Hit and Flop ETFs of Last Week

Last week saw sustained momentum in the market with stocks extending their push into the record territory. Meanwhile, the CBOE Volatility Index, often referred to as the market’s fear gauge, touched an all-time low on Oct 5, indicating a protracted period of market calm.

Though the first monthly drop in September payrolls in seven years put an end to the eight-day winning streak of repeated records for the S&P 500 — longest streak of records in 20 years — and the seven-day winning streak for the Dow Jones, both extended their weekly gains for the fourth week. The Nasdaq Composite Index also notched its second weekly gain (read: Invest in FANG Stocks With These ETFs).

Rounds of upbeat economic data drove the solid performance. Manufacturing activity, as measured by the Institute for Supply Management, reached a 13-year high in September while non-manufacturing activity or the service sector expanded to the highest level since August 2005. Additionally, auto sales strongly rebounded in September posting the best month of the year, following the eighth consecutive month of decline (read: 5 ETFs to Buy on 13-Year High Manufacturing Activity).

Further, renewed hopes of tax cuts by the end of the year led to increased optimism. Trump has proposed the biggest U.S. tax overhaul in three decades. Adding to the strength is solid expectation for Q3 earnings. Per Zacks, total Q3 earnings for the S&P 500 index are expected to be up 2.3% from the same period last year and up 10.6% for the small-cap S&P 600 index.

On the other hand, increased prospects for rate hikes in December lifted the 10-year Treasury yields to the highest level in three months and thus dampened the appeal for Treasury bonds.

Given this, several ETFs saw a huge spike in the week while a few were laggards. Below, we have highlighted some of them:

Best ETFs

Global X Copper Miners ETF COPX – Up 5.5%

Copper logged its largest weekly gain since late August on hopes of stronger demand from top consumer China, though a rise in dollar capped some gains. COPX is the only ETF offering global access to a broad range of copper mining companies. It tracks the Solactive Global Copper Miners Total Return Index and holds 28 stocks in its basket with heavy concentration on the top firm at 7.7%. Other firms hold no more than 5.5% share. Canadian firms take the largest share at 27%, while United Kingdom and China also receive a double-digit exposure each. The product has managed $59 million in AUM while charges 65 bps in fees per year. It trades in a light volume of 47,000 shares a day on average (read: 4 ETF Ways to Profit from a Rise in Dollar).

VanEck Vectors Rare Earth/Strategic Metals ETF REMX – Up 5.4%

Rare earth metal continued its stellar run as China, which produces over 90% of the world's rare earths, has restricted illegal rare earth miners in a bid to tackle pollution. REMX offers exposure to companies engaged in producing, refining, and recycling of rare earth and strategic metals and minerals. The ETF follows the MVIS Global Rare Earth/Strategic Metals Index, charging investors 61 bps in annual fees. With AUM of $119 million, the fund holds 21 stocks in its basket with each accounting for less than 7.5% of the assets. China and Australia are the top two countries making up for more than one-fourth share each, followed by Japan (14.2%). The fund trades in a good volume of 102,000 shares a day on average (read: Top & Flop Zones of Q3 and Their ETFs).

U.S. Global Jets ETF JETS – Up 4.7%

Airline stocks surged after the second most U.S. carrier Delta Airlines (DAL) instilled optimism into the Hurricanes-ridden industry by reporting positive September traffic result and third quarter outlook. As a result, the airline ETF got a boost. The fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 34 securities and charges 60 bps in annual fees. The fund has gathered $115.8 million in its asset base while sees moderate trading volume of nearly 60,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: ETFs to Watch in Harvey Aftermath & New Hurricane Irma).

Worst ETFs

iPath S&P 500 VIX Short-Term Futures ETN VXX – Down 5.3%

Since the fear gauge reached the lowest levels, volatility products were the biggest losers last week. The ETN focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility in the S&P 500 Index at various points along the volatility forward curve. It provides investors with exposure to a daily rolling long position in the first and second months VIX futures contracts. The note has amassed $1.1 billion in AUM and charges 89 bps in fees per year. Volume is heavy exchanging 21 million shares in hand per day on average (read: ETF Scorecard for September 2017).

Global X Uranium ETF URA – Down 3.3%

This ETF provides pure play to a broad range of uranium mining companies by tracking the Solactive Global Uranium Total Return Index. Holding 22 stocks in its basket, it is highly concentrated on the top two firms with a combined 38.1% share while other firms hold no more than 7.5% share each. The ETF has amassed $257.2 million in its asset base and charges 70 bps in annual fees. It trades in solid average daily volume of more than 300,000 shares.

PowerShares S&P SmallCap Energy Fund PSCE – Down 3.1%

Oil price logged in the first weekly decline in over a month on concerns over an uptick in U.S. and Libyan production. As such, PSCE, which provides exposure to the U.S. small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index, lost the most last week. Holding 28 securities in its basket, it is highly concentrated on the top two firms with double-digit exposure each while the other firms hold less than 8.6% of total assets. The fund is less popular with AUM of $48.8 million and average daily volume of 42,000 shares. It charges 29 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: 4 Market-Beating Sector ETFs & Stocks of September).  

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IPATH-SP5 VX ST (VXX): ETF Research Reports
 
PWRSH-SP SC EGY (PSCE): ETF Research Reports
 
GLBL-X URANIUM (URA): ETF Research Reports
 
GLBL-X COPPER (COPX): ETF Research Reports
 
US GLOBAL JETS (JETS): ETF Research Reports
 
VANECK-RAR ERTH (REMX): ETF Research Reports
 
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