Worst Performing ETFs Of The Year

October 06, 2017

Earlier this week, we posted an article on ETF.com highlighting the top-performing ETFs of the year so far. That list included inverse volatility products, tech ETFs and China funds, among others. They all handily outperformed the S&P 500's 15% year-to-date gain.

In this piece, we'll take a look at the other end of the spectrum, the worst-performing ETFs of the year. Once again, there'll be two lists; one that includes all exchange-traded funds, and one that excludes inverse and leveraged products.

There's quite a bit of overlap between the two lists.

Long VIX Products Decimated

The broader worst-performers list can be found below and is topped by the ProShares Ultra VIX Short-Term Futures ETF (UVXY) and the VelocityShares Daily 2x VIX Short-Term ETN (TVIX), both with losses of more than 88% for the year.

Just as shorting the CBOE Volatility Index (VIX) resulted in handsome gains in 2017, going long the VIX resulted in painful losses. Add leverage to the mix, and you get the eye-popping declines of UVXY and TVIX.

 

Worst-Performing ETFs Of 2017 (All Products)

Ticker Fund YTD Return
(%)
UVXY  ProShares Ultra VIX Short-Term Futures ETF -88.7
TVIX  VelocityShares Daily 2x VIX Short-Term ETN -88.6
LABD  Direxion Daily S&P Biotech Bear 3X Shares -77.0
UGAZ  VelocityShares 3X Long Natural Gas ETN -77.0
VMAX  REX VolMAXX Long VIX Weekly Futures Strategy ETF -74.8
TVIZ  VelocityShares Daily 2x VIX Medium-Term ETN -67.1
VIXY  ProShares VIX Short-Term Futures ETF -62.5
VXX  iPath S&P 500 VIX Short-Term Futures ETN -62.4
VIIX  VelocityShares Daily Long VIX Short-Term ETN -62.4
SOXS  Direxion Daily Semiconductor Bear 3x Shares -61.8

Data measures the year-to-date period through Oct. 4

 

Products that go long the VIX were decimated as the index hit record lows this year, the damage compounded by roll costs associated with a futures structure in contango. In addition to UVXY and TVIX, five other ETFs providing long-VIX exposure found themselves on the broad worst-performers list.

Betting Against Biotech Hurt

The only non-VIX ETFs on the all-products list were the Direxion Daily S&P Biotech Bear 3X Shares (LABD), the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the Direxion Daily Semiconductor Bear 3x Shares (SOXS).

Biotech stocks have soared higher this year as political uncertainty surrounding the group has eased. Likewise, semiconductor stocks have climbed this year amid the broader rally in the tech sector, led by shares of Nvidia, a company that's benefited greatly from the boom in digital currency mining.

Betting against biotech or semiconductors―especially with leverage―has been an awful bet, as evidenced by the 77% loss for LABD and the 61.8% loss for SOXS.

At the same time, betting on natural gas, with leverage, was also one of the worst trades of the year, as illustrated by the 77% decline for the VelocityShares 3X Long Natural Gas ETN (UGAZ).

Natural gas prices lost 21% this year following one of the warmest winters on record, and as U.S. production spiked to a record high.

 

Sugar Slumps On EU Quota Removal

Stripping out inverse and leveraged ETFs doesn't change the makeup of the worst-performers list very much. The narrower list is still filled to the brim with VIX exchange-traded products.

In fact, seven of the 10 ETFs on the narrower list are long VIX products. Two of the others are tied to natural gas: the iPath Bloomberg Natural Gas Subindex Total Return ETN (GAZ) and the United States Natural Gas Fund LP (UNG), with declines of 57.2% and 31.6%, respectively.

 

Worst-Performing ETFs Of 2017 (excluding inverse/leveraged)

Ticker Fund YTD Return
(%)
VMAX  REX VolMAXX Long VIX Weekly Futures Strategy ETF -74.8
VIXY  ProShares VIX Short-Term Futures ETF -62.5
VXX  iPath S&P 500 VIX Short-Term Futures ETN -62.4
VIIX  VelocityShares Daily Long VIX Short-Term ETN -62.4
GAZ  iPath Bloomberg Natural Gas Subindex Total Return ETN -57.2
VIIZ  VelocityShares VIX Medium Term ETN -41.6
VIXM  ProShares VIX Mid-Term Futures ETF -41.6
VXZ iPath S&P 500 VIX Mid-Term Futures ETN -41.4
SGG  iPath Bloomberg Sugar Subindex Total Return ETN -33.7
UNG  United States Natural Gas Fund LP -31.6

Data measures the year-to-date period through Oct. 4

 

The other name on the list is the iPath Bloomberg Sugar Subindex Total Return ETN (SGG), with a loss of 33.7%. Sugar is one of the poorest-performing commodities this year as supply rises, thanks to the end of European Union sugar production quotas that were in place for nearly 50 years.

Energy & Pakistan ETFs Hit

Looking beyond the 10 worst performers reveals a more eclectic set of ETFs. Nos. 11 through 20 are energy equity ETFs, another two sugar ETFs and a Pakistan ETF.

 

Worst-Performing ETFs Of 2017 (continued, excluding inverse/leveraged)

Ticker Fund YTD Return
(%)
PSCE  PowerShares S&P SmallCap Energy Portfolio -30.8
CANE  Teucrium Sugar Fund -27.1
XES  SPDR S&P Oil & Gas Equipment & Services ETF -26.1
PXJ  PowerShares Dynamic Oil & Gas Services Portfolio -23.8
OIH  VanEck Vectors Oil Services ETF -23.3
JJS  iPath Bloomberg Softs Subindex Total Return ETN -21.9
IEZ  iShares U.S. Oil Equipment & Services ETF -21.1
PAK  Global X MSCI Pakistan ETF -20.2
BSWN  VelocityShares VIX Tail Risk ETN -19.7
FRAK  VanEck Vectors Unconventional Oil & Gas ETF -19.1

Data measures the year-to-date period through Oct. 4

 

The energy sector has been the worst sector of 2017 due to disappointing performance of oil and natural gas prices. The PowerShares S&P SmallCap Energy Portfolio (PSCE), the VanEck Vectors Oil Services ETF (OIH) and the VanEck Vectors Unconventional Oil & Gas ETF (FRAK) are a trio of particularly poor-performing energy equity ETFs, with losses ranging from 19.1% to 30.8%.

Finally, the Global X MSCI Pakistan ETF (PAK) shed 20.2% this year due to political uncertainty and troubles in the cement and fertilizer industries.

Contact Sumit Roy at [email protected]

 

Find your next ETF

CLEAR FILTER