Best Performing ETFs In Second Quarter Signal a Global Recovery

Among the best-performing exchange traded funds (ETFs) for the second quarter are those that have some kind of bent toward basic materials and natural resources. This signals that there's some demand around the world, especially in emerging markets, for these products so these countries can resume the growth they enjoyed in the first half of the decade.

Market Vectors Coal (NYSE: KOL), up 68% in the second quarter; up 98.6% since March 9 low

• KOL was one of the top ETFs in the second quarter, gaining 68%.
• Activity in China is helping keep coal afloat and may help boost the price by increasing value-added taxes to coal producers.
• Commodities and shipping executives note China’s recent purchases of commodities that include iron, aluminum, copper, nickel, tin, zinc, crude oil, canola and soybeans. China is storing these commodities for several reasons: in anticipation of higher prices in annual contracts, for strategic reasons or to insulate domestic producers from any potential falling global prices.
• The Waxman-Markey Clean Energy Bill passed in the House this week – now it’s on its way to the Senate. The bill has a cap-and-trade system that will not produce a carbon price high enough to spur deployment of clean-coal technology for a long time.

Market Vectors Steel (NYSE: SLX), up 52.9% in the second quarter; up 81.5% since March 9 low

• China is again the big driver here - its $300 billion infrastructure stimulus plan helped boost steel production to an 11-month high in May
• Simply because of emerging market demand, the steel market is expected to remain tight until 2013
• 78% of the growth in steel demand is expected to come from emerging markets from 2007-2013 (and that's excluding China)

 iShares MSCI Brazil (NYSE: EWZ), up 40.5%in the second quarter; up 60.4% since the March 9 low

• Brazil is a country that's flush with natural resources, including copper and sugarcane ethanol
• Copper is used in pipes and wiring - key components of any recovery that involves new construction
• Brazil has a trade surplus with other nations, thanks to its abundant resources
• The country also enjoys a growing middle class, the hallmark of a strengthening economy