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Top and Flop ETFs at Half-Way Q1

Sweta Killa

At the midway through the first quarter of 2019, stocks across the globe have been on a smooth ride despite global growth worries. Notably, world stock markets hit a two-and-half month high buoyed by hopes of progress in U.S.-China trade talks and expectations of policy stimulus from the central bank. The Dow and the Nasdaq logged in their eighth consecutive weekly gains this year, suggesting that the bull run will complete its decade on Mar 9.

As a new round of negotiation has resumed this week, the world’s two biggest economies are expected to strike a deal that will resolve the nearly one-year long trade spat. President Donald Trump said discussions were going "extremely well" and suggested he might extend the Mar 1 deadline for a deal (read: US-China Talks Set in Washington: ETFs in Focus).

Meanwhile, the raft of soft economic data across the globe fueled expectations that the world's most powerful central banks could deliver on reflationary policies and provide support to the markets.

Given this, we have highlighted both the best and worst performing zones and their ETFs at halfway Q1:

Best ETFs

ETFMG Alternative Harvest ETF MJ – Up 42.9%


The marijuana ETF has been surging on easing rules and regulations on the once highly guarded drug, marijuana, for recreational and medical usage. The popularity is rising since Canada has legalized recreational cannabis and become the second country in the world to do so on a national level. Additionally, a number of states in United States have also joined the race of marijuana legalization. Congress, the White House and U.S. regulators have also softened their stance on the drug’s legalization. All these developments have injected strong optimism into the emerging marijuana industry.

MJ is the first and only pure ETF targeting the cannabis/marijuana industry. The fund tracks the Prime Alternative Harvest Index, designed to measure the performance of companies within the cannabis ecosystem, benefiting from global medicinal and recreational cannabis legalization initiatives. The fund holds 39 securities in its basket and charges 75 bps in annual fees. The ETF has AUM of $997.4 million and trades in a good volume of more than a million shares (read: Why Marijuana ETFs are on a High in 2019).

SPDR S&P Oil & Gas Equipment & Services ETF XES – Up 30.8%

Oil price has shown a strong rebound this year and recovered about half of the losses made in the final quarter of 2018 despite rising U.S. shale oil. The real optimism came from OPEC-led fresh crude output cuts, where major oil producers have agreed to curb production by 1.2 million barrels per day during the first six months of 2019 in order to tackle global supply glut and rebalance the oil market. Additionally, U.S. sanctions against Venezuela, falling OPEC production and the Fed’s dovish outlook, which pushed the U.S. dollar down, have led to a spike in oil price.

With AUM of $232.8 million, this fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry. It holds 40 securities in its basket and charges 35 bps in annual fees. The fund trades in a solid average daily volume of 1.5 million shares and has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: 5 Reasons Why Oil Saw the Best January: 5 ETF Winners).

Invesco Solar ETF TAN – Up 29.4%

Solar stocks have been on a tear buoyed by solid outlook from solar panel makers. This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 22 stocks in the basket. American firms dominate the fund’s portfolio with nearly 43.5% share, followed by China (27.6%) and Spain (7.8%). The product has amassed $283.5 million in its asset base and trades in solid volume of around 103,000 shares a day. It charges investors 70 bps in fees per year and has a Zacks ETF Rank #4 with a High risk outlook (read: 4 Market-Beating Sector ETFs of January).

Worst ETFs

Breakwave Dry Bulk Shipping ETF BDRY – Down 40.2%


Freight movement has been uncertain this year given the myriad of fundamental and sentimental shifts. BDRY is an actively managed ETF that seeks to provide exposure to daily changes in the price of dry bulk freight futures by tracking the performance of a portfolio consisting of a three-month strip of the nearest calendar quarter of futures contracts on specified indexes that measure rates for shipping dry bulk freight. The fund has accumulated about $1.6 million in AUM. It trades in a paltry volume of about 1,000 shares per day on average and charges a higher annual fee of 1.72% (see: all the Industrial ETFs here).

iPath Series B S&P 500 VIX Short-Term Futures ETN VXXB – Down 30.4%

Volatility products turned out to be the major losers as volatility took the back seat due to positive news flow. The note is linked to the performance of the S&P 500 VIX Short-Term Futures Index Total Return, which provides access to equity market volatility through CBOE Volatility Index futures. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects market participants’ views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the index. The ETF has amassed $580.8 million in its asset base and charges 89 bps in annual fees. It trades in volume 3.2 million shares a day on average (read: ETFs vs. ETNs: Why You Need to Know the Difference).

AdvisorShares Dorsey Wright Short ETF DWSH – Down 21%

With a rebound in the stock market, this ETF declined as it adds alpha to an investment portfolio, especially during a bear market. DWSH is an actively managed ETF that short sells U.S. large-cap securities with the highest relative weakness within an investment universe. It holds 102 stocks in its basket and chares higher annual fee of 99 bps. The product trades in lower average daily volume of 31,000 shares and has accumulated $14.6 million in its asset base (read: Best & Worst Performing ETFs to Start 2019).

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