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Fellow investor
The first quarter of 2015 is in the books and it has certainly been a very interesting ride. Markets saw periods of heavy volatility but still managed to finish the first three months of the year in the green.
As with any time frame though investors saw leading and lagging sectors with a very interesting breakdown among the major industry groups this time around. Health care (XLV) easily led the way with a gain approaching 8% for the quarter while utilities (XLU) were the clear loser as this segment tumbled about 5.9% in Q1.
This drop in XLU is especially surprising as the past six month chart saw a very strong start for the utilities ETF. However as the new year began the segment floundered on rate fears (even though rates remain low) and profit taking leading to a big drop off for the space.
Meanwhile health care is continuing its impressive winning streak as XLV has been the best performing sector over the past five years. Nowadays biotech and M&A activity are driving the trend higher adding to the recent trend of outperformance for the space.
Looking Ahead Which Funds Are Well-Positioned Now
While these have been among the most important performances for U.S. sectors so far in 2015 let's take a quick look at which fund segments have seen the most in inflows/outflows as of late. This could be a leading indicator of which products are going to be in focus in Q2 and it is definitely something that investors need to take into account.
For March we saw clear trends favoring international developed markets with EAFE-focused ETFs leading the charge. However there was also a clear bias towards hedged products as three of the ten funds with the most inflows removed the risks of foreign currencies from their portfolio holdings.
Meanwhile for ETF losers in March we saw a host of lower risk products lead the list including gold long-term Treasury bonds and consumer staples. Investors are shunning these sectors in droves in favor of higher risk markets and developed countries in Europe and Asia.
In other words look for some of the recent trends to continue into April while it seems pretty safe to say that shaky trading conditions will continue as well. However as always correct sector selection can make an enormous difference so make sure that your portfolio is positioned accordingly and that you are aware of the broader trends taking place in the ETF world right now. And for more on recent trends as well as what to watch in Q2 make sure to check out the links below:
Currency Hedged ETFs Top Q1 Asset Flows
Watch These Emerging Market ETFs in Q2
Important News
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Good Investing
Eric Dutram
ETF Strategist
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