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What are we looking for?

Biggest money makers in 2011 among Canadian-listed exchange traded funds.

The screen

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We looked at last year's 15 best performers. Leveraged ETFs, which allow investors to amplify their long or short bets on the market, were excluded.

What did we find?

A double-barrelled ETF at the top.

HBP Nymex Long Oil/Short Gas ETF, which is a bet on a rising oil price and a falling natural gas price, garnered a stellar 60.8-per-cent gain.

The performance stems from the Nymex (New York Mercantile Exchange) one-month, crude oil futures contract rising 8.2 per cent; the Nymex natural gas contract declining 32.2 per cent, and the daily compounding of returns.

Most of last year's top performers were bond ETFs. BMO Long Federal Bond Index ETF posted the strongest return of this group with a 19.9-per-cent gain.

There were also equity standouts. The iShares S&P/TSX Capped REIT Index Fund was the second-best performer with a 20.3-per-cent gain. RioCan, H&R and Canadian Real Estate Investment Trust represent about 46 per cent of this ETF.

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While 14 of the ETFs track passive indexes or commodity movements, HAP Seasonal Rotation is a an actively managed ETF. This fund, which invests in industry sectors during periods when they historically do well, climbed 11.5 per cent. "It was a good year for seasonal trades," said Don Vialoux, a research analyst for Horizons Investment Management Inc., which sponsors the ETF.

While the Horizons ETF was fully invested for the first four months of this year, it subsequently shifted to holding between 70 and 90 per cent cash until Oct. 5. Then, most of that cash was reinvested mainly in the economically sensitive technology, industrial and transportation sectors.

Within the past two weeks, however, Mr. Vialoux has turned cautious, and boosted the cash to about 50 per cent. "We are getting some technical signs that the market is starting to roll over," he said.

Some companies will give negative guidance when they report fourth-quarter results this week, he said. Earnings are expected to be hurt by the European economic slowdown, and conversion of foreign currencies back into the stronger U.S. dollar. "There will probably be at least a minor [market] correction in the first quarter," he suggested.

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