Top Performing ETFs – GLDX, XBI, BRAF
Over the last few weeks, US stocks have raced to new highs. And they have begun to fall back again this week.
The major stock market averages like the S&P 500, Dow, and NASDAQ get most of the attention. But you won’t find any of the ETFs that track these broad based indexes among the top performing ETFs this week.
Let’s take a look at the three top performing ETFs over the last week…
Global X Gold Explorers ETF (GLDX)
GLDX is the top performing ETF this week with a 12.2% gain.
This ETF tracks the Solactive Global Gold Explorers Total Return Index. It’s made up of companies exploring for new gold deposits.
You’ll find some large cap gold miners as well as small cap stocks in this ETF. It has a few stocks that are traded on US exchanges, but more than 95% of the stocks are international stocks.
In short, this is the venture capital of gold. This ETF is littered with companies that are looking for gold but don’t produce any gold or profits. Needless to say, these stocks tend to be very volatile.
The value of these stocks is driven by many factors. First and foremost is the price of gold. The price of the shiny yellow metal impacts the value of any gold deposits they find as well as the amount of money gold miners are willing to spend on exploration.
SPDR S&P Biotech ETF (XBI)
Don’t look now but biotech stocks are building bullish momentum again. XBI is up 9.1% over the last week.
That’s right, biotech stocks are bouncing back after a three month correction.
The resurgence of biotech stocks is being driven by Mergers & Acquisitions. The latest M&A deal is drug maker Merck (MRK) agreeing to buy Idenix Pharmaceuticals (IDX) for $3.85 billion.
MRK is paying a hefty premium to buy IDX. The buyout offer of $24.50 per share is 239% above IDX’s previous closing price.
This type of M&A activity has been one of the biggest catalysts for the surging valuations of biotech stocks. But it’s not the only one…
There’s amazing work being done in the biotech industry right now. All of the research that has been done over the years, coupled with advancements in technology, are producing new therapies to treat diseases. This is the gold age of new treatment developments.
What’s more, we should see some investors rotate back into growth stocks as undervalued stocks are bid up and become less undervalued.
Global X Brazil Financials (BRAF)
BRAF is another of the top performing ETFs over the last week. This ETF has enjoyed a 7.0% surge this week.
Is this ETF surging because Brazil is the host country of the World Cup? Or is there something else driving shares of Brazilian financial stocks up?
There’s no doubt the start of the World Cup has put the world’s focus on Brazil. But BRAF isn’t moving higher because of it.
The real reason for the uptick is political. The current Brazilian President hasn’t done their economy any favors. They have high unemployment, high inflation, and slow economic growth.
If new leadership can get the economy moving in the right direction, BRAF stands to be one of the biggest winners.
Here’s the upshot…
The major US stock market averages get most of headlines. But the best returns often come from sectors and markets that are flying under the radar. And the surge in gold explorers, biotech stocks, and Brazilian financials is no exception.
Good Investing,
Corey Williams
Category: Commodity ETFs, ETFs, Foreign Market ETFs
