As we continue our discussion on the third quarter of performance of various ETFs, today we’re going to take a look specifically at sector-based ETFs. We find that, on a sector basis, many of the year-to-date leaders were also the Q3 leaders. The Solar niche within Energy is a very narrow slice of the market, but a strong performing one just the same. The Guggenheim Solar Fund ( TAN) , for instance, gained 45.5% last quarter and has more than doubled on the year, easily the best performing of all sector funds. Internet and Biotech remain among the established leadership as well, and another market niche that has climbed the ranks of leadership this year is found within the Global X Social Media Fund ( SOCL), which gained 33.5% last quarter.
In terms of the sector laggards, there has been some change over the past few months. Early in the year we found that pretty much everything was rising within the US sector lineup except Basic Materials, and specifically Precious Metals. As the market rose, all things related to Gold and other Precious Metals faltered. Last quarter we saw many Precious Metals funds find lows and begin to move off of them. What replaced Precious Metals as the market laggard were essentially all of the “rate-sensitive” areas of the market. Real Estate was the most prevalent, but Utilities, Pipelines and Home Builders all joined the ranks of sectors that were clearly outpaced by the market last quarter.