Saturday, July 27, 2013

ETF Review of Top 3 Picks for Consumer Cyclical Stocks – XRT, PEJ and XHB

Comparison of Fund Performance

A review of the top performers is a springboard for sound investing in consumer cyclical stocks by way of an exchange tradedf fund (ETF). To pick out the best choice of index fund, the first step is to round up the front-runners. In sizing up the firebrands, the key gauges include the speed of capital gains and the extent of price volatility

To this end, a basic criterion involves the rate of return over the past few years. On the other hand, a lot of index funds are relative newcomers to the field. For this reason, a prober who insists on a lengthy history will exclude a raft of candidates. At this early stage in the upgrowth of exchange traded funds, a fitting compromise between the length of the track record and the size of the candidate pool is a life span of 3 years.

For our purpose here, the period of evaluation straddled three years ending in the summer of 2013. During this stretch, the best performance was turned in by an exchange traded fund based on the S&P Retail Select Industry Index. The communal pool, which sports the ticker symbol of XRT, chalked up a gain of 30.92 percent a year on average.

The runner-up in the sweepstakes was a vehicle tied to the S&P Homebuilders Select Industry Index. The dynamo, which flies under the banner of XHB, managed to snag an average return of 29.73% per year.

Meanwhile the bronze metal in the race went to the PowerShares Dynamic Leisure & Entertainment fund. The hustler, branded as PEJ, snapped up a yearly gain of 28.46%.

In order to obtain a better sense of the performance figures, we need to put the results into a larger context. For this purpose, the benchmark of choice among professional investors lies in the Standard & Poor’s index of 500 titans listed on the stock market.

The latter yardstick is tracked with remarkable accuracy by an exchange traded fund that runs under the banner of SPY. The tracking vehicle turned in a bounty of 18.87% a year on average over the course of three years.

To sum up, the third place in the rankings was claimed by PEJ which surpassed the chief benchmark of the market by nearly 10% a year. By contrast, the outcome for XHB turned out to be a mite better by about 1%. Finally, the payoff for XRT was higher still by another percent or so.

NOTE: The full report is a document in PDF form. The resource is available here: Top ETF Review for Consumer Cyclical Stocks.

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