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5 ETFs That Outperformed in Q1

·5 min read

The first quarter was off to a solid start with the Wall Street touching record highs on several occasions driven by initial trade deal, easing policies and upbeat indicators. However, all the gains soon evaporated on the deepening China-originated COVID-19 outbreak worldwide that is weighing heavily on global growth.

In fact, the malaise pushed the major U.S. indices into bear market in less than a month from a peak. Even a slew of stimulus measures by the government and the central banks globally failed to revive investors’ confidence in the economy and the stock market. (read: ETF Strategies & Best Practices Amid Coronavirus Volatility).

The deadly disease has now infected more than 700,000 people globally in more than 177 countries and claimed more than 34,000 lives. This has resulted in lockdowns and forced people to stay indoors to contain the spread, putting the economies of many nations at risk. Layoffs have risen and jobless claims spiked unprecedentedly as businesses scale back or temporarily shut down their operations. Spending — the engine of the U.S. economy — has collapsed. Revenues of restaurants, hotels, movie theaters, gyms, and airlines have been badly hit with many of them on the brink of bankruptcy.

Amid mass closures of private businesses, soaring layoffs and shutdowns, market participants forecast global recession in the coming quarters.

Though almost every sector has declined sharply in the first quarter, there are a few ETFs that have held their ground amid the turmoil. These funds do not purely seek investment in equities but follow some kind of strategies. We have highlighted some of them below:

AdvisorShares Dorsey Wright Short ETF DWSH – Up 53.4%

This is an actively managed ETF that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily, comprising large-capitalization U.S.-traded equities. It holds 100 stocks in its basket and charges higher annual fee of 3.07%. The product trades in lower average daily volume of 107,000 shares and has accumulated $76.6 million in its asset base (read: 5 ETFs in Green Despite the Coronavirus-Driven Sell-Off).

Cambria Tail Risk ETF TAIL – Up 24.6%

This fund seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets will be invested in the basket of long put option premiums, the majority of fund assets will be invested in intermediate term US Treasuries. The product has amassed $116 million in its asset base and charges 59 bps in annual fees from investors. It trades in average daily volume of 115,000 shares.

AGFiQ US Market Neutral Momentum Fund MOM – Up 24.1%

This ETF provides exposure to the “momentum” factor by investing long in U.S. equities that have had above average total returns and shorting those securities that have had below average total returns. It follows the Dow Jones U.S. Thematic Market Neutral Momentum Index, charging investors 2.62%. The product has accumulated $2.8 million in its asset base while trading in average daily volume of 5,000 shares (read: Long/Short ETF Hits New 52-Week High).

AGFiQ US Market Neutral Anti-Beta Fund BTAL – Up 14.9%

The fund has potential to generate positive returns regardless of the direction of the stock market as long as low beta stocks outperform high beta stocks. It invests in low-beta securities and at the same time shorts high-beta stocks of approximately equal dollar amounts within each sector. It seeks to deliver the spread return between low and high beta stocks. This can easily be done by tracking Dow Jones U.S. Thematic Market Neutral Anti-Beta Index. The ETF has AUM of $123.2 million and an expense ratio of 2.11%. It trades in average daily volume of 165,000 shares.

ProShares Long Online/Short Stores ETF CLIX – Up 11%

This fund seeks to benefit from both outperforming online and underperforming physical retailers through the long/short strategy. It combines the 100% long position in retailers that primarily sell online or through other non-store channels with a 50% short position in those that rely principally on physical stores by tracking the performance of the ProShares Long Online/Short Stores Index. The approach reduces equity market exposure and results in less volatility than long-only equity strategies. With long positions in 24 stocks and short positions in 48 stocks, the ETF has accumulated $43.3 million in its asset base and trades in average daily volume of 11,000 shares. It charges 65 bps in annual fees from investors (read: Beat Virus With 2 Sector ETFs & Stocks That Survived 2008 Crisis).

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AGFiQ US Market Neutral Anti-Beta ETF (BTAL): ETF Research Reports
 
ProShares Long Online/Short Stores ETF (CLIX): ETF Research Reports
 
AGFiQ US Market Neutral Momentum ETF (MOM): ETF Research Reports
 
Cambria Tail Risk ETF (TAIL): ETF Research Reports
 
AdvisorShares Dorsey Wright Short ETF (DWSH): ETF Research Reports
 
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Zacks Investment Research
 
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