With more than seven months of the year now behind us, it is interesting to take a look back and see how things stack up so far. One of the best ways to do that is to look at various market and industry sectors. There are currently more than 800 exchange-traded funds (ETFs), representing virtually every sector or index. So what are these funds telling us?

Of 806 funds tracked by Yahoo!, 148 have positive returns for the year so far. That means 82% of all ETFs are negative.

Breaking down that 148, 52 are energy or natural resource funds. Returns from that group range from less than 1% to 73.7%. The highest return was posted by United States Natural Gas Fund (UNG). Another 35 are bear market or short funds. In that group returns ranged from 3% up to 57%.

Unfortunately, gains are only half the story. Most investors have not participated in these profits because these funds are generally much too volatile. For example, although UNG is showing a nice gain for the year, it has fallen 42% in the past six weeks. Based on trading volume, many investors bought in near the price peak and have lost significant money since then.

Below is a list of the remaining 60 ETFs and their year-to-date gains. You’ll see that it is quite a diversified list including precious metals funds, currency funds, and even municipal bond funds. Most of these funds carry high risk. So while it is easy to look at the gains and wish we had those in our accounts, just keep in mind that for every two of these funds that show a profit, there are eight others that have suffered losses in 2008.

So what does all this mean? Not much, other than what we already know: so far it has been very difficult to make money in the markets in 2008. Perhaps more important, so far it has been very easy too lose money–in some cases a lot of money–in 2008. So if you are looking at your statements and seeing single-digit losses for the year, you can take heart in knowing that you are probably better off than the majority of investors.

Summer is quickly coming to an end. My wife is a school teacher and she has been working for two weeks already in preparation for the school year. Children in her district will be in class on Monday.

The good news is that the end of summer often is good for the markets. People come back from vacation, Congress goes back into session, and Americans resume a more normal pattern of living and spending. Enjoy the last of your summer and hope for better investment conditions in the coming weeks.

F.S.

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This entry was posted on Thursday, August 14th, 2008 at 5:31 pm and is filed under Newsletter. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.