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5 ETFs Up At Least 10% in Tumultuous Q4

Sanghamitra Saha

The fourth quarter of 2018 has been disastrous for the global markets, with SPDR S&P 500 ETF SPY, SPDR Dow Jones Industrial Average ETF DIA, the tech-heavy Invesco QQQ Trust QQQ and the all-world iShares MSCI ACWI ETF ACWI losing about 13.6%, 11.7%, 16.8% and 13.8% so far (as of Dec 19, 2018) (read: October Traditionally Most Volatile: ETFs That Gained).

While economic slowdown in Euro zone and Japan, political tensions in Euro zone, Brexit and U.S.-Sino trade war kept troubling global markets and long-term bond yields at check, a hawkish Fed pushed up short-term U.S. yields in the fourth quarter. This in turn resulted in a flattening yield curve, sparking recessionary fears and a broader-based sell-off.

The yield on 10-year U.S. Treasury fell to 2.77% on Dec 19 from 3.09% recorded at the start of October, while the yield on the three-month U.S. Treasury rose to 2.40% from 2.23%. Investors see a higher chance of a recession in the United States than the current consensus expectations, which doesn’t forecast any until late 2020.

Overall, the ongoing stock market upheaval in the fourth quarter has sent all the key U.S. indexes into the red for this year. Six of the 11 sectors in the S&P 500 have so far undergone double-digit losses, per an article published on Wall Street Journal.

ETFs in Focus

Amid such a tumultuous situation, there are some ETFs that are up at least 10% in the fourth quarter. Below we highlight a few.

AdvisorShares Dorsey Wright Short ETF DWSH – Up 22.4%

The fund is actively-managed with an investment focus that involves buying securities that have appreciated in price more than the other securities in the investment universe and holding those securities until they underperform. It charges 99 bps in fees (read: 8 Top Active ETFs of 2018).

iPath Bloomberg Natural Gas SubTR ETN B GAZ – Up 21.5%

In the energy ETF spectrum, natural gas products shot up in the quarter. After remaining flat for almost the whole year, natural ETFs spiked from November on higher heating demand in winter. The cold snap boosts electricity demand across the region, increasing demand for natural gas. Also, inventories were at subdued levels. Both factors have boosted natural gas ETFs lately. US Commodity Funds United States Natural Gas Fund LP UNG and United States 12 Month Natural Gas UNL have added about 17.2% and 14.2% (read: Top Sector ETFs of 2018).

Aberdeen Standard Physical Palladium Shares ETF PALL – Up 21.4%

The fund seeks to reflect the performance of the price of physical palladium, less the expenses of the Trust.It surged on prospects of higher demand from the Chinese auto industry. Investors should note that the increased appeal of palladium over platinum as a metal to be used in catalytic converters of gasoline vehicles has driven demand of late. The supply of the metal is expected to tighten, providing further support (read: Palladium ETF Tops Gold in 2018: Will It Rally in 2019?).

iShares MSCI Brazil Small-Cap ETF EWZS – Up 18.7% 

Brazil ETFs soared on the win of far-right and investor-friendly candidate Jair Bolsonaro in the first round of Brazil’s presidential election on Oct 7. He became the president of the country on Oct 28, having defeated leftist Workers’ Party candidate Fernando Haddad, with 55% of the votes. He has already been pushing for the existing administration to rework the pension bill before his inauguration on Jan 1, per Wall Street Journal. VanEck Vectors Brazil Small-Cap ETF BRF also added 16.6% in Q4(read: Top ETF Stories of October).

Cambria Tail Risk ETF TAIL – Up 15.3% 

This actively-managed ETF seeks to mitigate significant downside market risk. The fund intends to invest in a portfolio of out-of-the-money put options purchased on the U.S. stock market. It charges 59 bps in fees.

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SPDR-DJ IND AVG (DIA): ETF Research Reports
 
IPATH-BB NGAS (GAZ): ETF Research Reports
 
ISHARS-MS BR SC (EWZS): ETF Research Reports
 
ISHRS-MSCI ACWI (ACWI): ETF Research Reports
 
US-12M NATL GAS (UNL): ETF Research Reports
 
VANECK-BRZL SC (BRF): ETF Research Reports
 
ETFS-PALLADIUM (PALL): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
NASDAQ-100 SHRS (QQQ): ETF Research Reports
 
US-NATRL GAS FD (UNG): ETF Research Reports
 
ADVSR-DRSY WS (DWSH): ETF Research Reports
 
CAMBRIA-TAIL RI (TAIL): ETF Research Reports
 
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