Soft Commodities Slide, Too
Energy wasn’t the only commodity group to lose steam in 2017. Soft commodities like sugar and coffee slid too. The iPath Bloomberg Sugar Subindex Total Return ETN (SGG) fell by 31.9%, while the iPath Bloomberg Coffee Subindex Total Return ETN (JO) lost 21.6%.
Improved weather conditions in Brazil helped ease the supply squeeze that sent sugar and coffee prices surging last year. The normalization of supply levels in the world’s largest producer of the two commodities brought prices down to where they were before last year’s spike.
Leverage Compounds Woes
Adding leveraged and inverse ETFs into the mix doesn’t change the picture much when it comes to the worst-performing funds. As bad a trade as betting on the VIX was, doing it with leverage simply made it even more devastating.
The same goes for betting on natural gas with leverage. The VelocityShares 3x Long Natural Gas ETN (UGAZ) dropped 88.4% this year.
At the same time, betting against areas of the market that were hot—with leverage—proved just as unhealthy for one’s portfolio. The Direxion Daily S&P Biotech Bear 3x Shares (LABD) shed 73%; the Direxion Daily Semiconductor Bear 3x Shares (SOXS) fell by 71.6%; and the Direxion Daily FTSE China Bear 3X Shares (YANG) tanked 61.9%.
Worst Performing ETFs Of 2017 (all-encompassing)
Note: Data measures the total return for the year-to-date period through Dec. 20.
Sumit Roy can be reached at [email protected]