In the last few years, investors have slowly found their way back to equity markets as more lucrative opportunities continue to present themselves. And with more and more investors adopting higher risk tolerances, bullish momentum has undoubtedly become a dominant force on Wall Street, pushing equity markets into uncharted territory. And though across the board, most corners of the equity market have flourished in recent years, there have been certain sectors that have continuously outperformed while others have missed the mark .

Below, we highlight a handful of ETFs across each sector that have performed well over the past three years, as well as those that have struggled to keep up with the equity market’s quick pace (note that inverse and leveraged ETFs are excluded from this list – data as of 7/29/13):

Consumer Discretionary: Retail, Leisure & Entertainment Soar; International Funds Struggle

In the consumer discretionary space, two retail ETFs (XRT and PMR) and a leisure and entertainment fund came out on top, posting returns above 100% over the trailing three-year period. International consumer discretionary ETFs, however, posted lower returns, while the China Consumer ETF slipped nearly 16%.

Consumer Staples: Small Caps & Alternative Weighting Methodologies Deliver; Foreign Exposure Ekes Out Small Gains

Alternative weighting methodologies have proved their worth in the consumer staples sector, with the AlphaDEX , SmallCap , and equal weight funds delivering returns of over 70%. The Brazil and international-targeted ETFs (IPS and AXSL), however, posted significantly lower returns.

Energy: Alternative Weighting Wins Again; Solar and Coal Struggle

As with the consumer staples sector, energy ETFs that utilized alternative weighting methodologies also came out on top. PXE, PSCE, and PXI all posted returns around 80%. The two solar funds (KWT and TAN) as well as the coal ETF have struggled over the trailing three-year period, posting double-digit losses .

Financials: Small Cap, AlphaDex, and Regional Banks Come Out on Top; Emerging Market Funds Slump

Another small cap, , and the AlphaDEX fund delivered stellar returns in the financials sector, while a regional banking ETF also performed well. Investors who parked their assets in financial equities from emerging markets, however, suffered losses over the past three years.

Healthcare: Biotechs and Pharma Skyrocket, Medical Devices and International Options Fall Behind

In the healthcare space, biotechnology-targeted funds have delivered stellar returns over the trailing three-year period; Van Eck’s Market Vectors Biotech ETF has gained an incredible 161%. The medical devices and international healthcare ETFs, however, have struggled to gain traction.

Industrials: Dynamic, Small Cap, and Aerospace Soar; Shipping and Chinese Funds Struggle

Besides the small cap and alternative weighting methodologies (which have proven to be great picks over the years), aerospace and defense equities have also posted compelling returns. The shipping and China-focused ETFs, however, were the worst performers in the industrials sector.

Materials: Homebuilders and Construction Funds Catch Fire; Metal Miners Miss The Mark

With housing data showing significant uptrends in recent years, it perhaps is not surprising to see homebuilders and construction ETFs post stellar returns. Metal miners, however, have taken significant hits over the trailing three-year period .

Real Estate: Retail And Residential Funds Soar; Mortgage and Global Options Post Modest Gains

Every real estate fund delivered strong returns over the last three years, as the housing market continues to show encouraging signs. Coming out on top were the Retail , REIT and Residential funds. Chinese and global real estate, however, did not post as lucrative returns as their domestic counterparts

Technology: Internet Funds Come Out on Top; Nanotech Slips

In the tech space, two internet funds (PNQI and FDN) as well as a small cap ETF were the top performers, logging in double digit returns. The nanotechnology-focused fund , however, lost over 17% over the last three years.

Telecom: Domestic Picks Post Stellar Returns

Across the board, telecom ETFs have delivered strong gains over the last three years, with Vanguard’s Telecom ETF rising more than 60%.

Utilities: Small Cap and Equal Weight Deliver; Emerging Market Funds Slip Into Negative Territory

Once again, small cap and equal-weight ETFs came out on top in the utilities sector, while funds with exposure to emerging market economies suffered losses.

Follow me on Twitter @DPylypczak.

Disclosure: No positions at time of writing.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Hong Kong

    Learn about the iShares MSCI Hong Kong fund, which invests in various equities of companies listed on the Hong Kong Stock Exchange.
  2. Mutual Funds & ETFs

    ETF Analysis: Vanguard Small-Cap Growth

    Take a close look at the Vanguard Small-Cap Growth ETF, which focuses on domestic small-cap equities with a fundamental growth strategy.
  3. Mutual Funds & ETFs

    ETF Analysis: First Trust Dorsey Wright Focus 5

    Take a closer look at the First Trust Dorsey Wright Focus 5 ETF, a unique and innovative fund of funds based on momentum and relative strength.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares National AMT-Free Muni Bond

    Take an in-depth look at the iShares National AMT-Free Municipal Bond ETF, a highly diverse and very popular muni bond fund.
  5. Mutual Funds & ETFs

    Top 3 Switzerland ETFs

    Explore detailed analysis and information of the top three Swiss exchange-traded funds that offer exposure to the Swiss equities market.
  6. Mutual Funds & ETFs

    7 Best ETF Trading Strategies for Beginners

    Exchange-traded funds are ideal instruments for beginning traders and investors. Learn the seven best strategies for trading ETFs.
  7. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  9. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  10. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  4. Lion economies

    A nickname given to Africa's growing economies.
  5. Factor Investing

    An investment strategy in which securities are chosen based on ...
  6. Reverse Gold ETF

    Exchange traded funds that are designed to trade in a direction ...
RELATED FAQS
  1. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  2. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  3. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  4. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  5. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>
  6. What are some of the most popular ETFs that track the retail sector?

    Some of the most popular exchange-traded funds (ETFs) that track the retail sector include the iShares S&P Global Consumer ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!