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The Forgotten Indexes

Outsourcing America

The Forgotten Indexes

By Ronald DeLegge, Editor

June 1, 2007

 

SAN DIEGO (ETFguide.com) - How many more Dow 13,000 headlines can we bear? And what about the S&P 500 breaking through all time highs? We've heard that one too.

 

Nearly forgotten throughout this is the fact that other important indexes and the exchange-traded funds (ETFs) tracking them have outshined both the Dow Industrials and S&P this year.

 

One such example is the stunning comeback of emerging market stocks. Through the end of May, the Vanguard Emerging Markets ETF (ticker: VWO) posted a 12.83 percent year-to-date gain, despite getting socked in mid-February.

 

International stocks in developed economies are also outperforming. The iShares MSCI EAFE ETF (ticker: EFA) has handedly beaten the Dow and S&P 500 over the past five years and is doing it again in 2007 by gaining 10.67 percent. Yet, the Dow and S&P still get most of the attention.

 

What about midcap stocks? In 2006 they were laggards. This year they've reversed course by outperforming both large and small cap stocks through the end of May. Right now there's 27 ETFs tracking midcap equity indexes, take your pick.

 

And let's not forget about specific industry sectors. Here too is another newsworthy event that didn't make it past most news editors for whatever reason.

 

Despite advancing 8.69 percent, the S&P 500 as tracked by the SPDRs (ticker: SPY) has still underperformed six of its very own nine industry sectors. Through the end of May, the Materials Select Sector SPDR (ticker: XLB) was ahead by 17.65 percent, Healthcare (ticker: XLV) was up 10.09 percent, Industrials (ticker: XLI) gained 12.01 percent, Energy (ticker: XLE) increased 16.88 percent, and Utilities (ticker: XLU) advanced 14.53 percent. Each of these ETFs follow a narrow group of sector specific stocks. Even Technology (ticker: XLK), an out of favor group over the past several years, has resurrected itself by posting a respectable year-to-date gain of 10.28 percent.

 

Too bad no one bothered to tell you that part of the story.

 

This may come as a surprise to the financial media, but the Dow and S&P 500 are no longer the only game in town. True they may be the most recognizable stock indexes on the planet, but that doesn't entitle them to exclusive coverage. Other important benchmarks do exist. And not only do they merit attention by the financial media but by all serious investors.

 

There are dozens of other index ETFs that have outperformed yet remain ignored.

 

It's time we start remembering the forgotten indexes.  

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