4 Deceiving ETF Performances (EWT, IHY, SCIF)

4 Deceiving ETF Performances (EWT, IHY, SCIF) Looks can be deceiving. So can the performances of stocks and ETFs. Relying on the wrong time frame can lead investors to wrong ETF at the wrong time. Conversely, relying on the wrong time period as a barometer of a fund's performance potential can keep investors out of the right ETF at the right time. Imagine this scenario that has probably flummoxed many investors over time: ETF A looks great at first blush because it is up 30 percent year-to-date in June. The investor buys that fund July and it goes down. That scenario underscores the limitations of using year-to-date performance as a deciding factor in purchasing (or avoiding) select ETFs. All that glitters is not always gold and that is just a fancy of saying investors need not be seduced or dissuaded by year-to-date performances. Here are some examples to illustrate the point. Market Vectors India Small-Cap ETF SCIF Nearly any India ETF could be inserted here, but the Market Vectors India Small-Cap ETF could easily lure unknowing investors into its web of deceit with its 21.3 percent year-to-date gain. That sounds good, but SCIF's year-to-date gain needs to be put into context. After running from around $9 in early January to just over $14 in late February, SCIF has drifted lower and lower. Yes, every other India ETF on the block has been afflicted with the same gloomy scenario because global investors have become alarmed with the state of the Indian economy. Rising deficits, slowing growth and a tenuous hold on an investment-grade rating will do that. As a result, SCIF has lost almost 14 percent in the past 90 days. To be fair, the ETF is up 13.1 percent in the past month. The cold reality with India ETFs is these funds giveth, taketh away and repeat. iShares MSCI Belgium Investable Market Index Fund EWK The year-to-date performance of the iShares MSCI Belgium Investable Market Index Fund is arguably more surprising than deceiving. Belgium is a Eurozone nation and the ability of its economy and equity market to remain resilient in the face of the region's sovereign debt woes has been impressive. As a result, EWK is up six percent year-to-date. The deception comes in the form of the primary driver of the ETF's performance. That being Anheuser-Busch InBev BUD. That stuck accounts for almost 27 percent of EWK'w weight and is up 27 percent this year. In the past month, the stock is up almost 14 percent while EWK is not even up one percent, indicating that investors want exposure to Belgium would do well to own Anheuser-Busch InBev over EWK. Market Vectors International High-Yield Bond ETF IHY The case of the Market Vectors International High-Yield Bond ETF is a case of positive deception, if there is such a thing. IHY debuted in early April and in those two months of trading has lost almost five percent. IHY's problem is not that it is a junk bond ETF (over 76 percent of the index the ETF tracks is rated non-investment grade by Standard & Poor's). The fund's biggest near-term hurdles are that it is global in nature and that about a third of its issues are denominated in euros. Some investors have started to look past those concerns because IHY now has $19.4 million in AUM and has surged 5.4 percent in the past month. Most of the fund's bond issues are dollar-denominated and Market Vectors expects IHY will pay a monthly dividend, indicating this ETF has some use for income investors that are willing to take on some added risk. iShares MSCI Taiwan Index Fund EWT EWT is sporting a year-to-date gain, but as is the case with India ETFs, this fund would be in the tank if not for a stellar January-February run. In the past 90 days, EWT has given up 6.4 percent and the ETF's technical outlook is far from rosy. If EWT trades below $11.60, that could be a sign more downside is on the way. For more technical analysis on ETFs, click here.