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Best & Worst ETFs of Thanksgiving Week

The 2018 Thanksgiving week defied historical trends. The holiday-shortened week is usually a treat for stock investors, even with low volumes. However, this time around, bitter U.S.-China trade relations and global growth worries kept investors jittery. Additionally, the oil price rout worsened last week and took a toll on sentiments.

The three major indices logged in their biggest losses in a Thanksgiving week since 2011 with Dow Jones, S&P 500 and Nasdaq Composite Index tumbling 4.4%, 3.8% and 4.3%, respectively. The decline came in spite of a solid start to the holiday shopping season. A burst of online deals on products ranging from apparel to flat-screen TVs had boosted online sales in the Thanksgiving week (read: Time to Bet on Dow ETFs This Thanksgiving Week?).

According to Adobe Analytics, online sales jumped 28% to $3.7 billion on Thanksgiving Day and 23.6% to a record $6.22 billion on Black Friday. This makes Thursday the fastest-growing day for e-commerce sales in history and makes the Friday after Thanksgiving Day the first to see more than $2 billion in sales stemming from smartphones. About 33.5% of e-commerce sales came from mobile devices compared with 29.1% in 2017.

While the sluggish trading in the stock world pushed many ETFs in red last week, the optimism for the holiday season and defensive approach led to the emergence of a few winners. Given this, we have highlighted the best and worst performing ETFs of the Thanksgiving week:

Best ETFs

Principal Contrarian Value Index ETF PVAL – Up 3%

This fund tracks the Nasdaq U.S. Contrarian Value Index, which uses a quantitative model designed to identify equity securities in the Nasdaq US Large Mid Cap Index that appear to be undervalued by the market relative to their fundamental value. This methodology seeks to capitalize on inefficiencies in the market and has the potential to deliver higher returns with lower volatility compared with growth and blend counterparts. Holding 251 stocks in its basket, the product is widely diversified with each accounting for less than 1% share. It has amassed $3.7 million in its asset base since its debut more than a year ago and charges 29 bps in annual fees.   

iShares Evolved U.S. Innovative Healthcare ETF IEIH – Up 2.9%

This ETF got a boost from its sector’s non-cyclical nature, which offers defensive tilt at the times of market turbulence. It is an actively managed fund and employs data science techniques to identify companies with exposure to the innovative healthcare sector. The fund holds 198 stocks in its basket with double-digit concentration on the top firm - Johnson & Johnson. It has accumulated $4.9 million in its asset base since its inception on Mar 21 and charges 18 bps in annual fees (read: 5 ETFs That Deserve Special Thanks in 2018).

iShares U.S. Home Construction ETF ITB – Up 2.1%

This fund provides a pure play to home construction stocks by tracking the Dow Jones U.S. Select Home Construction Index. It holds a basket of 47 stocks with a double-digit concentration on the top two firms that account for 13% share each. The product has AUM of $952.3 million in its asset base and charges 43 bps in annual fees. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Worst ETFs

Invesco S&P SmallCap Energy ETF PSCE – Down 8%

The slump in oil price continued last week amid escalating concerns about an increase in global supply and a slowdown in economic growth. In particular, oil prices dropped to their lowest levels in more than a year on Black Friday, deepening a worst seven-week sell-off that has plunged crude futures deep into a bear market. While most energy ETFs have been in the red in the past week, PSCE, which provides exposure to U.S. small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index, stole the show. Holding 31 securities in its basket, it is slightly concentrated on the top firm with 8.7% exposure while other firms hold less than 5.3% of the total assets. The fund is less popular with AUM of $37.6 million and charges 29 bps in fees per year. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Oil in Bear Market: Leveraged ETFs to Gain From).

Advisorshares New Tech and Media ETF FNG – Down 7.3%

The FAANG and big tech stocks were the worst performers of the ongoing tech sell-off leading to large drop in FNG. This is an actively managed ETF designed to invest in companies that are driving economic growth in the modern era and can adapt to changing leadership by maintaining the ability to invest in next generation of technology and media companies leading the equity markets. It seeks to provide a similar return stream to the performance of technology and media equity leaders as characterized by the FANG stocks acronym. This approach results in a basket of 20 stocks with none holding more than 13.7% share. FNG has accumulated $26.6 million in its asset base and comes with a high expense ratio of 0.86% (read: FAANGs Slip to Bear Market: What Lies Ahead for ETFs?).    

SPDR S&P Metals & Mining ETF XME – Down 7%

This ETF follows the S&P Metals and Mining Select Industry and offers a broad exposure to the U.S. metal and mining industry. It holds 29 stocks in its basket with each making up for less than 5.7% of the assets. Steel firms account for half of the portfolio while coal & consumable fuels, gold and aluminum round off the next three spots with double-digit exposure each. The fund has 0.35% in expense ratio and has AUM of $515 million.

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