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Though the U.S. stock market started off Q3 on an encouraging note with key indices hitting highs on several occasions, the momentum melted to some extent in the month of August. The key U.S. ETFs, namely, the S&P 500-based (SPY - Free Report) added 0.2%, Dow Jones Industrial Average-based (DIA - Free Report) ticked up 0.04% and Nasdaq-100-based (QQQ - Free Report) tacked on over 0.5% gains.
In any case, August has never been famous for stellar equity returns. A consensus carried out from 1950 to 2015 has revealed that August has ended up offering positive returns in 37 years and negative returns in 29 years, with an average return of negative 0.27%, as per moneychimp.com.
Let’s take a look at the five best and worst performing ETFs of the month.
Top Performers
ETFS Zacks Earnings Small-Cap U.S. Index Fund ZSML – Up 18.1%
The underlying index of the fund looks to pick small-cap stocks based on the analysis of their earnings. Both quantitative and qualitative approaches are followed to select stocks. Investors should note that with the U.S. economy gaining traction, the bias on small-cap stocks was obvious in the month. Small-caps, in fact, beat large-cap stocks with iShares Core S&P Small-Cap ETF (IJR - Free Report) offering 1.3% returns against SPY’s meagre 0.2%.
PowerShares DB Japanese Govt Bond Futures ETN JGBL – Up 13.0%
As Japanese equities gave a soft performance, thanks to a stronger yen for most part of the month, investors probably showed more interest in Japanese bonds. Investors should note that 10- and 20-year Japanese government bond yields dipped below zero, thanks to an ultra-easy monetary policy.
Also, talks of further monetary easing by BoJ following a lackluster GDP in Q2 dragged down government bond yields and pushed up prices of JGBL. The fund looks to track the DB USD JGB Futures Index, which is intended to measure the performance of a long position in 10-year JGB Futures (read: Japan's Economy Slowed in Q2: ETFs in Focus).
Guggenheim China Technology ETF (CQQQ - Free Report) – Up 12.1%
Not only in China, the tech space is shoring up even in the U.S. A slew of positive earnings releases and the return of risk-on sentiments to the market (after the Brexit induced sell-off) on a flurry of upbeat U.S. economic data favored this growth-oriented fund (read: Time to Buy These Tech ETFs?).
United States Diesel-Heating Oil Fund ) – Up 8.4%
This ETF tracks the movement of heating oil prices. Now since oil prices were steady in the month with United States Oil (USO - Free Report) adding about 6.2% and United States Brent Oil (BNO - Free Report) advancing about 7.5%, gains in UHN are self-explanatory (read: Oil ETFs Soar on Positive News: Will the Rally Last?).
Hopes of output freeze talks in an informal meeting among Saudi Arabia, Russia and other key oil producers in Algeria this month actually gave the liquid commodity a boost.
Worst Performers
Mining ETFs were slaughtered in August. The sudden strength of the greenback in the wake of the U.S. policy tightening talks have weighed on metal ETFs at the end of the month, putting miners in trouble. Profit-booking activity after a stellar run this year in those metal and mining ETFs also played foul.
As the U.S. dollar strengthened on renewed Fed hike talks, gold prices fell to a two-month low and recorded “their first monthly loss since May.” Gold ETF SPDR Gold Shares (GLD) shed over 3.4% in the month. Needless to say, sentiments were dampened for the gold mining ETFs as well. Some other battered gold mining ETFs were Global X Gold Explorers ETF (GLDX), PowerShares Global Gold & Precious Metals ETF and VanEck Vectors Junior Gold Miners ETF (GDXJ). Most of these lost around 14% to 17%.
PureFunds ISE Junior Silver ETF (SILJ - Free Report) – Down 14.6%
Mainly due to the above-mentioned reasons, this small-cap silver mining ETF was hit hard along with several other silver mining products.
Prospects of higher global supplies along with falling demand in China dragged down the prices of cotton. Plus, like several other commodities, cotton investing was hurt by the strengthening of the dollar.
Wheat futures recently touched their “lowest level since 2006” on rising output. Going by an article published in MarketWatch, “Global wheat output is expected to exceed demand this year by about 10 million metric tons, or about 1.4%” as per Teucrium Trading LLC.
Nickel had been in a lull in August, after price rallies in June and July. As per analysts, uncertainty in demand in China and heavy inventories weighed on nickel prices in August.
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5 Top and Flop ETFs of August
Though the U.S. stock market started off Q3 on an encouraging note with key indices hitting highs on several occasions, the momentum melted to some extent in the month of August. The key U.S. ETFs, namely, the S&P 500-based (SPY - Free Report) added 0.2%, Dow Jones Industrial Average-based (DIA - Free Report) ticked up 0.04% and Nasdaq-100-based (QQQ - Free Report) tacked on over 0.5% gains.
In any case, August has never been famous for stellar equity returns. A consensus carried out from 1950 to 2015 has revealed that August has ended up offering positive returns in 37 years and negative returns in 29 years, with an average return of negative 0.27%, as per moneychimp.com.
Let’s take a look at the five best and worst performing ETFs of the month.
Top Performers
ETFS Zacks Earnings Small-Cap U.S. Index Fund ZSML – Up 18.1%
The underlying index of the fund looks to pick small-cap stocks based on the analysis of their earnings. Both quantitative and qualitative approaches are followed to select stocks. Investors should note that with the U.S. economy gaining traction, the bias on small-cap stocks was obvious in the month. Small-caps, in fact, beat large-cap stocks with iShares Core S&P Small-Cap ETF (IJR - Free Report) offering 1.3% returns against SPY’s meagre 0.2%.
PowerShares DB Japanese Govt Bond Futures ETN JGBL – Up 13.0%
As Japanese equities gave a soft performance, thanks to a stronger yen for most part of the month, investors probably showed more interest in Japanese bonds. Investors should note that 10- and 20-year Japanese government bond yields dipped below zero, thanks to an ultra-easy monetary policy.
Also, talks of further monetary easing by BoJ following a lackluster GDP in Q2 dragged down government bond yields and pushed up prices of JGBL. The fund looks to track the DB USD JGB Futures Index, which is intended to measure the performance of a long position in 10-year JGB Futures (read: Japan's Economy Slowed in Q2: ETFs in Focus).
Guggenheim China Technology ETF (CQQQ - Free Report) – Up 12.1%
The Chinese tech space has also been on a tear in August, favoring CQQQ. Another China tech fund, KraneShares CSI China Internet ETF (KWEB - Free Report) added about 11.7% in the month (read: Alibaba Stock Up on Healthy Q1 Earnings: ETFs in Focus).
SPDR S&P Technology Hardware ETF XTH – Up 11.1%
Not only in China, the tech space is shoring up even in the U.S. A slew of positive earnings releases and the return of risk-on sentiments to the market (after the Brexit induced sell-off) on a flurry of upbeat U.S. economic data favored this growth-oriented fund (read: Time to Buy These Tech ETFs?).
United States Diesel-Heating Oil Fund ) – Up 8.4%
This ETF tracks the movement of heating oil prices. Now since oil prices were steady in the month with United States Oil (USO - Free Report) adding about 6.2% and United States Brent Oil (BNO - Free Report) advancing about 7.5%, gains in UHN are self-explanatory (read: Oil ETFs Soar on Positive News: Will the Rally Last?).
Hopes of output freeze talks in an informal meeting among Saudi Arabia, Russia and other key oil producers in Algeria this month actually gave the liquid commodity a boost.
Worst Performers
Mining ETFs were slaughtered in August. The sudden strength of the greenback in the wake of the U.S. policy tightening talks have weighed on metal ETFs at the end of the month, putting miners in trouble. Profit-booking activity after a stellar run this year in those metal and mining ETFs also played foul.
Sprott Gold Miners Exchange Traded Fund (SGDM - Free Report) – Down19.23%
As the U.S. dollar strengthened on renewed Fed hike talks, gold prices fell to a two-month low and recorded “their first monthly loss since May.” Gold ETF SPDR Gold Shares (GLD) shed over 3.4% in the month. Needless to say, sentiments were dampened for the gold mining ETFs as well. Some other battered gold mining ETFs were Global X Gold Explorers ETF (GLDX), PowerShares Global Gold & Precious Metals ETF and VanEck Vectors Junior Gold Miners ETF (GDXJ). Most of these lost around 14% to 17%.
PureFunds ISE Junior Silver ETF (SILJ - Free Report) – Down 14.6%
Mainly due to the above-mentioned reasons, this small-cap silver mining ETF was hit hard along with several other silver mining products.
iPath Bloomberg Cotton SubTR ETN BAL– Down 12.4%
Prospects of higher global supplies along with falling demand in China dragged down the prices of cotton. Plus, like several other commodities, cotton investing was hurt by the strengthening of the dollar.
Teucrium Wheat ETF WEAT – Down 9.2%
Wheat futures recently touched their “lowest level since 2006” on rising output. Going by an article published in MarketWatch, “Global wheat output is expected to exceed demand this year by about 10 million metric tons, or about 1.4%” as per Teucrium Trading LLC.
iPath Bloomberg Nickel SubTR ETN JJN – Down 8.5%
Nickel had been in a lull in August, after price rallies in June and July. As per analysts, uncertainty in demand in China and heavy inventories weighed on nickel prices in August.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>