Each week in my newsletter I publish lists of “hot” mutual funds and exchange-traded funds based on certain performance metrics. A fund’s place high in the ranking simply means that it’s displaying stronger price momentum characteristics than ones appearing lower on the list. Typically, you’ll notice a correlation between rank and volatility, that is, funds and ETFs aiming for daily returns tied to a multiple of an underlying index often fall at the extreme upper and lower ends of the lists. Case in point: at the moment Direxion Daily China Bull 3x Shares (YINN) – an ETF which seeks to return 300% of the performance of the BNY Mellon China Select ADR Index and has more than doubled in value since mid-June – is #1 in relative strength out of the nearly 1,400 ETFs that I track each day. YINN also happens to be trading 87% below its 2011 high. This triple beta fund is a good example of an ETF that can top my list for several weeks or months, then disappear. I like to look for staying power and I’ve found that in the solar sector.
Since last November, thanks to rising demand for renewable energy solutions, Guggenheim Solar (TAN) and Market Vectors Solar Energy (KWT) have consistently maintained a presence among the top 1% of all ETFs that I monitor. Year-to-date through September 30th TAN and KWT are up 120.7% and 80.7%, respectively. Today the public learned that the single largest holding in both solar ETFs, a Chinese company called Hanergy Solar Group Ltd., will manufacture the solar panels soon be sold directly to the public at IKEA retail stores in Britain. A word of caution: TAN and KWT are relatively small, thinly traded ETFs with large spreads.
♦ Please note that my readings will change without notice, so please don’t buy or sell solely based on anything you read in this blog. ♦