The U.S. stock markets retreated and closed out the week ending July 11, slightly in the red after the Dow topped 17,000 for the first time early in the month. In fact, the S&P 500 shed 0.9% last week, representing the biggest decline since April, while Dow Jones dropped 0.5% from its highest level.
This is because some concerns have started to build up lately outweighing the accelerating job market and improving economic growth. The trouble in the major Portuguese bank is the major culprit for the downslide that has raised worries about the health of the Portuguese financial system and contagion in other peripheral Euro zone nations, weighing heavily on the global markets, including U.S.
In addition, investors have taken a wait-and-see approach on the stock’s valuations ahead of the earnings season which will start in full gear this week (read: 3 Promising Sectors ETFs Ahead of Q2 Earnings Season).
Given mixed sentiments across the globe, some of the ETFs/ETNs emerged as winners last week while some funds lost double digits. Below, we have highlighted some of them:
ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN ((EEH - ETF report)) – Up 9.19%
Investors are currently honing on in the large cap products, as these will likely outperform the mid and small cap counterparts, and offer stability amid economic adversities and capital appreciation in a booming market. Though this ETN is unpopular and illiquid with just $1 million in AUM and average daily volume of under 3,000 shares, it grabbed the best performer title last week, gaining over 9% (see: all the Large Cap ETFs here).
This is because of its unique momentum strategy that seeks to increase exposure to the sub-indices that outperform the S&P 500 and reduce allocations for the underperformers. The note comes with a cash payment at the scheduled maturity or early redemption based on the performance of the SPECTRUM Large Cap U.S. Sector Momentum Index and is issued in the USA by Swedish Export Credit Corp. The ETN charges a higher 75 bps in fees per year.
Global X Gold Explorers ETF () – Up 7.00%
Ongoing turmoil in Iraq, stand-off between Russia and the West, and concerns over the financial health of the Euro zone have bolstered the appeal for the safe haven gold and its mining stocks. As a result, GLDX outperformed other products in the commodity producer space and rose 7% last week. The ETF provides global exposure to the small basket of 21 gold mining firms by tracking the Solactive Global Gold Explorers Index (read: Will the Uptrend in Gold Mining ETFs Continue?).
The product is highly concentrated on the top two firms accounting for at least 7% share each while the other hold less than 6% of assets. Canadian firms dominate the fund’s return at 81% while Australia, United Kingdom and the U.S. take the remaining portion. The fund has $53.7 million in its asset base and sees roughly 71,000 shares in average daily volume. Expense ratio came in at 0.65%.
iShares MSCI Indonesia Investable Market Index Fund ((EIDO - ETF report)) – Up 6.91%
The Indonesian fund saw a big jump arising from the expected victory for Joko Widodo that hinges on the hopes of a turnaround in the beleaguered economy and is thus attracting more foreign capital into the country. The ETF was up 6.91% over the past five days and is on track to outstrip the other nations in the emerging Asia Pacific space (read: Indonesia ETFs in Focus Ahead of Elections).
EIDO is the most popular ETF tracking the Indonesian market with AUM of $530.3 million and average daily volume of nearly 628,000 shares. The fund tracks the MSCI Indonesia Investable Market Index, holding 107 securities in its basket while charging 62 bps in annual fees from investors. The product is somewhat concentrated on both sectors and securities as the top two firms account for nearly 10% of the total assets while from a sector look, financials dominates the fund’s return with one-third share.
iPath Global Carbon ETN () – Down 13.16%
The ETN follows the Barclays Global Carbon Index Total Return, which measures the performance of the most highly traded carbon-related credit plans. The note holds around 99.5% of its total assets in futures contracts of EXC Emission Reduction Units (ERUs) and the remaining in futures contracts of EXC Certified Emission Reductions (CERs).
The product is currently facing tough times due to the lagging recovery of the Euro zone – the largest buyer of carbon credits – as well as the political turmoil in number of other countries. The ETN lost more than 13% last week and charges investors 75 bps in fees and expenses. It has total assets of $1.7 million while volume is light.
EGShares Indxx India Small Cap Fund () – Down 12.68%
Indian ETFs experienced major weakness due to the lack of optimism in the Modi-led NDA government's first Railway budget and the absence of major reforms and fiscal deficit details in the Federal budget. In particular, the unpopular and illiquid small cap ETF, SCIN, saw the largest decline among the Indian ETFs, plunging 12.68% last week. The product has been able to manage only $32 million in its asset base while trades in light volume of less than 29,000 shares (read: Small Cap ETFs Tumble Most on Indian Sell-Off).
This fund follows the Indxx India Small Cap Index, holding 56 stocks in its basket. It is pretty spread across individual securities with less than 5.7% share allotted to each. However, the product is heavy on financials with more than one-third share, while consumer goods and industrials also get double-digit allocation in the basket.
Global X FTSE Portugal 20 ETF ((PGAL - ETF report)) – Down 8.98%
This ETF was badly hit in the latter part of the week when the country’s largest bank – Banco Espirito Santo – failed debt payments, signaling that it is in a deep financial crisis and might seek for bankruptcy protection. The only Portugal ETF targeting the nation tumbled about 9% and tracks the FTSE Portugal 20 Index. The fund has amassed $22.5 million since its debut eight months ago while volume is light. Expense ratio came in at 0.61% (read: Portugal ETF: Canary in the Coal Mine for Europe Investing?).
Holds 22 stocks in its basket, the product fund is heavily concentrated on the top two firms at more than one-third of assets, leaving behind two-thirds share for the rest of the securities. From a sector perspective, utilities, financials and materials are at the top three spots.
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