Worst Performing ETFs 4Q 2019
In a year in which U.S. stocks are flirting with their best returns in more than two decades and asset classes across the board are delivering gains, it’s not easy to find ETFs that are in the red.
Case in point: Of the more than 2,065 nonleveraged/noninverse U.S.-listed ETFs on the market, only 77—or 4%—are currently down year to date.
Simply put, it’s been incredibly hard for ETF investors to go wrong in 2019, and if a fund is down, it’s for good reason.
Take natural gas ETFs, for instance, like the iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (GAZ) and the United States Natural Gas Fund LP (UNG), down 38% and 31.6%, respectively. They are the Nos. 1 and 3 worst-performing exchange-traded products this year, weighed down by an endless glut of fossil fuel.
Natural gas prices are barely hanging above $2/mmbtu, their lowest level in three years. Supplies of the fuel—which is primarily used for heating and electricity generation—are bursting at the seams as the U.S. produces record amounts of it. Even though demand for natural gas has risen solidly in recent years, it hasn’t been enough to absorb the enormous amounts of supply coming onto the market.
Cannabis Bubble Bursts
Sandwiched between the two natural gas products on the list of worst-performing ETFs is the ETFMG Alternative Harvest ETF (MJ), the first and largest U.S.-listed cannabis exchange-traded fund.
MJ, which has fallen 32.3% year to date, is trading near all-time lows no thanks to an ugly year for cannabis stocks. MJ’s demise comes as the bubble in marijuana stocks bursts, taking air out of the extreme valuations that many stocks in the industry traded at earlier in 2019.
5 Worst-Performing ETFs Of The Year (ex. leveraged/inverse/VIX ETPs)
Ticker | Fund | YTD Return (%) |
iPath Series B Bloomberg Natural Gas Subindex Total Return ETN | -38.0 | |
-32.3 | ||
-31.6 | ||
-22.7 | ||
-18.8 | ||
-18.4 |
Data measures total returns for the year-to-date period through Dec. 30.
Canadian legalization last year and steady state-by-state legalization in the U.S. fueled significant hype in cannabis investments, but so far, the road to riches for companies involved in the industry has been much bumpier than many had imagined.
Bankruptcies have been numerous and profits hard to come by as the black market continues to dominate overall sales. Most industry observers still believe there is a bright future for legalized cannabis, but there is no telling if and when cannabis stocks and ETFs will begin working as good investments.
Emerging Market Laggards
Also on the worst-performers list are a handful of emerging market funds, including the VanEck Vectors India Small-Cap Index ETF (SCIF), the iShares MSCI Chile ETF (ECH) and the Global X MSCI Nigeria ETF (NGE).
Broadly speaking, 2019 has been a solid year for emerging markets. The two largest funds in the space, the iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard FTSE Emerging Markets ETF (VWO), are higher by 17.5% and 20.5%, respectively.
But as is typically the case, performance among the various emerging markets isn’t uniform.
Chile’s worst civilian protests in decades are clearly responsible for the woes of ECH. The protests, which are still ongoing, are a response to rising subway fares and growing income inequality in the country. If they continue, the Chilean economy may fall into a recession as early as the first quarter of 2020, according to analysts.
Meanwhile, India small cap ETFs like SCIF have been hammered this year, even as India large cap ETFs like the iShares MSCI India ETF (INDA) have risen. It’s a peculiar divergence that some analysts say could eventually reverse, with small caps outperforming large caps in the future.
Commodity Underperformers
Finally, several commodity-related ETFs also find themselves among the worst performers of 2019, even as commodities more broadly have done decently.
In addition to the aforementioned natural gas funds, the VanEck Vectors Coal ETF (KOL), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iPath Series B Bloomberg Tin Subindex Total Return ETN (JJT), the Teucrium Corn Fund (CORN) and the iPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL) each shed 6% to 13% this year.
Here’s a full list of this year’s worst-performing ETFs:
20 Worst-Performing ETFs Of The Year (ex. leveraged/inverse/VIX ETPs)
Ticker | Fund | YTD Return (%) |
iPath Series B Bloomberg Natural Gas Subindex Total Return ETN | -38.0 | |
-32.3 | ||
-31.6 | ||
-22.7 | ||
-18.8 | ||
-18.4 | ||
-17.8 | ||
-17.2 | ||
-16.1 | ||
-13.1 | ||
-12.7 | ||
-10.7 | ||
-10.1 | ||
-9.8 | ||
-8.4 | ||
-7.8 | ||
-7.7 | ||
-6.9 | ||
-6.8 | ||
-6.5 | ||
-6.5 | ||
-6.4 | ||
-6.2 |
Data measures total returns for the year-to-date period through Dec. 30.
Email Sumit Roy at sroy@etf.com or follow him on Twitter @sumitroy2
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