Volatility has been calling shots in the investing world this year as hard landing fears in China, return of deflationary worries in the Euro zone despite easy policy measures, vulnerable emerging markets, slumping commodities and the nagging hearsay about the timeline of Fed lift-off dampened the risk-on trade sentiments on several occasions.
Though the most part of the year saw decent trading, the global market went ballistic in Q3 on the Chinese market crash. Sudden currency devaluation, multi-year low manufacturing data and some failed but desperate policy measures to rein in the slide led the Chinese stocks to hit the dirt in Q3 and see the worst quarter since 2008.
Needless to say, such a massacre in the world's second-largest economy did not spare other risky asset classes. The most key global indices also endured the worst quarter in four years and the leading u.s. indices tasted correction in August. Also, emerging market fund flows are now likely to turn negative this year for the first time since 1988 (read: ETFs to Watch as Emerging Market Asset Outflow Doubles).
Agreed, a dovish September Fed meeting and a soft job report for that month finally pushed back the speculative timeline for the U.S. policy tightening to early next year. This also brought the risk-on sentiment back on the table. Yet it definitely does not ensure seamless trading till the end of the year.
These may give enough reasons for investors to panic and look for equity survivors this year. For them, we highlight five ETFs that have gained over 15% so far this year.
China – Market Vectors ChinaAMC SME-ChiNext ETF (CNXT – ETF report)
After a lot of tantrums, the China stocks and ETFs finally seem back on track. Compelling valuation after a bloodbath, some decent factory data in September, continued momentum in China's service sector, persistent rollout of accommodative government measures (though at a petite dose) and an accommodative Fed led this China A-Shares ETF to build up gains in the year-to-date frame.
The Zacks Rank #3 (Hold) fund is up over 25% so far this year (as of October 5, 2015) and also added close to 20% in the last one month. However, the point to be noted here is that China investing stands at a critical juncture this year and the economy is far from being steady. So, A-Shares investing needs a strong stomach for risks (read: Correction Seems Over: Time for China ETFs?).
Long/Short – QuantShares US Market Neutral Momentum Fund (MOM – ETF report)
Since volatility has been at its height so far this year, this long/short ETF had to emerge as the winner. The underlying index of the fund is equal weighted, dollar neutral and sector neutral. The index takes the highest momentum stocks into account as long positions and the lowest momentum stocks as short positions.
