Worst Performing ETFs: 3Q 2020

Nineteen of the 20 worst-performing ETFs come from one sector.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

Earlier this week, ETF.com published a list of this year’s best-performing ETFs through the first nine months of the year. That list was pretty eclectic. You had everything from VIX ETFs to tech ETFs to clean energy ETFs to health care ETFs represented on that list, each with gains of 65% or more.

The same can’t be said for this year’s worst-performing ETFs list. It’s anything but diverse, with one group taking up 95% of the slots.

That group is energy.

Yes, energy ETFs make up 19 of the 20 worst-performing ETFs of the year (excluding leveraged/inverse products). They also make up 28 of the 30 worst-performing ETFs of 2020, and 41 of the 50 worst performers.

Popular ETF Crushed
For anyone following along with the markets this year, it’s not surprising to see energy ETFs performing so poorly. Crude oil prices famously fell below zero for a brief period in April, and they are still at only $40 right now, 35% below where they started the year.

The popular United States Oil Fund LP (USO) has fallen nearly 73% year to date, making it the worst-performing ETF of the year. A series of unlucky circumstances have crushed the returns of this fund, which originally tracked near-month oil futures. Today  the fund tracks a more extensive basket of futures extending all the way to the June 2021 futures contract.

And even though oil prices have surged from their worst levels of April, USO has captured only a fraction of those gains due to steep roll costs from contango.

Despite its poor returns, some investors are keeping their faith in USO. The fund currently has around $4 billion in assets, up from $1.2 billion at the start of the year. Incidentally, investors have added $5.3 billion to the fund in that time frame, meaning the ETF has wiped out around $2.5 billion of value this year alone.

Worst-Performing ETFs Of The Year (ex. leveraged/inverse)

TickerFundYTD Return (%)
USOUnited States Oil Fund LP-72.80%
USOICredit Suisse X-Links Crude Oil Shares Covered Call ETN-71.10%
OILKProShares K-1 Free Crude Oil Strategy ETF-67.50%
AMZAInfraCap MLP ETF-64.60%
XESSPDR S&P Oil & Gas Equipment & Services ETF-63.50%

Data measures total returns for the year-to-date period through Oct. 6, 2020. For a full list, see the table at the end of the article.

Numerous Energy Laggards 

USO, of course, isn’t the only oil-tracking product among the worst performers. The ProShares K-1 Free Crude Oil Strategy ETF (OILK) and the United States Brent Oil Fund LP (BNO) are two others.

Then there are ETFs targeting energy stocks of various sorts. The InfraCap MLP ETF (AMZA), which focuses on energy infrastructure companies; the SPDR S&P Oil & Gas Equipment & Services ETF (XES), which focuses on oil service companies; and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which focuses on energy producers, are each down more than 50% on the year.

Pot Bubble Bursts
The sole nonenergy ETF to be among the 20 worst performers is the Global X Cannabis ETF (POTX), with a 48.1% loss so far for the year.

2020 has seen a continuation of the bursting of the marijuana stock bubble that formed in 2017 and 2018. Once-popular cannabis stocks have fallen, as the legal marijuana industry hasn’t blossomed as some had anticipated, taking the air out of an industry that had priced in much growth.

Other Losers
While 19 energy ETFs and one marijuana ETF make up the 20 worst-performing ETFs of the year so far, there are several poorly performing funds outside of the list that are worthy of mention.

The US Global Jets ETF (JETS), a breakout hit that has taken in $1.5 billion of cash this year, hasn’t lived up to investors’ expectations. Many had bought the ETF focused on the airline industry as a value play, but it’s still mired near its lows as the travel industry struggles to recover. JETS was last trading with a 44.6% year-to-date loss.

Another loser this year is the Global X SuperDividend REIT ETF (SRET), down 43.8%. SRET holds a basket of 30 global REITs with the highest dividend yields. As a group, REITs—both mortgage and equity real estate investment trusts—have underperformed this year, and that is reflected in SRET’s performance.

Other notable losers this year include the Breakwave Dry Bulk Shipping ETF (BDRY), down 43.5%; the iPath S&P GSCI Total Return Index ETN (GSP), down 41.2%; the iShares MSCI Brazil ETF (EWZ), down 39.4%; and the iShares MSCI Colombia ETF (ICOL), down 38.9%.

Worst-Performing ETFs Of The Year (ex. leveraged/inverse)

TickerFundYTD Return (%)
USOUnited States Oil Fund LP-72.80%
USOICredit Suisse X-Links Crude Oil Shares Covered Call ETN-71.10%
OILKProShares K-1 Free Crude Oil Strategy ETF-67.50%
AMZAInfraCap MLP ETF-64.60%
XESSPDR S&P Oil & Gas Equipment & Services ETF-63.50%
IEZiShares U.S. Oil Equipment & Services ETF-62.60%
OIHVanEck Vectors Oil Services ETF-62.20%
PXJInvesco Dynamic Oil & Gas Services ETF-61.50%
PSCEInvesco S&P SmallCap Energy ETF-57.80%
XOPSPDR S&P Oil & Gas Exploration & Production ETF-52.90%
PXEInvesco Dynamic Energy Exploration & Production ETF-52.20%
PXIInvesco DWA Energy Momentum ETF-52.20%
RJNElements Rogers International Commodity Index-Energy TR ETN-52.20%
RYEInvesco S&P 500 Equal Weight Energy ETF-51.00%
JHMEJohn Hancock Multifactor Energy ETF-50.70%
BNOUnited States Brent Oil Fund LP-49.70%
IEOiShares U.S. Oil & Gas Exploration & Production ETF-49.50%
FRAKVanEck Vectors Unconventional Oil & Gas ETF-49.10%
POTXGlobal X Cannabis ETF-48.10%

Data measures total returns for the year-to-date period through Oct. 6, 2020.

 

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.