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Mutual Fund News

Amid a market storm, these funds bloomed

What are we looking for?

Exchange traded funds (ETFs) that did well in the third quarter. Given that stock markets took a drubbing, we looked for ETFs that came up smelling like roses.

The screen

We ranked the 15 biggest gainers among Canadian-listed ETFs, but excluded leveraged ETFs.

What did we find?

Gold, currency, bond and actively managed fund ETFs.

The unhedged version of Claymore Gold Bullion ETF led the pack with a 16-per-cent gain as gold surged to a record high of over $1,900 (U.S.) an ounce in September before retreating. Meanwhile, Horizons U.S. Dollar Currency ETF rose 8.6 per cent as the greenback strengthened as a safe-haven currency.

Long-term bonds did well with BMO Long Federal Bond ETF gaining 11.9 per cent. Its holdings benefited from the Bank of Canada decision to hold rates steady until next year, and got an additional boost from a "flight to quality" amid volatile stock markets, said Alfred Lee, investment strategist for BMO ETFs at Bank of Montreal.

HAP Seasonal Rotation ETF, which moves its assets among various sectoral ETFs to take advantage of recurring annual patterns in the market, rose 4.8 per cent. This actively managed ETF had a big chunk of its assets in cash, but made some money from short-term trades in gold and gold bullion ETFs. "As things started to deteriorate, we got rid of them," said Don Vialoux, a research analyst for JovInvestment Management Inc.

His ETF also held utilities and health care ETFs (which got hit in the market downturn) but made money by shorting - or selling - steel and transportation ETFs.

As the quarter ended, the ETF was nearly all in cash. Mr. Vialoux turned bullish on Oct. 5, and began investing again. Because markets have run up so fast, he is waiting to deploy his remaining 60-per-cent cash position after the "slight pullback" in the markets he expects as companies report third-quarter results.



Assets3-mo % rtnYTD % rtnCalendar year % rtn
Fund nameTickerCategoryMER($-mil)(Sep. 30)(Oct. 12)201020092008
Claymore Gold Bullion ETF (Non-Hgd)CGL.C-TMisc. - Commodity0.5030.616.0%n/an/an/an/a
BMO Long Federal Bond Index ETFZFL-TCdn Lng Trm Fxd Inc0.2013.811.9%11.2%n/an/an/a
PowerShares Ultra DLUX L-Term Gov't BndPGL-TCdn Lng Trm Fxd Inc0.28n/a10.4%n/an/an/an/a
iShares DEX Long Term Bond IndexXLB-TCdn Lng Trm Fxd Inc0.35152.19.7%8.8%12.0%5.3%2.2%
Horizons U.S. Dollar Currency ETFDLR-TMisc. - Other0.455.68.6%n/an/an/an/a
iShares S&P/TSX Global Gold IndexXGD-TPrecious Metals Equity0.551355.98.2%-5.4%26.0%7.0%1.0%
Horizons COMEX Gold ETFHUG-TAlternative Strategies0.8115.77.5%17.0%26.8%n/an/a
Claymore Gold Bullion ETFCGL-TMisc. - Commodity0.50552.27.1%18.7%26.6%n/an/a
BMO Long Corporate Bond Index ETFZLC-TCdn Lng Trm Fxd Inc0.3327.77.0%7.0%n/an/an/a
BMO Mid Federal Bond Index ETFZFM-TCdn Fixed Income0.3615.66.8%7.5%7.2%n/an/a
iShares DEX All Government Bond IdxXGB-TCdn Fixed Income0.35225.65.5%5.5%6.0%1.2%8.7%
iShares DEX Universe Bond IndexXBB-TCdn Fixed Income0.301693.15.0%5.1%6.3%5.0%6.1%
iShares DEX Real Return Bond IndexXRB-TCdn Infl. Prot. Fxd Inc0.35685.44.8%10.0%10.6%14.1%0.0%
HAP Seasonal Rotation ETFHAC-TAlternative Strategies1.0744.74.8%8.1%14.5%n/an/a
BMO Real Return Bond Index ETFZRR-TCdn Infl. Prot. Fxd Inc0.2516.14.6%9.6%n/an/an/a
S&P/TSX Total Return-12.0%-8.7%17.6%35.1%-33.0%
S&P 500 Composite Total Return Idx($Cdn)-7.2%-0.4%9.4%8.1%-21.9%
Source: Globe Investor, Bloomberg

© 2007 The Globe and Mail. All rights reserved.

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