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Top & Flop ETF Areas of Q2

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Some investors are rotating out of earlier high flying technology stocks into cheap emerging markets.
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The second quarter of 2018 was all about trade tensions, the Fed’s and the ECB’s hawkish stances and OPEC’s decision to boost output marginally. The trio was strong enough to leave an impact on the global market.

So, it would be intriguing to find ETF areas which topped and the ones that flopped in the quarter. Notably, SPDR S&P 500 ETF SPY, SPDR Dow Jones Industrial Average ETF DIA and Invesco QQQ Trust QQQ added about 5.4%, 2.8% and 10.4% in the quarter.

Top ETF Areas


There has been an oil price rally as evident from an 18.2% three-month rise in United States Oil USO. And then, OPEC members signed a deal to boost output by a lower-than-expected margin (read: Winning and Losing Sectors ETFs Post OPEC Decision).

“People probably feared 1.5 million barrels a day.” But Saudi Arabia said the renewed deal will result in a nominal output rise of around 1 million barrels per day (bpd). This was a pleasant surprise for the space, sending oil higher and benefitting ETFs like Invesco Dynamic Energy Exploration & Production ETF PXE (up 31.3%), Invesco S&P SmallCap Energy ETF PSCE (up 27.9%) and First Trust Nasdaq Oil & Gas ETF FTXN (up 28.3%) in the last three months.


REIT and Real Estates are known for high yield and perform well with economic growth. So, as the Fed turned hawkish in Q2, encouraged by solid U.S. growth momentum (especially when compared with other developed economies) and bond yields jumped, some REIT ETFs that offer benchmark-beating yields rallied.

These are Invesco KBW Premium Yield Equity REIT ETF KBWY (yields 7.20% annually and up 15%), NuShares Short-Term REIT ETF NURE (yields 3.3% annually and up 14.5%), IQ US Real Estate Small Cap ETF ROOF (yields 5.38% annually and up 14.2%) and Hartford Multifactor REIT ETF RORE (yields 3.51% and up 13.4%).


The technology sector seems to have passed a bad phase earlier in the year due to the Facebook debacle. A deluge of upbeat earnings results has boosted sentiments in the space in Q2. Though trade tensions occasionally posed threat to the space, plenty of emerging technologies and Trump’s tax cuts favored the space. SPDR S&P Internet ETF (XWEB) added about 17.7% in the last three months.

Flop ETF Areas


Like all other emerging markets, Brazil investing fell prey to rising rate worries in the United States. The strengthening of the dollar weighed on emerging market currencies. Plus, a truckers’ strike in protest against rising oil prices paralyzed the economy. Franklin FTSE Brazil ETF FLBR (down 28%) and iShares MSCI Brazil Capped ETF (EWZ) (down 27.4%) were among the key losers (read: Trump, Tariff & Geopolitics Lead May: 10 Top ETF Stories).


The aftereffects of policy tightening in the United States caused sell-offs in the lira. Plus, double-digit inflation and political woes led Turkey ETF to a nine-year low in Q2. iShares MSCI Turkey ETF TUR was off 27.5% in the quarter (read: Erdogan Victory Takes Turkish ETF to 9-Year Low).


This is yet another emerging market country that bore the brunt of rising rate worries and a stronger dollar in the United States. Global X MSCI Argentina ETF ARGT lost about 23.9% in Q2 (read: Should These 3 Emerging Country ETFs Fear Fed Rate Hikes?).

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SPDR-DJ IND AVG (DIA): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
US-OIL FUND LP (USO): ETF Research Reports
ISHARS-BRAZIL (EWZ): ETF Research Reports
PWRSH-SP SC EGY (PSCE): ETF Research Reports
ISHRS-MSCI TURK (TUR): ETF Research Reports
SPDR-SP INTRNT (XWEB): ETF Research Reports
HARTFRD REIT (RORE): ETF Research Reports
IQ-US RE SC (ROOF): ETF Research Reports
PWRSH-DYN ENRG (PXE): ETF Research Reports
GLBL-X MS ARGEN (ARGT): ETF Research Reports
PWRSH-K PY REIT (KBWY): ETF Research Reports
FT-NDQ OIL&GAS (FTXN): ETF Research Reports
Ford Motor Company (F) : Free Stock Analysis Report
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