Worst Performing ETFs Of The Year

April 03, 2017

After recently taking a look at the top-performing ETFs of the first quarter, it only makes sense to tell the other side of the story as well. There weren't too many exchange-traded funds with big declines during the period, but there were enough to make an interesting list.

Just as most of the top-performing ETFs of the quarter could be placed in two broad groups―inverse VIX products and single-country emerging market products―the same can be done for the worst-performers.

VIX Products Demolished

One of those groups is long VIX products, making the worst-performers list a mirror image of the top-performers list. Just as inverse VIX products delivered far and away the best returns in the period, long VIX products delivered the poorest returns.

In fact, seven of the 15 worst-performing ETFs of Q1 were VIX funds (leveraged products were excluded from the list).

At the No. 1 position was the REX VolMAXX Long VIX-Weekly Futures Strategy ETF (VMAX). It plunged 45.7% during the first three months of the year. Likewise, the VelocityShares Daily Long VIX Short-Term ETN (VIIX), the iPath S&P 500 VIX Short-Term Futures ETN (VXX) and the ProShares VIX Short-Term Futures ETF (VIXY) all shed a little more than 39%.

All of these products get their exposure by perennially holding near-term CBOE Volatility Index (VIX) futures contracts, a bet that's been hit hard in the current low-volatility environment.

Energy ETFs Dragged Down By Oil & Gas
The other type of ETF to see steep losses during the quarter were funds related to energy. In the year-to-date period through March 30, crude oil futures dropped 6.4%, and natural gas futures slid 13.9%.

Natural gas' woes during the quarter were largely related to the weather. The sixth-warmest winter on record sapped demand for natural gas, weighing on prices. For oil, surging U.S. production renewed oversupply concerns and threw a monkey wrench into OPEC's plans to draw down global inventories by cutting its output.

 

With oil and gas prices falling, about half a dozen energy ETFs found themselves on the worst-performers list for the quarter. The iPath Bloomberg Natural Gas Subindex Total Return ETN (GAZ) and the United States Natural Gas Fund (UNG), lost 33.7% and 19%, respectively.

At the same time, the United States Gasoline Fund (UGA) fell by 13.8% and the iPath Bloomberg Energy Subindex Total Return ETN (JJE)―which tracks oil, natural gas, gasoline and heating oil futures―lost 15.8%.

In addition to weighing on futures-tracking ETFs such as UNG, GAZ, UGA and JJE, those lower prices also weighed on energy equity ETFs.

The Elkhorn S&P MidCap Energy Portfolio (XE) and the PowerShares S&P SmallCap Energy Portfolio (PSCE) dropped 19% and 15%, respectively.

Sugar In Surplus

One exchange-traded product that doesn't fit into any of the VIX and energy buckets, but is still worth noting for its poor performance, is the iPath Bloomberg Sugar Subindex Total Return ETN (SGG). SGG tracked sugar futures lower to a 15.1% loss for the quarter.

Prices for sugar hit a four-year high in 2016 after two years of deficits. In 2017, most analysts currently expect the market to shift into a surplus, though that could change depending on the weather in Brazil and India.

For a full list of the worst-performing ETFs of Q1, see the table below:

Ticker Fund Report
VMAX  REX VolMAXX Long VIX Weekly Futures Strategy ETF -45.7%
VIIX  VelocityShares Daily Long VIX Short-Term ETN -39.2%
VXX iPath S&P 500 VIX Short-Term Futures ETN -39.2%
VIXY ProShares VIX Short-Term Futures ETF -39.1%
GAZ  iPath Bloomberg Natural Gas Subindex Total Return ETN -33.7%
GRN  iPath Global Carbon ETN -25.5%
VIXM  ProShares VIX Mid-Term Futures ETF -24.5%
VIIZ  VelocityShares VIX Medium Term ETN -24.4%
VXZ  iPath S&P 500 VIX Mid-Term Futures ETN -24.3%
XE  Elkhorn S&P MidCap Energy Portfolio -19.0%
UNG  United States Natural Gas Fund LP -19.0%
JJE  iPath Bloomberg Energy Subindex Total Return ETN -15.8%
SGG  iPath Bloomberg Sugar Subindex Total Return ETN -15.1%
PSCE PowerShares S&P SmallCap Energy Portfolio -15.0%
UGA  United States Gasoline Fund LP -13.8%

Note: Data is for the year-to-date period through March 30 and excludes leveraged ETFs.

Contact Sumit Roy at sroy@etf.com

 

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