Worst Performing ETFs Of The Year

October 09, 2020

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)

Ticker Fund YTD Return (%)
USO United States Oil Fund LP -72.80%
USOI Credit Suisse X-Links Crude Oil Shares Covered Call ETN -71.10%
OILK ProShares K-1 Free Crude Oil Strategy ETF -67.50%
AMZA InfraCap MLP ETF -64.60%
XES SPDR 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)

Ticker Fund YTD Return (%)
USO United States Oil Fund LP -72.80%
USOI Credit Suisse X-Links Crude Oil Shares Covered Call ETN -71.10%
OILK ProShares K-1 Free Crude Oil Strategy ETF -67.50%
AMZA InfraCap MLP ETF -64.60%
XES SPDR S&P Oil & Gas Equipment & Services ETF -63.50%
IEZ iShares U.S. Oil Equipment & Services ETF -62.60%
OIH VanEck Vectors Oil Services ETF -62.20%
PXJ Invesco Dynamic Oil & Gas Services ETF -61.50%
PSCE Invesco S&P SmallCap Energy ETF -57.80%
XOP SPDR S&P Oil & Gas Exploration & Production ETF -52.90%
PXE Invesco Dynamic Energy Exploration & Production ETF -52.20%
PXI Invesco DWA Energy Momentum ETF -52.20%
RJN Elements Rogers International Commodity Index-Energy TR ETN -52.20%
RYE Invesco S&P 500 Equal Weight Energy ETF -51.00%
JHME John Hancock Multifactor Energy ETF -50.70%
BNO United States Brent Oil Fund LP -49.70%
IEO iShares U.S. Oil & Gas Exploration & Production ETF -49.50%
FRAK VanEck Vectors Unconventional Oil & Gas ETF -49.10%
POTX Global 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

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