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Foreign gains propel three ETF stars

jnelson@globeandmail.com

What are we looking for?

The exchange-traded funds (ETFs) listed on Canadian exchanges that produced the best returns over the past year.

The screen

We looked for the 15 best performers among Canadian-listed ETFs for the year to Nov. 30. We excluded leveraged ETFs, which amplify the movements of an underlying investment, as well as U.S. dollar funds.

What did we find?

A trio of top performers that each focused on a different country.

At the top of our list was the Canadian-dollar-hedged iShares Japan Fundamental Index ETF, which surged 67.5 per cent.

The fund tracks the biggest companies in Japan and benefited from the country's improving economy, which has gained momentum thanks to Prime Minister Shinzo Abe's ambitious stimulus and reform agenda.

Jeff Logan, head of iShares products at BlackRock Asset Management Canada Ltd., said earlier this year that he expected Mr. Abe's reforms would "re-energize the private sector and improve productivity" in Japan.

The second-best performing fund on the chart was also focused on Asia. The BMO China Equity Index ETF gained 43.3 per cent.

The BMO fund seeks to mimic the performance of the BNY Mellon China Select ADR index. This index tracks a group of American depositary receipts (ADRs) that trade on U.S. exchanges but represent shares in Chinese companies.

Canadian investors might recognize some of the fund's top holdings including CNOOC Ltd., which paid $15.1-billion (U.S.) to acquire Calgary-based energy producer Nexen Inc. Another big holding is Baidu Inc., the Internet search-engine company.

Rounding out the top three ETFs is the Canadian-dollar-hedged PowerShares S&P 500 High Beta ETF, which came in just behind the BMO fund with a gain of 43.3 per cent.

The ETF is made up of the 100 stocks on the S&P 500, the flagship U.S. equity index, that are judged to be the most sensitive to market movements. Financial stocks account for about one-quarter of the fund's holdings.

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15 BEST-PERFORMING CANADIAN-LISTED ETFS TO NOV. 30

% return (Nov. 30)% returnAssets
FundTicker1-yr3-yr5-yr10-yr2012201120102009MER($-mil)Category
iShares Japan Fdmntl Idx C$ Hdg ComCJP-T67.2%13.1%7.2%15.4%-19.6%-1.9%1.9%0.6563.5Japanese Equity
BMO China Equity Index ETFZCH-T43.3%2.5%9.2%-26.4%0.7416.8Grtr China Equity
PS S&P 500 High Beta (CAD Hdg) ETF43.3%0.383.5U.S. Equity
iShares US Fundament Idx-C$Hgd ComCLU-T42.1%19.7%19.0%20.1%-1.5%16.7%28.5%0.65117.3U.S. Equity
BMO Junior Gas Index ETFZJN-T42.1%10.5%-11.1%2.2%0.629.2Natural Res. Equity
BMO EW US Hlth Care Hg CAD Idx ETFZUH-T41.9%23.5%21.3%4.1%0.4061.3Health Care Equity
BMO EW US Banks Hgd CAD Index ETFZUB-T41.6%14.6%33.1%-26.9%0.40185.2Financial Svcs. Equity
BMO S&P/TSX EW Ind Index ETFZIN-T41.3%0.5510.7Canadian Equity
iShares Russell 2000 Idx (CAD-Hgd)XSU-T40.2%17.1%19.4%16.2%-5.6%25.2%24.5%0.35214.2U.S. Sml/MdCp Equity
Vanguard S&P 500 Index ETFVFV-T39.2%0.15227.5U.S. Equity
BMO S&P 500 Index ETFZSP-T38.7%0.15727.4U.S. Equity
BMO Junior Oil Index ETFZJO-T38.2%10.2%-2.7%-3.9%0.6213.8Natural Res. Equity
iShares Int'l Fundamental Idx Com35.9%10.0%8.7%12.1%-13.1%-0.2%15.6%0.65204.7International Equity
Horizons S&P 500 Index ETF35.8%18.9%16.0%0.9%0.16123.9U.S. Equity
PS FTSE RAFI US (CAD Hedged) ETF35.0%0.5799.9U.S. Equity
S&P/TSX Composite Index9.4%1.1%7.6%5.5%4.0%-11.1%14.4%30.7%
S&P 500 Composite ($ Cdn)36.1%16.5%11.5%3.4%10.9%2.2%7.2%5.5%
US$ ETFs and Leveraged ETFs excluded. Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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