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Wicked Wednesday for Some Beloved ETFs


It was a terrible Tuesday for some of 2013’s best-performing ETFs as the U.S. government shutdown sent investors scampering out of biotech, Internet and social media ETFs.

Even with yesterday’s slack performances, three biotech ETFs still rank among this year’s top-10 non-leveraged ETFs. The Global X Social Media Index ETF (SOCL) , PowerShares NASDAQ Internet Portfolio (PNQI) and the First Trust Dow Jones Internet Index Fund (FDN) are not far removed from the top-10.  [A Hidden ETF for Biotech Declines]

However, Tuesday’s list of 15 worst non-leveraged ETFs looks a graveyard of previous high flyers. That list contained four of the five major biotech ETFs, FDN, PNQI and SOCL, according to WallachBeth data. [Some of the Best ETFs Were Worst on Tuesday]

Sellers are back for with biotech, Internet and social media stocks Wednesday.  This is how ugly it is getting for these high beta, stretched P/E  ETFs:

SOCL is already down 2.6% on more than double its average daily volume as investors depart Facebook (FB) and LinkedIn (LNKD), SOCL’s largest and fourth-largest holdings, on heavy volume. Those two stocks combine for 21.7% of the weight of an ETF with a P/E of 35.4, according to Global X data.

EVERY biotech ETF is currently trading lower. The SPDR S&P Biotech ETF (XBI) is down over 5% on volume that is roughly triple the daily average. The iShares Nasdaq Biotechnology ETF (IBB) , the largest biotech ETF by assets, has already seen triple its average turnover. Only one of the five biotech ETFs is down less than 2% today.

The BEST performer among FDN’s top holdings is Google (GOOG), which is off a mere 0.5% today.  Two days may not make a trend, but it is clear that high some high P/E stocks have been vulnerable this week.  FDN and PNQI have average P/E  ratios of almost 35 and an average price-to-book ratio of almost 4.4.

Global X Social Media Index ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Google and Facebook.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.