Zacks.com ETF Strategist Eric Dutram highlights: Five Best ETFs over the Past Five Years

CHICAGO, July 3, 2012 /PRNewswire/ -- Funds in this article include: PowerShares Dynamic Pharmaceutical ETF (PJP), iShares Barclays 20+ Year Treasury Bond Fund (TLT), First Trust Amex Biotechnology Index ETF (FBT), iShares Silver Trust (SLV), iShares COMEX Gold Trust (IAU).  Eric Dutram looks at the five best performing ETF segments from the past five year period.  

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Five Best ETFs over the Past Five Years written by Eric Dutram of Zacks Investment Research:  

In the last five years, investors have witnessed a variety of market conditions. Stocks were relatively strong in the middle part of 2007 but, as we all know, proceeded to fall apart during the turmoil of 2008 and one of the worst recessions in recent memory.

After the bottom in March of 2009, stock nearly doubled over the next 18 months, although they have seen some weakness to close out recent trading, falling back to break even on the year. After all of this volatility, the most popular ETF in the world, the SPDR S&P 500 ETF (SPY) has actually lost about 11.5% in the past five years leaving many investors worse off than they were at the beginning of this relatively long time period.

However, while broad markets have had trouble recouping their gains after the market slump in 2008, some other funds have managed to surge higher despite the turmoil. In fact, a number of more focused ETFs have seen gains exceeding 50% in the time period in question, crushing the broad benchmark in the time frame (see the Ten Biggest U.S. Equity Market ETFs).

Below, we highlight five of the strongest ETF performers during this uncertain time that have done well without the use of leverage or inverse techniques. While most have seen significant weakness as of late, these products still represent the cream of the crop for returns over the last few years and look to be products to watch in the years ahead for continued outperformance or a drop back to earth should investors shift to new funds heading into the second half of 2012:

Pharmaceutical ETFs

Despite fears of a patent cliff in some of the major drug companies, the broad pharma space has soared in the last five years. The segment has greatly outperformed those that are outside the health care world, and has certainly been helped by its role as a 'safe haven' in the market (see Health Care ETFs in Focus on Obamacare Supreme Court Decision).

Thanks to this, as well as high dividends and decent growth prospects, many pharma ETFs have been among the top performers over the last half decade. Not only did much of the sector lose less in the 2008 debacle, but many have come back quite strongly in the years following the crisis, helping the segment to outperform others in the time period.

In this space, the PowerShares Dynamic Pharmaceutical ETF (PJP) has led all comers, gaining roughly 77.5% in the last five years. The product has a decidedly large cap focus while it employs a type of equal weight methodology that ensures no one company dominates the fund.

Others in this sector with strong performances: IHE and FXH.

Long Term Treasury Bond ETFs

As a result of the market turmoil and the rush to T-Bills, investors have seen huge gains in the Treasury ETF market. Since inflation is still low and rates appear to be suppressed for quite some time, a great deal of interest has been seen in particular at the long end of the curve.

This is important because long-dated bonds tend to be more sensitive than their short term counterparts when interest rates are shifting. Since rates have plunged to historic lows over the past five years, this has been a boon for long-term debt, pushing securities focused on this segment up sharply higher in the time period.

In particular, investors have to be quite happy with the performance of the iShares Barclays 20+ Year Treasury Bond Fund (TLT). This fund has added close to 81.5% in the past five years include a nearly 38% gain in the past 52 weeks alone (also see Are The Fundamental Bond ETFs Better Fixed Income Picks?).

This fund has an effective duration of 17.33 suggesting that the product is pretty sensitive to interest rate moves. Meanwhile, the weighted average maturity comes in at close to 28 years and the 30 Day SEC Yield is roughly 2.5%, two factors that have undoubtedly helped TLT as bond rates have plunged, the dollar has soared, and safe havens have become in demand.

Others in this sector with strong performances: TLO, BLV.

For the rest of this ETF article, please visit Zacks.com at: http://www.zacks.com/stock/news/78045/the-five-best-etfs-over-the-past-five-years

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Eric Dutram
Company: Zacks.com
Phone: 312-265-9462
Email: [email protected]
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SOURCE Zacks Investment Research, Inc.