By Jeff Reeves
Investors have been taken for a wild ride in 2011. Consider that in the past 50 trading days, dating back to the Aug. 8 rout where the index shed 600-plus points, the market has seen 34 triple-digit moves in the Dow Jones. That's a 70% frequency!
Depending on the day, the major indices are either sitting on a slight gain for the year or a slight loss. Traders are patting themselves on the back every time the market makes an about-face, claiming that the volatility is further proof that buy-and-hold is dead.
But don't believe it. While it certainly is true that buy-and-hold investing never will make you a mint overnight, there are a host of long-term investments that have thrived — even in a choppy market and a hostile environment to many stocks on Wall Street.
Need proof? Here are five funds that have all delivered gains of over 120% in the last three years. Most importantly, the flavor of these funds also says a lot about the current areas of opportunity in this market.
Physical Silver ETF
The ascent of the iShares Silver Trust ETF /zigman2/quotes/205744453/composite SLV +0.49% is impressive, notching a gain of about 270% since October 2008. That's about seven times the performance of the broader stock market, as silver prices have tripled from less than $10 per ounce to more than $30 per ounce currently. The silver trust ETF holds physical silver, thus is tied to the appreciation of the precious metal.
One could argue the time to sell SLV has come and gone, as silver prices crashed this summer from the $45 range and took the ETF from a 50% gain to a sub-5% gain year to date in 2011. But those who believe inflation will heat up or think investors should hide out in hard assets still might believe in the long-term upside of this fund, even after these impressive gains.
Gold Miners ETF
You probably think the SPDR Gold Trust ETF /zigman2/quotes/200593176/composite GLD +0.25% is just as red-hot an investment as silver. But the fact is the gold trust is up "only" about 100% in the past three years — easily more than double the market, but not on par with SLV. In fact, it's not even on par with the Market Vectors Gold Miners ETF /zigman2/quotes/206399889/composite GDX -0.85% , which is up 160% since October 2008 to notch quadruple the performance of the Dow Jones and S&P.
This fund holds equities listed in the NYSE Arca Gold Miners Index, including Barrick Gold and Goldcorp , among others. This focus on equities instead of physical gold has tertiary benefits beyond just the headline performance of the past three years, too. GDX pays a small dividend to shareholders while physical gold just sits there. Also, gold is deemed a "collectible" by the IRS, and thus long-term gains are taxed at 28% — almost double the 15% tax on long-term capital gains in ETFs and stocks. GLD is subject to this higher tax rate, making the returns even sweeter in GDX.
There's a lot of talk about a hard landing in China . Runaway inflation threatens to gut Brazil's growth. The euro zone is teetering on the edge of bankruptcy. And, of course, there's our own domestic troubles. Where can you turn for long-term growth? How about Thailand. The iShares MSCI Thailand Index Fund /zigman2/quotes/201226812/composite THD -0.67% has notched a very impressive 120% in gains since October 2008, more than tripling the major U.S. indices. And when you consider broad-based emerging markets funds like the Vanguard MSCI Emerging Markets ETF /zigman2/quotes/204649024/composite VWO -0.19% have significantly underperformed the market in the long term, it makes Thailand's growth even more impressive.
There is, of course, the inherent risk of an emerging market, as well as non-U.S.-listed stocks like Siam Commercial bank and gas and oil producer PTT Exploration and Production that compose the fund. And it's worth noting that the top five holdings represent more than 35% of the entire portfolio. However, if you're looking to tap into growth, there are few options in Western markets, and even the BRIC nations are looking unappealing. Countries like Thailand and ETFs like the THD fund seem like decent ideas in the current market.
Consumer discretionary sales have been battered as unemployment has soared and Americans hunker down to protect their meager finances. But against all odds, the SPDR S&P Retail ETF /zigman2/quotes/206947004/composite XRT -1.37% has surged more than 120% since October 2008. Yes, some of its holdings are stocks many investors hold their noses over — Sears , Aeropostale and other recent laggards. But the fund is very balanced, with no one holding worth more than 1.5%. That means diversification and the opportunity to tap into profitable retail stocks such as discounter Dollar Tree /zigman2/quotes/203712248/composite DLTR +0.11% and thriving luxury brand Tiffany's .
Collectively, this retail ETF is a big success story. These big winners have buoyed the fund and made it a great long-term play — with a nearly 1% dividend to boot. Why settle for the platitude of it being a "stock picker's market" when a diversified fund like this can do so well in the long term?
Technology stocks have outperformed the market (mostly) in the last few years. The embodiment of this trend is the First Trust Dow Jones Internet Fund /zigman2/quotes/200286380/composite FDN -2.33% . FDN focuses on some of the biggest dot-com names out there — Google /zigman2/quotes/205453964/composite GOOG -7.44% , Amazon /zigman2/quotes/210331248/composite AMZN -2.02% and eBay /zigman2/quotes/204653455/composite EBAY -2.01% , to name a few. The fund also has tallied 120% gains since October 2008, tripling the broader market's returns in the same time frame.
As technology remains in focus as one of the few areas for growth, with consumers heavily reliant on e-commerce and gadgets, and businesses using tech tools to boost productivity, this ETF could have continued upside despite these hot gains.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.