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5 ETF Areas That Didn't Trick Investors in October

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The Halloween month has seen one of the scariest stock market gyrations this year.Historically, the month has witnessed some of the most appalling market crashes. The most horrifying of these is the 1987 one, “which saw the S&P 500 lose more than 20 percent of its value in one day.” The 1929 crash and the 2008 financial crisis' acute sell-offs also took place in October (read: October Traditionally Most Volatile: ETFs That Gained).

This October is no different with stocks crashing mainly on rising rate worries. U.S.-Sino trade tensions and the resultant pressure on global growth, geopolitical issues and uncertainty around mid-terms also complicated issues for Wall Street. Morgan Stanley apprehended acute selling pressure on Wall Street due to “declining liquidity and growing concerns about peaking growth.”

Big three U.S. ETFs — SPDR S&P 500 ETF (SPY - Free Report) , SPDR Dow Jones Industrial Average ETF (DIA - Free Report) and Invesco QQQ Trust (QQQ - Free Report) — have lost about 8.2%, 7.1% and 10.9% this month (as of Oct 30, 2018). However, there are some ETF areas that offered treats to investors instead of tricking them (read: Forget Spooky Market, 4 Halloween ETF Treats for Investors).

ETF Areas That Gained in October

Volatility

Volatility has been pretty obvious in the month. iPath B S&P 500 VIX S/T Futures ETN VXXB (up 47.0%), ProShares VIX Short-Term Futures (VIXY - Free Report) ) (up 47.4%) and iPath S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) (up 47.4%) gained in the month.

Agriculture

Agricultural commodities had a fair stretch in the month. Among the whole bunch, sugar deserves a special mention. Sugar output in Brazil — one of the top growers — is at the lowest in 12 years due to a “smaller cane crop and higher ethanol production,” per Datagro consultancy.  

India, another major producer of sugarcane, is seeing lower production as the Indian Sugar Mills Association has lowered its forecast for the country’s sugar output in 2018-19 due to inclement weather conditions. Two ETF gainers were iPath B Bloomberg Sugar Subindex Total Return ETN SGGB (up 15.3%) and Teucrium Sugar ETF (CANE - Free Report) (up 13.7%).

Apart from this, the overall agri-space performed better in the month with Invesco DB Agriculture (DBA - Free Report) (up 2.3%) being in the positive territory. iPath Bloomberg Cocoa ETN gained about 12.5% in October.

Brazil

Brazilian ETFs started rallying on the win of far-right and investor friendly candidate Jair Bolsonaro in the first round of Brazil’s presidential election held on Oct 7. He became the president of the country on Oct 28, having defeated leftist Workers’ Party candidate Fernando Haddad with 55% of the votes.

He has already been pushing for the existing administration to rework the pension bill before his inauguration on Jan 1, per Wall Street Journal. iShares MSCI Brazil Small-Cap ETF (EWZS - Free Report) is up 23.7% past month and VanEck Vectors Brazil Small-Cap ETF (BRF - Free Report) has gained about 23.9%. iShares MSCI Brazil Capped ETF (EWZ - Free Report) is up 19.8% in October (as of Oct 30, 2018) (read: What EM Shock? Brazil ETFs Soar on Election Optimism).

Long/Short

Investors who wanted to shift focus to low-beta stocks during this uncertain market environment considered adding BTAL to their portfolio. The fund follows the Dow Jones U.S. Thematic Market Neutral Anti-Beta Index. The index identifies the lowest beta stocks and goes long on them, while at the same time going short on the highest beta stocks (read: 5 Defensive ETFs to Survive Global Market Rout).

Natural Gas

Forecast of below-average temperatures and the need for heating boosted natural gas futures in October. iPath Bloomberg Natural Gas ETN GAZB (up 5.4%) and United States Natural Gas (UNG - Free Report) are up 1.4% in October (as of Oct 30, 2018).

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