Worst Performing ETFs Of The Year

October 07, 2021

When looking at the list of the worst-performing ETFs so far this year, there are several clear themes that emerge. Volatility names still top the list in spite of recent market tensions; the Chinese government crackdown has hurt education and tech names in particular; and precious metals miners are having a tough year.

Ticker Fund YTD Return
VXX iPath Series B S&P 500 VIX Short Term Futures ETN -58.56%
VIXY ProShares VIX Short-Term Futures ETF -58.52%
EDUT Global X Education ETF -39.56%
KWEB KraneShares CSI China Internet ETF -38.38%
PGJ Invesco Golden Dragon China ETF -33.94%
GDXJ VanEck Junior Gold Miners ETF -29.31%
SILJ ETFMG Prime Junior Silver Miners ETF -27.59%
SLVP iShares MSCI Global Silver and Metals Miners ETF -27.31%
EWEB Global X Emerging Markets Internet & E-commerce ETF -26.76%
JGLD Amplify Pure Junior Gold Miners ETF -26.01%
CHIC Global X MSCI China Communication Services ETF -25.99%
SGDJ Sprott Junior Gold Miners ETF -25.03%
PBW Invesco WilderHill Clean Energy ETF -24.70%
GOEX Global X Gold Explorers ETF -23.76%
EPU iShares MSCI Peru ETF -23.34%
ICLN iShares Global Clean Energy ETF -22.91%
SIL Global X Silver Miners ETF -22.76%
PALL Aberdeen Standard Physical Palladium Shares ETF -22.31%
TAN Invesco Solar ETF -22.20%
EMQQ Emerging Markets Internet & Ecommerce ETF -22.00%

 

 

Volatility Funds Still Suffering

While several volatility ETFs fell off the list relative to last quarter, the top two worst-performing ETFs of the year remain those that offer exposure to near-term futures contracts on the Cboe Volatility Index.

VIX

Chart courtesy of Bloomberg

The VIX is a real-time market index representation of volatility expectations. The so-called fear index has trended downward since the beginning of the year. Though recent market movements have caused a small bump in the level of the index, it has still seen a dramatic decline since the beginning of the year.

The iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and the ProShares VIX Short-Term Futures ETF (VIXY) both offer exposure to VIX futures with an average one-month maturity. The ETFs have both dropped by 59%, with much of this decline occurring within the first half of the year.

Precious Metals Lose Their Luster

Several precious metal ETFs populated the list this quarter. Typically, precious metals are an area that do well when inflation heats up. Though the CPI remains firmly above 5% for the first time since 2008, gold and silver miners have experienced sharp declines in the third quarter.

Several factors have weighed on this part of the market. The strengthening dollar is typically bad for gold and silver, as it makes the metals more expensive for international buyers.

Higher bond yields also tend to be a negative, as an asset like gold does not offer an income stream. While both gold and bonds are seen as safe haven assets, as bond yields increase, gold becomes less attractive on a relative basis.

The third quarter was also an important reminder that miners and physically backed ETFs can experience divergent performance.

While the SPDR Gold Trust (GLD) fell by less than 1% during the quarter, the VanEck Junior Gold Miners ETF (GDXJ) fell by 18%.

Over the long term, the performance of mining stocks is correlated with the price of gold and silver. But these stocks are also affected by movements in the broader equity market itself. In times of equity market weakness, gold miners may fall even further than the price of gold itself.

Chinese Crackdown Spreads
The Global X Education ETF (EDUT) remains the worst performer of the year, excluding VIX-related products. The fund fell an additional 18.3% in the third quarter, as the Chinese government continued to crack down on private tutoring companies.

The government has also put pressure on other industries, including technology and gaming. This explains why several China and emerging market tech names show up on the worst performers list.

The KraneShares CSI China Internet ETF (KWEB) was down 38.4% for the quarter. The ETF tracks overseas-listed Chinese internet-sector companies. (Read: China Internet ETF Craters Amid Gov’t Crackdown)

Emerging market tech ETFs such as the Global X Emerging Markets Internet & E-Commerce ETF (EWEB) and the Emerging Markets Internet & Ecommerce ETF (EMQQ) made the list as well, falling by 27% and 22%, respectively. Though the ETFs are diversified across various countries, over half of each portfolio is exposed to China.

Contact Jessica Ferringer at [email protected] and follow her on Twitter

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