Worst Performing ETFs Of 2016

April 06, 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.


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