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Best & Worst Performing ETF Zones of the Nine Months of 2021
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Stocks across the globe have been enjoying a rally this year on the wider rollout of COVID-19 vaccines, a huge stimulus, upbeat earnings and reopening trade.
In fact, the global stocks notched in the second-best first half in 23 years but got caught in a nasty web of woes lately. This is especially true given the Chinese regulatory crackdown, slowing growth in China, concerns over the financial contagion due to the potential failure of China’s Evergrande property group, inflationary pressures and prospects of tightening policies (read: 5 Winning Global ETFs of First Nine Months of 2021).
In the FOMC meeting that concluded on Sep 22, the Federal Reserve Chair Jerome Powell signaled the tapering of bond buying as soon as in November, followed by interest rate hikes as early as next year. The European Central Bank also said that it will slow down emergency bond purchases over the coming quarter. Norway’s central bank last week raised interest rates to 0.25% from zero after cutting rates three times in 2020 due the pandemic-driven crisis.
Meanwhile, the spike in commodity prices has raised inflation, leading to a spike in yields. This has sparked fears of overvaluation especially in a high-growth sector like technology, which has seen a huge surge during the pandemic.
In the commodity world, while the shine for gold and silver has faded, industrial metals and energy have become red hot. The industrial metals like copper, platinum and tin are surging on optimism over economic recovery. Agricultural commodities are also not behind with corn seeing strength on China’s buying binge. Meanwhile, oil price has returned to the pre-COVID levels on rising demand and tightening supplies.
Given this, we have highlighted the best and worst-performing zones of the first nine month of 2021 and their ETFs:
Best Zones
Shipping
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , which is the only freight futures ETF exclusively focused on dry bulk shipping, is the biggest winner, having gained about 363%. The astounding rally has been driven by the booming dry bulk shipping industry, which is enjoying a smooth sailing due to supply chain disruptions around the world caused by the pandemic and increase in demand for dry vessel due to the reopening of the economies. This fund provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It has accumulated about $96.9 million in AUM and trades in a good volume of about 172,000 shares per day on average. It charges a higher annual fee of 3.32% (read: What's Behind the Smooth Sailing of the Top ETF of 2021?).
Natural Gas
Natural gas price is soaring on strong demand and tightening supply market conditions. United States Natural Gas Fund (UNG - Free Report) provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near month contract is within two weeks of expiration, the benchmark will be the next month contract to expire. It has AUM of $296.5 million and trades in volume of around 3.8 million shares per day. The fund has 1.35% in expense ratio and has jumped 104.8% so far this year (read: ETFs to Tap on Soaring Natural Gas Price).
Uranium
Uranium stocks have been on a tear buoyed by growing social media attention, the restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit, accelerated by the pandemic-related production cuts. North Shore Global Uranium Mining ETF (URNM - Free Report) climbed 77%. It provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee. The ETF holds 35 stocks in its basket and has accumulated $627.4 million in its asset base. It trades in a good volume of 316,000 shares per day on average (read: 4 Market-Beating Sector ETFs of Q3).
Worst Zones
Volatility
Although stock market volatility increased in recent weeks, it was on a back seat for most of the nine months of 2021. As such, volatility products have been the biggest losers. In particular, iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) has plunged 58.6%. It focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility in the S&P 500 Index at various points along the volatility forward curve. The note provides investors with exposure to a daily rolling long position in the first and second months of VIX futures contracts. This ETN is popular and liquid with AUM of $940.4 million and an average daily volume of 30.5 million shares. The note charges 89 bps in annual fees (read: Volatility ETFs Spike on Evergrande Collapse Fears).
China
The Chinese authorities have introduced a slew of legislation over the past few months, largely aimed at the tech sector. The crackdown has wiped out billions of dollars in value from the country’s Internet giants. While many China ETFs have been experiencing losses, KraneShares CSI China Internet Fund (KWEB - Free Report) has lost 40% this year. This product provides exposure to the China-based companies whose primary business or businesses are in the Internet and Internet-related sectors. It tracks the CSI China Overseas Internet Index. The fund holds 52 securities in its basket and charges 70 bps in annual fees from investors. It has amassed $7 billion in its asset base and trades in an average daily volume of 13.1 million shares. The product has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Top ETF Stories of Third Quarter).
Education
China's regulatory crackdown has also hit education sector with Global X Education ETF plunging 39.9%. It seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education and professional education. The fund follows the Indxx Global Education Thematic Index and holds 38 stocks in its basket. With AUM of $7.7 million, it charges 50 bps in annual fees and trades in an average daily volume of 8,000 shares.
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Best & Worst Performing ETF Zones of the Nine Months of 2021
Stocks across the globe have been enjoying a rally this year on the wider rollout of COVID-19 vaccines, a huge stimulus, upbeat earnings and reopening trade.
In fact, the global stocks notched in the second-best first half in 23 years but got caught in a nasty web of woes lately. This is especially true given the Chinese regulatory crackdown, slowing growth in China, concerns over the financial contagion due to the potential failure of China’s Evergrande property group, inflationary pressures and prospects of tightening policies (read: 5 Winning Global ETFs of First Nine Months of 2021).
In the FOMC meeting that concluded on Sep 22, the Federal Reserve Chair Jerome Powell signaled the tapering of bond buying as soon as in November, followed by interest rate hikes as early as next year. The European Central Bank also said that it will slow down emergency bond purchases over the coming quarter. Norway’s central bank last week raised interest rates to 0.25% from zero after cutting rates three times in 2020 due the pandemic-driven crisis.
Meanwhile, the spike in commodity prices has raised inflation, leading to a spike in yields. This has sparked fears of overvaluation especially in a high-growth sector like technology, which has seen a huge surge during the pandemic.
In the commodity world, while the shine for gold and silver has faded, industrial metals and energy have become red hot. The industrial metals like copper, platinum and tin are surging on optimism over economic recovery. Agricultural commodities are also not behind with corn seeing strength on China’s buying binge. Meanwhile, oil price has returned to the pre-COVID levels on rising demand and tightening supplies.
Given this, we have highlighted the best and worst-performing zones of the first nine month of 2021 and their ETFs:
Best Zones
Shipping
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , which is the only freight futures ETF exclusively focused on dry bulk shipping, is the biggest winner, having gained about 363%. The astounding rally has been driven by the booming dry bulk shipping industry, which is enjoying a smooth sailing due to supply chain disruptions around the world caused by the pandemic and increase in demand for dry vessel due to the reopening of the economies. This fund provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It has accumulated about $96.9 million in AUM and trades in a good volume of about 172,000 shares per day on average. It charges a higher annual fee of 3.32% (read: What's Behind the Smooth Sailing of the Top ETF of 2021?).
Natural Gas
Natural gas price is soaring on strong demand and tightening supply market conditions. United States Natural Gas Fund (UNG - Free Report) provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near month contract is within two weeks of expiration, the benchmark will be the next month contract to expire. It has AUM of $296.5 million and trades in volume of around 3.8 million shares per day. The fund has 1.35% in expense ratio and has jumped 104.8% so far this year (read: ETFs to Tap on Soaring Natural Gas Price).
Uranium
Uranium stocks have been on a tear buoyed by growing social media attention, the restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit, accelerated by the pandemic-related production cuts. North Shore Global Uranium Mining ETF (URNM - Free Report) climbed 77%. It provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee. The ETF holds 35 stocks in its basket and has accumulated $627.4 million in its asset base. It trades in a good volume of 316,000 shares per day on average (read: 4 Market-Beating Sector ETFs of Q3).
Worst Zones
Volatility
Although stock market volatility increased in recent weeks, it was on a back seat for most of the nine months of 2021. As such, volatility products have been the biggest losers. In particular, iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) has plunged 58.6%. It focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility in the S&P 500 Index at various points along the volatility forward curve. The note provides investors with exposure to a daily rolling long position in the first and second months of VIX futures contracts. This ETN is popular and liquid with AUM of $940.4 million and an average daily volume of 30.5 million shares. The note charges 89 bps in annual fees (read: Volatility ETFs Spike on Evergrande Collapse Fears).
China
The Chinese authorities have introduced a slew of legislation over the past few months, largely aimed at the tech sector. The crackdown has wiped out billions of dollars in value from the country’s Internet giants. While many China ETFs have been experiencing losses, KraneShares CSI China Internet Fund (KWEB - Free Report) has lost 40% this year. This product provides exposure to the China-based companies whose primary business or businesses are in the Internet and Internet-related sectors. It tracks the CSI China Overseas Internet Index. The fund holds 52 securities in its basket and charges 70 bps in annual fees from investors. It has amassed $7 billion in its asset base and trades in an average daily volume of 13.1 million shares. The product has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Top ETF Stories of Third Quarter).
Education
China's regulatory crackdown has also hit education sector with Global X Education ETF plunging 39.9%. It seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education and professional education. The fund follows the Indxx Global Education Thematic Index and holds 38 stocks in its basket. With AUM of $7.7 million, it charges 50 bps in annual fees and trades in an average daily volume of 8,000 shares.