xinhua China 25(iS) | 6.46% |
| MVV | EXTRADED Ultra MidCap 400(ProShr) | 6.19% |
| ILF | EXTRADED S&P 40 Latin America(iS) | 6.19% |
| DGG | EXTRADED Intern’l Communications(WTree) | 6.05% |
| ADRE | EXTRADED Emerging Markets 50 ADR(BLDRS) | 5.76% |
| PJP | EXTRADED Dyn Pharmaceuticals(PowShr) | 5.74% |
| VOX | EXTRADED Telecom Service(VIPER) | 5.61% |
| VAW | EXTRADED Materials(VIPER) | 5.45% |
| XME | EXTRADED Metals & Mining(SPDR) | 5.33% |
| PYZ | EXTRADED Dyn Basic Materials(Powshr) | 5.24% |
| PMR | EXTRADED Dyn Retail(PowShr) | 5.24% |
| IHE | EXTRADED DJ US Pharmaceuticals(iS) | 5.24% |
| IXP | EXTRADED S&P Global Telecommunicatio(iS) | 5.20% |
| DND | EXTRADED Pacific ex-Japan Divdend(WTree) | 5.15% |
| XHB | EXTRADED Homebuilders(SPDR) | 5.11% |
| IYM | EXTRADED DJ US Basic Materials(iS) | 5.08% |
| XLB | EXTRADED Materials(SPDR) | 5.02% |
| QLD | EXTRADED Ultra QQQ(ProShr) | 4.96% |
| PRFS | EXTRADED FTSE RAFI Consumer Serv(PowShr) | 4.90% |
| SLV | EXTRADED Silver Trust(iS) | 4.89% |
| PRFM | EXTRADED FTSE RAFI Basic Materia(PowShr) | 4.84% |
| PIV | EXTRADED Value Line Timeliness(PowShr) | 4.77% |
| EWZ | EXTRADED MSCI Brazil(iS) | 4.74% |
| EPP | EXTRADED MSCI Pacific ex Japan(iS) | 4.74% |
| IYZ | EXTRADED DJ US Telecom(iS) | 4.71% |
| IAU | EXTRADED Comex Gold Trust(iS) | 4.58% |
| MXI | EXTRADED S&P Global Materials(iS) | 4.52% |
| EWT | EXTRADED MSCI Taiwan(iS) | 4.51% |
| PPH | EXTRADED Pharmaceuticals(HLDRS) | 4.50% |
| PRFG | EXTRADED FTSE RAFI Consumer Good(PowShr) | 4.39% |
| TTH | EXTRADED Telecom(HLDRS) | 4.38% |
| GLD | EXTRADED Gold(stTr) | 4.35% |
| XPH | EXTRADED Pharmaceuticals(SPDR) | 4.29% |
| IYC | EXTRADED DJ US Consumer Cyclical(iS) | 4.14% |
| XRO | EXTRADED Zacks Sector Rotation(Claym) | 4.13% |
| RTH | EXTRADED Retail(HLDRS) | 4.11% |
| PKB | EXTRADED Dyn Building & Construc(PowShr) | 4.06% |
| VCR | EXTRADED Consumer Discretionary(VIPER) | 4.05% |
| ITA | EXTRADED DJ US Aerospace & Defense(iS) | 4.04% |
| IHI | EXTRADED DJ US Medical Devices(iS) | 4.03% |
| FPX | EXTRADED IPOX-100(1Trust) | 4.00% |
| FDN | EXTRADED DJ Internet(1Trust) | 3.94% |
| DDM | EXTRADED Ultra Dow 30(ProShr) | 3.93% |
| PRFH | EXTRADED FTSE RAFI Health Care(PowShr) | 3.87% |
| PTH | EXTRADED Dynamic Healthcare(PowShr) | 3.86% |
Have a great weekend. I’m looking for the deep freeze to end. It’s been a cold winter so far in the Mountain West.
F.S.
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