I was checking out the funds on Vanguard.com and here are the funds that have better than a 5% YTD return:
Energy Fund Investory - 14.45%
Precious Metals and Mining - 8.87%
Emerging Mkts Stock Index - 7.70%
Internatl Explorer Fund - 6.49%
I don't know all the much about investing and the markets, but here is my take on why these four are doing so well:
Energy Fund
The high price of oil. A barrel of light crude oil has gone from less that $28 a barrel at the beginning of 2004 to now over $54 a barrel. Essentailly, all the inventory of oil companies has doubled in value. Oil fields that weren't worth pumping at $30 a barrel are now worth pursuing, driving up the need for oil drilling equipment. Other forms of energy that compete with oil such as natural gas have also risen (but not as much as oil) because they tend to track the price of oil. Also, energy prices appear to be in a slow-motion switch from being dollar-based to euro-based, so the drop in the dollar is a prime mover behind the high price of oil.
OUTLOOK - With the dollar predicted to continue to drop and the demand for oil internationally forecasted to continue to increase, it don't see this fund cooling off any time soon.
Precious Metals and Mining
I am really out of my league here, but I am going to guess the dropping dollar. Also, I could see how increasing in living standards in India and China could result in the increase for precious metals. I don't know enough to comment on the future outlook.
Emerging Mkts Stock Index
Internatl Explorer Fund
I moved a significant portion of my retirement money into the Emerging Mkts Stock Fund in July, 2002 when it was $8.42 a share and it is now $15.81 a share. Basically, all of the international stock funds have excellent YTD returns, but these are the two top international funds. I know that the decline in the dollar is a significant factor in the run up of this fund, that doesn't explain all of the jump. My guess is that people know that the US stock market is overpriced and that the dollar is going to fall, so they are investing their money in international funds to get a better return and the increased capital inflow is driving up stock prices.
OUTLOOK - With the dollar predicted to continue to drop, non-US stock markets remain attractive investment opportunities.
Note: My only relationship with Vanguard is that of an moderately informed investor.