A great way to see which themes have worked in the market so far this year — and which haven’t — is to look at the top 10 performing exchange traded funds.
ETF’s by definition are baskets of different assets — such as stocks, commodities or bonds — and trade close to their net asset value. Because of this — and the fact that most ETFs track an index — ETFs are less influenced by short-term noise, and more likely to reflect larger underlying fundamental factors.
Bets on volatility, natural gas and Russia have not worked well this year, based on the returns of the major ETF’s that cover those themes. But on the winning side are themes based on coffee, India and precious metals.
The Business of Beans
Coming in as the top ETF so far this year is the iPath Dow Jones-UBS Coffee Total Return (JO) with a whopping 63.30 percent year-to-date return. The grande to that venti is the iPath Pure Beta Coffee (CAFE) which has a nearly as impressive 57.58 percent return so far in 2014. The success of these two ETF’s is caused by the surge in coffee prices driven by one of the worst droughts seen in the last 50 years in Brazil, which is the world’s top producer and exporter.
The second most profitable theme has been investing in India. Four of the top 10 ETF’s track the business climate in the world’s second-most populous country. In particular, ETF’s that invest in small cap companies and infrastructure in India have done well in anticipation of business friendly reforms that most experts expect new Prime Minister Narendra Modi will put in place.
The Market Vectors India Small-Cap (SCIF), EG Shares India Small-Cap (SCIN), iShare MSCI India Small-Cap (SMIN), and EG Sharex India Infrastructure (INXX) have returned, 60.79 percent, 47.04 percent, 43.61 percent and 37.97 percent respectively year-to-date.
The continued optimism in India is echoed by Steve Cucchiaro, chief investment officer of the world’s largest ETF strategist, Windhaven Investment Management who says, “If there’s ever a place that has so much potential and so much room for improvement in infrastructure and so many other things, you have to say India is that place.”
Junior Miners
The final winning theme revolves around precious metals, but not the underlying commodities themselves. Instead, ETF’s that follow junior miners -– small exploration firms with higher volatility, but larger potential upside movement -– have done the best.
Global X Gold Explorers (GLDX) has returned 43.09 percent, and Market Vectors Junior Gold Miners (GDXJ) has increased 32.66 percent. Pure Funds ISE Junior Silver Small Cap Miners/Explorers (SILJ) has returned 43.04 percent so far this year.
Though it has been a choppy ride in precious metals this year, many experts feel that the effects of the Federal Reserve’s taper are soon to become a reality, and with that, an increase in interest rates, which is historically bullish for gold and silver.
If that scenario plays out, the junior miners will benefit most from the underlying assets’ price increase, which will be reflected in their shares.
Rounding out the top ten was PowerShares DB Agriculture Long (AGF), which though returning 31.72 percent, didn’t have any complimentary ETFs to confirm a strong overall investing theme in that space.
There is no guarantee of course that the ETF themes that have worked for the first half of the year will continue; however, these three themes have strong factors driving them and should at least be on the radar on any investor going into the second half of 2014.
Securing a favorable interest rate is a prime way to maximize savings. On a major loan repayment like a mortgage, a little upfront effort can save you considerable amounts for years to come. To cash in on this frugal hack, you need to get your credit in shape. That means checking your credit history, making payments on time (and in full), and reducing your debt to available credit ratio as much as possible. It means paying down your balances on all your credit card accounts. The higher your credit score, the lower your interest payments and the higher your savings.
1. Save on interest
Adjust your withholding exemptions so that your payments to Uncle Sam match your actual tax liability, and you won’t wind up with a big refund come April. As exciting as it is to get that big check in the mail, that’s money you’ve been loaning to the government for free rather than having it grow in your own savings and investment accounts. As of the start of April this year, the average tax refund was $2,831. That’s $235 a months’ worth of money that could be working for you.
2. Forego the tax refund
Just 10 to 20 minutes on the phone with your cable company, cell phone rep, or any other service provider can result in recurring monthly savings through old-fashioned negotiation. If you’re not getting anywhere after asking for a lower rate, ask for the cancellation (or retention) department and see what offers start to come in. If you’re unable to haggle down to get the savings you want, you can always shop providers to get your service elsewhere — probably with a new-customer discount rate, too.
3. Haggle
While bulk buying can sometimes lead to unnecessary purchases and overspending, it’s a great strategy for savings on nonperishable items like paper products, cleaning supplies and alcohol. When you stock up, you save on the unit price and the trips to the store to restock.
4. Buy in bulk
Other than the obvious benefits of reduced health care costs over time, exercising and living a healthy, smoke-free lifestyle can provide some more immediate savings on your insurance premiums.
5. Get healthy
More stuff equals more to maintain, clean and devote time and energy to. From the size of your home to the size of your clothing collection, more "stuff" generates more expenses. Downsize and watch your savings soar.
6. Downsize
For each year after full retirement age that you delay taking Social Security benefits, you accumulate a permanent increase in your benefits of 5 to 8 percent until age 70. This one strategy can increase your Social Security retirement income by more than 25 percent. It would take a lot of penny-pinching to add up to that kind of income boost.
7. Hold off on retirement
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