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Top and Flop ETFs So Far in Q2

Sanghamitra Saha

The key issue of the second quarter of 2019 has been the ebb and flow in U.S.-China trade talks and some upbeat U.S. economic data points. Though the United States and China were deemed to have come very close to a trade deal, Trump administration is likely to slam higher tariffs on Chinese imports from today (read: Top ETF Stories of April).

Against this backdrop, below we highlight a few best-and-worst-performing sector ETFs so far this quarter.

Top Sectors

Solar

Solar stocks have been on a tear, probably due to the fact that investors bought last year’s dip. Also, there is news that some states, including California, are using solar subsidies to boost the adoption of solar power. There is also the potential for Chinese subsidies.Higher oil prices are also lending a hand to the solar stock rally. Invesco Solar ETF (TAN) has gained 11.2% so far this quarter (read: 6 Top ETFs of April).

Semiconductor

Rising demand for cutting-edge technology, including cloud computing, big data, IoT, wearables, gaming, autonomous cars, VR headsets, drones, virtual reality, AI and machine has also bolstered investors’ sentiments toward this segment (read: Chipmakers on Fire: ETFs & Stocks Soaring to New Highs).

Though renewed U.S.-China trade tensions dented the space in May, semiconductor ETFs like SPDR S&P Semiconductor ETF XSD and iShares PHLX Semiconductor ETF SOXX have shed about 7.7% and 7.2%, respectively, so far this quarter. 

Financials

The U.S. treasury yield curve had steepened in the middle thanks to some upbeat U.S. economic data points. This steepening of the yield curve worked in favor of the regional banks and boosted net interest rate margin. Though re-escalation of trade tensions weighed on the long-term U.S. treasury yields and hurt these ETFs in May, financial ETFs are still among the top performers.

Invesco KBW Property & Casualty Insurance ETF (KBWP) (up 7.7%), Invesco KBW Regional Banking ETF KBWR (down 7.3%) and iShares U.S. Regional Banks ETF IAT (up 7.2%) are some of the winners.

Flop sectors

Gold Mining

As global markets rallied in April and as the greenback hovered around a one-year high, gold prices suffered in the month. Investors stayed away from gold investments. As mining stocks act as a leveraged play of the underlying metal, gold mining ETF VanEck Vectors Gold Miners ETF (GDX) lost about 8.9% in the quarter.

China

Though trade tensions took a center stage in May and roiled China investing, some China ETFs have been underperforming since the start of the quarter. Global X MSCI China Real Estate ETF (CHIR) (down 8.5%),SPDR MSCI China A Shares IMI ETF (XINA) (down 8.4%) and Reality Shares Nasdaq NexGen Economy China ETF BCNA (down 8.2%) are some of the ETFs that lost the most in the segment.

Biotech

Biotech stocks have been under pressure since April probably due to overvaluation concerns. The GenomeWeb Index dropped about 3% in April, recording its first loss for 2019 amid wider losses for biotech stocks.

Invesco Dynamic Biotechnology & Genome ETF PBE (down 8.1%) and Virtus LifeSci Biotech Products ETF BBP (down 9.7%) are some of the biggest losers.

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iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
Invesco KBW Regional Banking ETF (KBWR): ETF Research Reports
 
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
 
Invesco KBW Property & Casualty Insurance ETF (KBWP): ETF Research Reports
 
iShares U.S. Regional Banks ETF (IAT): ETF Research Reports
 
Virtus LifeSci Biotech Products ETF (BBP): ETF Research Reports
 
Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports
 
Global X MSCI China Real Estate ETF (CHIR): ETF Research Reports
 
SPDR MSCI China A Shares IMI ETF (XINA): ETF Research Reports
 
Reality Shares NASDAQ NexGen Economy China ETF (BCNA): ETF Research Reports
 
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