S&P Highlights Some of 2011's Top-Performing ETFs

The first 10 months of 2011 have not been kind to equity investors, but the good news, if there is any, is that U.S. stocks and the ETFs that focus on domestic holdings have held up well compared to international offerings. Year to date through the end of October, there were 192 U.S.-traded ETFs/ETNs with a positive total return, including about nine ETFs that were up more than 10%, according to a research note from S&P Capital IQ. Making the environment even trickier for investors is that over the same time frame, more than 400 U.S.-listed ETFs or ETNs were down and 186 had declines of more than 10%, S&P said. S&P Capital IQ notes that of those nine top performers, all are sector funds. The sector breakdown is as follows: Three utilities ETF, two health care funds, two financials ETFs and one each from consumer discretionary and consumer staples. Among the nine funds that S&P remains bullish on are the Utilities Select Sector SPDR XLU and the iShares Dow Jones US Pharmaceuticals Index Fund IHE. The firm issued “overweight” ratings on both ETFs earlier this year and maintained that view in today's note. Earlier this week, S&P reiterated “overweight” ratings on IHE rivals the Health Care Select Sector SPDR XLV and the Vanguard Health Care ETF VHT. “IHE is also receiving a relatively favorable appraisal in each of the three primary ranking categories. Meanwhile, XLU had an Underweight ranking in the Performance Analytics areas, but an Overweight ranking in the Risk Considerations and Cost Factors categories,” S&P analyst Tom Graves said in the note. With regards to XLU, S&P favors that fund over its rivals, the Vanguard Utilities Index Fund; ETF Shares VPU and the iShares Dow Jones US Utilities Sector Index Fund IDU, both of which are rated “marketweight” by S&P. Year-to-date, both IHE and XLU are up 11.2% compared to a flat performance for the S&P 500.