SPDR S&P Biotech (XBI) was the best performing Biotech fund, gaining 17.6% in July and is now up nearly 40% year-to-date. Excluding leveraged ETF’s, XBI’s performance was bested only by Guggenheim Global Solar (TAN), up 20.1% and Market Vectors Egypt (EGPT), up 18.5%. With July’s solid across the board gains, only six of the 30 sectors tracked remain negative year-to-date. Natural Resources/Gold is second worst following Spread.
Gains made by EGPT are surprising as it is easy to make the case that the situation on the ground in Egypt is getting worse, not better. Even though many of the companies held in EGPT are trading at attractive valuations (even after recent gains EGPT is trading with a P/E less than 10), downside risks remain elevated making any trade more of a gamble than an actual investment.
All told, Biotech and alternative energy funds were responsible for seven of the top 10 Winners in July. Global X Pure Gold Miners (GGGG), PowerShares Golden Dragon (PGJ) and EGPT rounded out the Top 10 Winners. GGGG, as its name suggests is a pure gold miners fund, but it is thinly traded and has just slightly less than $3.5 million in assets. Thin volume and assets often leads to higher volatility. PGJ’s gains and relative outperformance versus other China-related ETFs can be attributed to the performance of its largest holding, Baidu (BIDU), which gained nearly 40% in July.
At the opposite end of the spectrum, volatility and India-related funds occupy half of the Top 10 Losers list. After being the second best performer in June, ProShares VIX Short-Term Futures (VIXY) is the worst unleveraged performer in July, off 27.5%. Market volatility had been on the rise following statements from Fed officials in June suggesting that they may begin tapering asset purchases, but when those statements were clarified and new assurances were made that cheap money was not going away anytime soon volatility quickly faded. India’s woes are many, slowing growth, high inflation and a rapidly weakening currency have all encouraged investors to look elsewhere for returns. For most of July, Global X Fertilizers/Potash (SOIL) held up well as agricultural commodities, like Teucrium Corn (CORN) were falling until July 30 when Russia’s Uralkali Group announced it was going in its own direction (opposite of the rest of the industry) and was going to ramp up production.