America’s Riskiest ETFs

April 07, 2014

Here are the most volatile funds in the last 90 days.

Market Intel - Americas Riskiest ETFs

Based on price movements in the past 90 days, these are the most volatile ETF plays in America:

  • Volatility: Ironically, volatility itself is the most volatile and riskiest ETF play in America. Unfortunately, the simple risk-equals-reward mantra does not apply: The C-Tracks Citi Volatility ETN (CVOL | D-50) has lost more than 80 percent of its value during the past 12 months. Worse, losing at least 80 percent of its value is less an anomaly for CVOL and more a regular course of business. The ETN provides exposure to securities that are highly exposed to the yield-eroding effects of contango.
  • Carbon Credits: Thinly traded markets are often more volatile than their liquid counterparts, and the iPath Global Carbon ETN (GRN | F-36) is no exception. GRN, an ETN that may be ahead of its time, provides exposure to a carbon market that is relatively underdeveloped.
  • Natural Gas: The iPath Dow Jones-UBS Natural Gas ETN (GAZ | D-65) is a healthy example of the importance of functional plumbing for ETFs. Based on price movements, GAZ is among the most volatile and risky ETF plays an investor could make. However, this is more a symptom of broken plumbing than reflective of volatility in the ETN's underlying exposure: GAZ has been closed for creations since 2009, so it regularly swings to large premiums and discounts beyond the changes in the value of its underlying exposure.
  • Gold Miners: Gold miners are significantly more volatile and riskier than gold itself, and junior gold miners are the riskiest of the bunch. The Market Vectors Junior Gold Miners ETF (GDXJ | D-29) provides exposure to small-cap and mid-cap firms that mine gold and other precious metals.
  • Coffee: As with most crops, weather plays a key role in the price of coffee. Extreme weather in coffee-growing regions has seen increased volatility in the price of coffee. The iPath Dow Jones Coffee ETN (JO | B-92) provides exposure to front-month coffee futures.
  • Sugar: The Teucrium Sugar ETF (CANE | A) provides exposure to three sugar futures contracts with different maturities.
  • Solar: As a sector, energy is among the most volatile, so it comes as no surprise that the nascent solar industry, which is rife with small companies, is among the most volatile ETF plays in America. The Guggenheim Solar ETF (TAN | B-38) provides exposure to a portfolio of companies that derive a substantial portion of revenues from solar operations.

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