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ETF chart-topper gets lift from Abenomics

What are we looking for?

Investors will soon be staring down the final quarter of the year. Let's take a look at which exchange-traded funds have offered the best performance in 2013 so far.

The screen

We searched all categories for the 15 ETFs with the best performance for the year to Aug. 31. We omitted leveraged ETFs, which use derivatives to amplify the long or short returns, as well short or "inverse" ETFs that take bets against the market.

What did we find?

The top performing ETF in the chart was helped by major Japanese automotive and technology companies.

The Canadian hedged iShares Japan Fundamental Index ETF gained 46.8 per cent in the first eight months of the year.

"We continue to see opportunities with currency hedged positions in Japan. Encouraging monetary policy and a weaker yen provide a positive outlook for the Japanese economy," said Jeff Logan, head of iShares products at BlackRock Asset Management Canada Ltd.

"Japan now has a united government that we expect will allow Prime Minister [Shinzo] Abe to move ahead with bold reform. This should re-energize the private sector and improve productivity," he said.

The ETF's current top holding is Toyota Motor Corp., but other auto makers and their affiliated financing businesses also appear in the top 10, including Mitsubishi UFJ Financial Group Inc. and Honda Motor Co. Ltd.

But broad gains in Japanese markets and a softer yen weren't the only factors driving performance so far this year, and ETFs from other hot sectors this year are also represented in the chart - from health care to technology, U.S. banks to Chinese equities.

The second-best performing fund for the year to Aug. 31 was the BMO Junior Gas Index ETF, up 30.7 per cent. It is currently weighted toward some high-performing stocks such as Gulfport Energy, which was up 54 per cent in the year to the end of August.

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CANADIAN ETFS, EIGHT MONTHS TO AUG. 31, 2013

% return (Aug. 31)% returnAssets
FundTicker8-mo.1-yr5-yr10-yr20122011201020092008MER($-mil)Category
iShares Japan Fundament Idx (CAD-Hgd) Com ETFCJP-T46.8%59.2%-6.0%15.4%-19.6%-1.9%1.9%-46.7%0.7257.3Japanese Equity
BMO Junior Gas Index ETFZJN-T30.7%32.7%-11.1%2.2%0.628.3Natural Res. Equity
BMO Equal Weight US Banks (CAD-Hgd) Index ETFZUB-T30.0%32.8%33.1%-26.9%0.40147.6Financial Svcs. Equity
iShares S&P/TSX Cap Info Tech Idx ETFXIT-T27.9%44.4%-0.4%4.1%6.6%-20.5%4.1%52.4%-49.1%0.6128.8Misc. - Sector Equity
BMO Equal Weight US Health Care (CAD-Hgd) Idx ETFZUH-T26.4%31.1%21.3%4.1%0.4041.7Health Care Equity
PowerShares S&P 500 High Beta (CAD Hgd) ETFUHB-T24.7%29.8%0.383.0U.S. Equity
Vanguard S&P 500 Index ETFVFV-T24.2%0.18190.2U.S. Equity
iShares Russell 2000 Idx (CAD-Hgd) ETFXSU-T24.2%26.1%5.2%16.2%-5.6%25.2%24.5%-38.8%0.36158.5U.S. Sml/MdCap Equity
iShares S&P/TSX Cap Consumer Staples ETFXST-T24.1%26.4%21.4%0.6229.1Misc. - Sector Equity
BMO S&P 500 Index ETFZSP-T23.6%0.17660.6U.S. Equity
BMO China Equity Index ETFZCH-T22.9%30.0%9.2%-26.4%0.7410.9Greater China Equity
BMO Junior Oil Index ETFZJO-T22.6%25.2%-2.7%-3.9%0.6214.3Natural Res. Equity
iShares S&P Global Healthcare (CAD-Hgd) ETFXHC-T22.6%27.0%17.3%0.6550.6Health Care Equity
Horizons S&P 500 Index (CAD-Hgd) ETFHXS-T21.4%23.0%16.0%0.9%0.1661.2U.S. Equity
PowerShares FTSE RAFI US (CAD-Hgd) ETFPXU-T21.3%25.0%0.57112.6U.S. Equity
S&P/TSX Total Return5.9%9.3%1.3%8.1%7.2%-8.7%17.6%35.1%-33.0%
S&P 500 Composite Total Return Idx($Cdn)24.2%26.1%10.5%4.8%15.7%7.3%12.2%13.7%-25.8%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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