Keeping a year-end tradition alive, let’s look back at the best and the worst of 2015. Here, we’ll do a quick recap of the ETFs that rocked and flopped this year with the ups and downs in the global economy and the resultant flow and ebb in the investing world.
It’s important to start off by saying that the broader market disappointed us this year. SPDR S&P 500 ETF (SPY - Free Report) has added about 0.9% so far (as of December 29, 2015), Vanguard FTSE Europe ETF (VGK) has shed about 2.7% during the same timeframe, iShares MSCI Emerging Markets (EEM) has retreated as much as 16.5%, iShares MSCI All Country Asia ex Japan (AAXJ) has plummeted about 11.1% and the all-world ETF iShares MSCI ACWI (ACWI) is down over 2.9%.
But all this happened because persistently, rather terribly low oil prices, a huge Chinese market upheaval instigated by currency devaluation and the slowing manufacturing sector in the mid year and Fed lift-off worries left the global markets tottering.
Added to this, the return of deflation fears in the Euro zone, recessionary threats in Japan and some other key emerging economies were dark spots in the 2015 calendar. Metals were slaughtered; broad-based commodities were in the red with commodity currencies struggling against the surging greenback.
Let’s take a look at five top and worst performing ETFs of the year so far (as of December 29, 2015).
China – Market Vectors ChinaAMC SME-ChiNext ETF (CNXT) – Up 45.68%
Investors must be surprised to know that even after a huge massacre, a China ETF, CNXT, has managed to score a 45.7% gain in the year-to-date frame and is a top performer of the year. However, investing in this fund needs great caution as the fund was up just 1% in the last one month and could be due for a wilder ride in the days to come as the Chinese government occasionally launches a crackdown on the domestic stock market and the economy is not out of the woods yet.
Japan – WisdomTree Japan Hedged Health Care ETF (DXJH) – Up 34.45%
The Japanese economy may have lagged, but not the Japanese stocks. This economy is already undergoing a gigantic stimulus measure. Thus, hopes for further easing amid a slowing economy gave a justified boost to this currency-hedged ETF. Moreover, health care is a recession-proof sector.
Biotech – ALPS Medical Breakthroughs ETF (SBIO) – Up 26.49%
Though the soaring biotech space has recently undergone a correction on overvaluation concerns and drug pricing issues, now it is back with a bang. In fact, a timely correction in the latter part of the year made this hot investing area more tempting. This helped SBIO to emerge as a winner (read: Biotech Boom Over? 3 Health Care ETFs to Invest in Instead).
U.S. – QuantShares US Market Neutral Momentum Fund (MOM) – Up 23.51%
Since occasional volatility and Fed lift-off bets sporadically stumped the U.S. market this year, this long/short ETF has made an entry into the toppers’ list. The underlying index of the fund is equal weighted, dollar neutral and sector neutral. The index takes the highest momentum stocks into account as long positions and the lowest momentum stocks as short positions (read: Long/Short ETFs to Fight This Stormy Market).
Internet – First Trust Dow Jones Internet ETF (FDN) – Up 22.66%
This branch of the U.S. technology sector has been a smart survivor in the recent global market sell-off. In fact, the entire technology sector has sailed through the market meltdown of 2015. The usage of Internet has been gaining popularity. While its surge has reached saturation point in the developed economies, scope for growth is huge in the emerging markets (read: 4 Sector ETFs Standing Tall in Current Turmoil).
Energy Equities – PowerShares S&P Small-Cap Energy ETF (PSCE) – Down 47.67%
This fund provides exposure to the energy sector of the U.S. small cap segment. In the last one-and-a-half year long energy market rout, small-cap companies have been hard hit as these lack economies of scale and find it difficult to arrange financial support to carry out operations. Quite expectedly, this has given PSCE a loser’s crown.
MLPs – InfraCap MLP ETF (AMZA) – Down 47.67%
The double whammy of the recent crash in crude oil price to below $40 and the Fed’s hawkish stance on interest rate hike are causing mayhem in the master limited partnership (“MLPs”) business. MLPs are involved in the business of transportation and storage of oil and gas and are suffering worse than the oil producers from the downturn in the market. Plus, the Fed rate hike marred the appeal for high-yield investing that MLPs are famous for (read: Is This the Worst Time For MLP ETF Investing?).
Brazil – Market Vectors Brazil Small-Cap ETF (BRF) – Down 47.19%
Brazil has been in a technical recession this year. Plus, greenback strength, high inflation and political upheaval crippled Brazilin investing to the core. Since small-cap stocks are tied more to the domestic market, this capitalization stumbles badly when internal crisis deepens in the economy (read: Brazil Stocks, ETFs Ignore Slump: Rally on Rousseff Issues).
Oil – United States Brent Oil Fund (BNO) – Down 47.1%
Needless to say, oil ETFs would definitely find a place in the worst ETF performers’ list. A supply glut along with the possibility of no production cut from OPEC and declining demand led both Brent and WTI crude prices to their multi-year low levels. This clearly explains why BNO has lost 47.1% (read: Oil ETFs Crash As Crude Touches Multi-Year Low).
Copper – Global X Copper Miners ETF (COPX - Free Report) – Down 45.1%
Among the beleaguered metal space, copper has had the choppiest journey this year. Economic slowdown in the key consuming nation China, a supply glut and surging U.S. dollar punished the metal brutally in 2015. Since mining ETFs act as leveraged plays on the underlying metal, this copper miner ETF was battered the most.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>