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January 01, 2009 at 02:00 AM
If you want to know what kind of year 2008 was, all you have to do is look at the lopsided performance of exchange-traded funds (ETFs). The top ETF performers in 2008 were mostly short ETFs designed to profit when the market falls. With major domestic and international equity benchmarks declining between 40 to 50 percent in 2008, short ETFs were one of the few places that provided shelter.
Let’s look at a few of this year’s top ETF performers, as of late December.
ProShares UltraShort Semiconductors (SSG) +126.70 percent gain: In 2008, ever volatile semiconductor stocks led on the way down, which meant outsized gains for SSG. This particular short ETF attempts to double the inverse daily performance of the Dow Jones U.S. Semiconductor Index. Even though SSG racked up nice gains, it also racked up a sizeable tax bill by distributing a staggering $42.35 in short term capital gains.
ProShares UltraShort Technology (REW) +107.13 percent gain: Aside from financial shares, broader technology stocks were one of this year’s worst performing S&P industry sectors. Like other short leveraged ETFs, REW distributed a sizeable $26.46 short term capital gain.
ProShares UltraShort Industrials (SIJ) +90.22 percent gain: A 57 percent year-to-date decline in shares of the once invincible General Electric (GE) pretty much sums up the kind of year it’s been for industrial stocks. SIJ’s double inverse exposure to industrial stocks was one of 2008′s biggest winners.
