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Despite the best start to the month in eight years, U.S. stocks are on track for the worst December since the Great Depression in 1931. The S&P 500 and Dow Jones are down nearly 7.5% each so far this month, marking the largest drop for each key market barometer since 1931 when the indexes plunged 14.5% and 17%, respectively.
Myriad woes including higher interest rates, political malaise in Europe, U.S.-China trade tensions, slowdown in Japan, troubles in emerging markets and threats of a global slowdown led to the terrible performances. A flattening U.S. yield curve and a decline in oil price have added to the woes (read: Global Markets in Red for 2018: 8 Inverse ETF Winners).
According to the latest survey of the American Association of Individual Investors, bearish sentiment (expectations that stock prices will fall over the next six months) jumped 18.4 percentage points to 48.9% in the seven-day period ended Dec 12, while bullish sentiment (expectations that prices will rise over the next six months) fell 17 percentage points to 20.9% -- its lowest since May 25, 2016 and below its historical average of 38.5% for the 12th time in 14 weeks.
With the recent slump, the S&P 500 is on track for its biggest quarterly loss since the third quarter of 2011. The collapse comes despite the fact that December is historically a solid month for the stock market. According to the Stock Trader's Almanac, the S&P 500 has gained an average of 1.6% for December (read: Will Fed Play Santa Claus for Wall Street? ETFs in Focus).
As a result, a number of ETFs incurred heavy losses over the past month. Below we have highlighted five funds that have been hit badly in the market turmoil and might continue their rough trading if similar trends prevail.
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Down 22.1%
With AUM of $224.1 million, this fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry. It holds 41 securities in its basket and charges 35 bps in annual fees. The fund trades in a solid average daily volume of 1.4 million shares and has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).
First Trust Nasdaq Bank ETF (FTXO - Free Report) – Down 14.7%
This fund follows the Nasdaq US Smart Banks Index, which measures performance of U.S. companies within the banking industry. It holds 30 securities in its basket and charges 60 bps in annual fees. The ETF has AUM of $187.6 million and trades in average daily volume of 587,000 shares. It has a Zacks ETF Rank #3 (Hold) (read: Bank ETFs in Focus as Rates Rise).
First Trust ISE-Revere Natural Gas Index Fund (FCG - Free Report) – Down 14.6%
This fund offers exposure to U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 37 stocks in its basket. The fund has amassed $99.8 million in its asset base while charging 60 bps in annual fees. Volume is good with 198,000 shares exchanged per day on average. The product has a Zacks ETF Rank #3 with a High risk outlook.
This fund targets the small-cap segment of the material sector by tracking the S&P SmallCap 600 Capped Materials Index. It holds 32 securities in its basket and has accumulated $18.2 million in its asset base. Volume is low with 2,000 shares exchanged a day on average. The product has an expense ratio of 0.29% and has a Zacks ETF Rank #3 with a High risk outlook.
Arrow QVM Equity Factor ETF – Down 11.6%
This ETF tracks A.I. Quality Value Momentum Index, which uses a Tri-Factor approach to provide equally weighted exposure to 50 equities at the intersection of Quality, Value and Momentum. It holds 51 stocks in its basket and charges 65 bps in fees per year. Volume is paltry at 4,000 shares. QVM has a Zacks ETF Rank #3 with a Medium risk outlook (read: Quality ETFs & Stocks to Outperform Amid Volatility).
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Market on Track for Worst December: 5 ETFs Losers
Despite the best start to the month in eight years, U.S. stocks are on track for the worst December since the Great Depression in 1931. The S&P 500 and Dow Jones are down nearly 7.5% each so far this month, marking the largest drop for each key market barometer since 1931 when the indexes plunged 14.5% and 17%, respectively.
Myriad woes including higher interest rates, political malaise in Europe, U.S.-China trade tensions, slowdown in Japan, troubles in emerging markets and threats of a global slowdown led to the terrible performances. A flattening U.S. yield curve and a decline in oil price have added to the woes (read: Global Markets in Red for 2018: 8 Inverse ETF Winners).
According to the latest survey of the American Association of Individual Investors, bearish sentiment (expectations that stock prices will fall over the next six months) jumped 18.4 percentage points to 48.9% in the seven-day period ended Dec 12, while bullish sentiment (expectations that prices will rise over the next six months) fell 17 percentage points to 20.9% -- its lowest since May 25, 2016 and below its historical average of 38.5% for the 12th time in 14 weeks.
With the recent slump, the S&P 500 is on track for its biggest quarterly loss since the third quarter of 2011. The collapse comes despite the fact that December is historically a solid month for the stock market. According to the Stock Trader's Almanac, the S&P 500 has gained an average of 1.6% for December (read: Will Fed Play Santa Claus for Wall Street? ETFs in Focus).
As a result, a number of ETFs incurred heavy losses over the past month. Below we have highlighted five funds that have been hit badly in the market turmoil and might continue their rough trading if similar trends prevail.
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Down 22.1%
With AUM of $224.1 million, this fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry. It holds 41 securities in its basket and charges 35 bps in annual fees. The fund trades in a solid average daily volume of 1.4 million shares and has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).
First Trust Nasdaq Bank ETF (FTXO - Free Report) – Down 14.7%
This fund follows the Nasdaq US Smart Banks Index, which measures performance of U.S. companies within the banking industry. It holds 30 securities in its basket and charges 60 bps in annual fees. The ETF has AUM of $187.6 million and trades in average daily volume of 587,000 shares. It has a Zacks ETF Rank #3 (Hold) (read: Bank ETFs in Focus as Rates Rise).
First Trust ISE-Revere Natural Gas Index Fund (FCG - Free Report) – Down 14.6%
This fund offers exposure to U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 37 stocks in its basket. The fund has amassed $99.8 million in its asset base while charging 60 bps in annual fees. Volume is good with 198,000 shares exchanged per day on average. The product has a Zacks ETF Rank #3 with a High risk outlook.
Invesco S&P SmallCap Materials ETF (PSCM - Free Report) – Down 12.6%
This fund targets the small-cap segment of the material sector by tracking the S&P SmallCap 600 Capped Materials Index. It holds 32 securities in its basket and has accumulated $18.2 million in its asset base. Volume is low with 2,000 shares exchanged a day on average. The product has an expense ratio of 0.29% and has a Zacks ETF Rank #3 with a High risk outlook.
Arrow QVM Equity Factor ETF – Down 11.6%
This ETF tracks A.I. Quality Value Momentum Index, which uses a Tri-Factor approach to provide equally weighted exposure to 50 equities at the intersection of Quality, Value and Momentum. It holds 51 stocks in its basket and charges 65 bps in fees per year. Volume is paltry at 4,000 shares. QVM has a Zacks ETF Rank #3 with a Medium risk outlook (read: Quality ETFs & Stocks to Outperform Amid Volatility).
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 >>