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Worst Sector ETFs of August

Sanghamitra Saha

Global stock markets remained edgy in August on re-escalation in U.S.-China trade tensions. SPDR S&P 500 ETF SPY (down 4.2%), SPDR Dow Jones Industrial Average ETF DIA (down 4.3%) and Invesco QQQ Trust QQQ (down 4.9%) — all lost heavily in the past month (as of Aug 28, 2019) (read: Trade War Gets Uglier: Here Are the ETF Winners & Losers).

While most sectors got punished, a few bore the brunt heavily. Below we highlight such sectors in detail.

Energy Equipment & Services

Global growth worries weighed on the demand outlook of oil prices. United States Oil Fund, LP USO was down 1.5% in the past month. Also, U.S. oil rig count fell to a near two-year low, per Baker Hughes data. Market watchers are of the view that “shale producers are cutting back in a bid to conserve capital,” which means “less drilling and fracking work for top oilfield services providers.” SPDR S&P Oil & Gas Equipment & Services ETF XES and iShares U.S. Oil Equipment & Services ETF IEZ lost about 22.3% each in the past month.

Steel Producer

VanEck Vectors Steel ETF SLX lost about 19.3% in the past month. The underlying NYSE Arca Steel Index tracks the overall performance of companies involved in the steel sector. Per Citigroup analyst, “benefits from the Trump administration’s tariffs on foreign steel imports have diminished and demand has been disappointing,” as quoted on Bloomberg.

Copper Miner

U.S.-China trade tensions have been playing foul to the demand for copper. This is because China is a huge consumer of copper. Any slowdown in China could disrupt the copper producing industry. Prices remained around a two-year low on worries over underperformance in the industrial activity.In any case, industrial activities remained subdued globally in recent times.Global X Copper Miners ETF (COPX) lost 18.6% in the past month.

Marijuana

Marijuana stocks are struggling lately. “A series of scandals and regulatory deadlock” weighed on the space lately. News of unlicensed growing at CannTrust crushed the space. There was also the FDA’s warning letter to U.S. company Curaleaf. ETFMG Alternative Harvest ETFMJ and Amplify Seymour Cannabis ETF CNBS, The Cannabis ETF (THCX), Cambria Cannabis ETF (TOKE) and AdvisorShares Pure Cannabis ETF YOLO. Currency in USD retreated about 16.8%, 15.5%, 15.1%, 15% and 13.9% in the past month (as of Aug 28, 2019).

Coal

“Declining profitability, weakening export prices and declining demand from utilities over the next decade” are disturbing the coal industry, per Moody’s. Moody's expects coal sector EBITDA to decline more than 3% over the next 12 months. VanEck Vectors Coal ETF KOL lost about 15.2% in the past month.

Metal & Mining

Worries over global slowdown probably have hit this space, which has strong correlation with industrial activity. iShares MSCI Global Metals & Mining Producers ETF PICK (down 14.8%) and SPDR S&P Metals and Mining ETF XME (down 13.7%) were the losers.

Lithium

Global X Lithium & Battery Tech ETF (LIT) tracks the performance of the largest and most liquid listed companies that are active in the exploration and mining of Lithium or the production of Lithium batteries. The fund shed about 13.2% as lithium prices have been hurt by “oversupply and electric vehicle subsidy cuts,”per Financial Times.

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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
Global X Copper Miners ETF (COPX): ETF Research Reports
 
SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
 
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
 
VanEck Vectors Steel ETF (SLX): ETF Research Reports
 
US Commodity Funds United States Oil Fund (USO): ETF Research Reports
 
VanEck Vectors Coal ETF (KOL): ETF Research Reports
 
iShares MSCI Global Metals & Mining Producers ETF (PICK): ETF Research Reports
 
Global X Lithium & Battery Tech ETF (LIT): ETF Research Reports
 
SPDR S&P Metals & Mining ETF (XME): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Amplify Seymour Cannabis ETF (CNBS): ETF Research Reports
 
The Cannabis ETF (THCX): ETF Research Reports
 
Cambria Cannabis ETF (TOKE): ETF Research Reports
 
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