These ETFs are Loaded With Nasdaq Bear Market Stocks

ETF Trends

On Tuesday, CNBC  posted a list of 29 Nasdaq stocks that are at least 20% below their 52-week highs, enough to qualify for bear market territory.

Yahoo (YHOO) was the “best” performer on the list with a decline from its 52-week high of exactly 20%, but shares of the Internet search firm are up 6.3% Wednesday after the company first-quarter earnings.

Even with Yahoo, the Nasdaq bear market list, for now at least, there are still 28 names remaining, including some familiar ones that account for sizable portions of some well-known ETFs.  Consider the following.

iShares Nasdaq Biotechnology ETF (IBB): Once beloved biotech ETFs have been sunk this year due to high valuations and waning appetite for momentum sectors. As the largest biotech ETF, IBB has endured plenty of pressure. Down 14% in the past month, IBB is not yet in a bear market itself. [Biotech ETFs Violate Key Trendlines]

Plenty of its marquee holdings are, though. Nearly a quarter of the names on the CNBC list are IBB constituents, including Alexion Pharmaceuticals (ALXN), Biogen (BIIB), Celgene (CELG) and Gilead (GILD). The seven IBB constituents on the bear market list combine for over 42% of the ETF’s weight.

First Trust Consumer Staples AlphaDEX Fund (FXG) : Time for a caveat. Only one of FXG’s holdings, Green Mountain Coffee Roasters (GMCR), is on the Nasdaq bear list. And it must be noted the stock is just 4.5% of the ETF’s weight. Although at less than 2%, FXG also has one of the largest weights to Herbalife (HLF) among ETFs.

iShares North American Tech-Software ETF (IGV) : The iShares North American Tech-Software ETF is off 2.8% this year, but it could be worse. The $1.1 billion ETF devotes a combined 10% of its weight to Symantec (SYMC), Autodesk (ADSK) and Citrix Systems (CTXS). All three are on the bear market list. IGV’s 9.5% weight to Microsoft (MSFT) has helped the ETF hold up, sort of. [Old Dogs Lift New ETFs]

Internet ETFs : Netflix (NFLX), TripAdvisor (TRIP), Amazon (AMZN), Facebook (FB) and Baidu (BIDU) entered Wednesday in bear markets. All five are top-10 holdings in the PowerShares NASDAQ Internet Portfolio (PNQI) , combining for about 26% of that ETF’s weight.

The First Trust Dow Jones Internet Index Fund (FDN) is being hurt by those stocks as well. FDN has no Baidu exposure, but the other stocks combine for 19.5% of the ETF’s weight. Plus, Equinix (EQIX) is another Nasdaq name in a bear market. It is 2.6% of FDN’s weight. [Waiting on a Bounce for Internet ETFs]

iShares North American Tech-Software ETF

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Tom Lydon’s clients own shares of Microsoft, Amazon and Facebook.

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