Even with a multi-day bounce the SPDR S&P 500 (SPY) is still off more than a third of a percent this month. That glum performance indicates that, to this point, investors have ignored seasonal trends for stocks while opting to focus instead on the result of U.S. elections and the looming fiscal cliff.
Slack performance this month does not mean November has been a wash for all ETFs. In fact, some plain vanilla funds have notched solid runs in what has been a challenging environment for the broader market. Not only have the following ETFs been beacons of strength this month, but that strength could be indicative of more bullishness to come.
Best of all, this mix of pleasant November ETF surprises offers something for all investors from the risk-averse to the risk-takers.
PowerShares Build America Bond Portfolio (BAB) As a bond ETF focused primarily on high-grade U.S. bonds, the PowerShares Build America Bond Portfolio is not designed to excite when it comes to near-term gains. A November gain of 0.4 percent indicates as much, but there is more to the story.
Prior to the presidential election, BAB was highlighted as a valid play on an Obama reelection because the President wants to make the Build America Bonds program a permanent fixture. Republicans do not have the same feelings for these bonds, so BAB and its rivals were seen as in jeopardy if Mitt Romney had emerged victorious.
Obviously, that was not the case. Now investors can enjoy BAB's conservative posture with significantly diminished political risk. They will also be compensated for waiting for capital growth as BAB has a 30-day SEC yield of 4.3 percent and pays a monthly dividend.
WisdomTree Australia & New Zealand Debt Fund (AUNZ) The WisdomTree Australia & New Zealand Debt Fund represents yet another bond play that has proven quite sturdy this month. Up nearly one percent for the month, AUNZ is useful on multiple fronts. First, the ETF helps investors establish a risk-on outlook because the Australian and New Zealand dollars are viewed as high-beta currencies relative to the U.S. dollar.
Second, the yield is decent and AUNZ pays a monthly dividend. Third, although AUNZ gives investors an obvious hedge against declines in the U.S. dollar, that hedge does not come with increased credit risk. All of AUNZ's holdings are rated AAA or AA.
Consumer Discretionary Select Sector SPDR (XLY) In theory, the election result and subsequent fiscal cliff fears should have been disasters for XLY and other ETFs tracking discretionary names. Indeed, XLY did slump earlier this month, but the ETF has started obeying the strong seasonal trends for the sector it tracks.
In the process, XLY has rallied enough over the past several trading sessions to not only erase all of the losses accrued earlier this month, the fund is now up nearly 2.3 percent for the month. If retailers report robust Black Friday results, that should bode well for XLY's near-term health and it could mean the ETF sets a new 52-week high before the end of this year.
First Trust Dow Jones Internet Index Fund (FDN) The First Trust Dow Jones Internet Index Fund deserves a lot of credit for soaring nearly two percent this month. Google (GOOG), the fund's largest holding with a weight of almost 10 percent, has endured a rough November, but other FDN constituents have stepped up to lift the ETF.
Gains by Amazon (AMZN), eBay (EBAY) and Priceline (PCLN), a trio that represents over 19 percent of FDN's weight, have boosted the fund. It does not hurt that FDN is known as one of the ETFs that offers exposure to both Facebook (NASDAQ: FB) and LinkedIn (LNKD). Facebook alone is up nearly 14 percent this month.
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