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Best and Worst ETF of Second Quarter From Different Zones
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The U.S. stock market ended the second quarter of 2023 on a high note, with major indexes recording significant gains despite mounting recession fears and a tight central bank policy. The Nasdaq Composite Index led the charge, rising 12.8% while the S&P 500 and Dow Jones Industrial Average gained 8.8% and 2.5%, respectively.
Most of the gains were brought in by the tech sector, propelled by massive enthusiasm for artificial intelligence (AI). The rally in recent weeks has broadened into other sectors. Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target.
Meanwhile, the Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
Additionally, builders are becoming more optimistic due to ongoing gradual improvements in supply chains, despite difficulties obtaining builder and developer loans over the last year. Further, the recent rounds of economic data signaled economic resilience despite fears of an impending recession.
Given this, we have highlighted three ETFs, each from the best and worst-performing zones of the second quarter:
Best ETFs
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) ) – Up 46.8%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 21 securities in its basket (read: 5 Top-Performing Sector ETFs of Q2).
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 86,000. DAPP has accumulated $45.2 million in its asset base.
VanEck Vectors Brazil Small-Cap ETF (BRF - Free Report) ) – Up 35%
Brazil was the second best-performing regional stock market in the second quarter, with the main Brazilian market index rising 19.5%. The country’s central bank’s dovish tone and bets of interest rate cuts in August have resulted in the rally. VanEck Vectors Brazil Small-Cap ETF follows the MVIS Brazil Small-Cap Index and targets the small-cap segment of the Brazilian stock market. Holding 98 stocks in its basket, consumer discretionary and industrials take the top two spots in terms of the sector at 20.9% and 17.7%, respectively.
VanEck Vectors Brazil Small-Cap ETF has $33.8 million in AUM and trades in a lower volume of 12,000 shares. It charges 66 bps in annual fees. However, BRF has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: 5 Country ETFs Beating the S&P 500 in Q2).
Global X MSCI Nigeria ETF ) – Up 26.6%
Nigeria’s stock market soared to the highest level in 15 years, driven by the peaceful transition to power following the 2023 elections, favorable policies introduced by President Bola Tinubu’s new administration, such as the removal of fuel subsidies, streamlining of exchange rates and the floating of the naira. Global X MSCI Nigeria ETF offers exposure to the largest and most-liquid Nigerian securities by tracking the MSCI All Nigeria Select 25/50 Index. Holding 23 stocks in its basket, the fund is skewed toward financials at 49.8% while consumer staples and materials round off the next two sectors.
Global X MSCI Nigeria ETF has accumulated $30.6 million in its asset base and has 0.83% in expense ratio. The average daily volume is lower at 25,000 shares. However, NGE has a Zacks ETF Rank #4 with a High risk outlook.
Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule.
Breakwave Dry Bulk Shipping ETF has accumulated about $61.7 million in AUM and trades in a good volume of about 245,000 shares per day on average. It charges a higher annual fee of 3.50%.
ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration (read: Top and Flop ETFs of the First Half of 2023).
ProShares VIX Short-Term Futures ETF has amassed $229.8 million in AUM and charges 85 bps in fees per year. It trades in an average daily volume of 7.4 million shares.
KraneShares Global Carbon Offset Strategy ETF ) – Down 40.8%
KraneShares Global Carbon Offset Strategy ETF provides investors access to global carbon offset futures contracts, previously unavailable through an ETF. It tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. These futures contracts include Nature-Based Global Emission Offsets (N-GEOs) and Global Emission Offsets (GEOs), which trade through the CME Group, the world's largest financial derivatives exchange.
KraneShares Global Carbon Offset Strategy ETF has gathered $1.3 million in its asset base and trades in a volume of 7,000 shares a day on average. It charges 79 bps in annual fees.
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Best and Worst ETF of Second Quarter From Different Zones
The U.S. stock market ended the second quarter of 2023 on a high note, with major indexes recording significant gains despite mounting recession fears and a tight central bank policy. The Nasdaq Composite Index led the charge, rising 12.8% while the S&P 500 and Dow Jones Industrial Average gained 8.8% and 2.5%, respectively.
Most of the gains were brought in by the tech sector, propelled by massive enthusiasm for artificial intelligence (AI). The rally in recent weeks has broadened into other sectors. Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target.
Meanwhile, the Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
Additionally, builders are becoming more optimistic due to ongoing gradual improvements in supply chains, despite difficulties obtaining builder and developer loans over the last year. Further, the recent rounds of economic data signaled economic resilience despite fears of an impending recession.
Given this, we have highlighted three ETFs, each from the best and worst-performing zones of the second quarter:
Best ETFs
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) ) – Up 46.8%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 21 securities in its basket (read: 5 Top-Performing Sector ETFs of Q2).
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 86,000. DAPP has accumulated $45.2 million in its asset base.
VanEck Vectors Brazil Small-Cap ETF (BRF - Free Report) ) – Up 35%
Brazil was the second best-performing regional stock market in the second quarter, with the main Brazilian market index rising 19.5%. The country’s central bank’s dovish tone and bets of interest rate cuts in August have resulted in the rally. VanEck Vectors Brazil Small-Cap ETF follows the MVIS Brazil Small-Cap Index and targets the small-cap segment of the Brazilian stock market. Holding 98 stocks in its basket, consumer discretionary and industrials take the top two spots in terms of the sector at 20.9% and 17.7%, respectively.
VanEck Vectors Brazil Small-Cap ETF has $33.8 million in AUM and trades in a lower volume of 12,000 shares. It charges 66 bps in annual fees. However, BRF has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: 5 Country ETFs Beating the S&P 500 in Q2).
Global X MSCI Nigeria ETF ) – Up 26.6%
Nigeria’s stock market soared to the highest level in 15 years, driven by the peaceful transition to power following the 2023 elections, favorable policies introduced by President Bola Tinubu’s new administration, such as the removal of fuel subsidies, streamlining of exchange rates and the floating of the naira. Global X MSCI Nigeria ETF offers exposure to the largest and most-liquid Nigerian securities by tracking the MSCI All Nigeria Select 25/50 Index. Holding 23 stocks in its basket, the fund is skewed toward financials at 49.8% while consumer staples and materials round off the next two sectors.
Global X MSCI Nigeria ETF has accumulated $30.6 million in its asset base and has 0.83% in expense ratio. The average daily volume is lower at 25,000 shares. However, NGE has a Zacks ETF Rank #4 with a High risk outlook.
Worst ETFs
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) ) – Down 45%
Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule.
Breakwave Dry Bulk Shipping ETF has accumulated about $61.7 million in AUM and trades in a good volume of about 245,000 shares per day on average. It charges a higher annual fee of 3.50%.
ProShares VIX Short-Term Futures ETF (VIXY - Free Report) ) – Down 44.8%
ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration (read: Top and Flop ETFs of the First Half of 2023).
ProShares VIX Short-Term Futures ETF has amassed $229.8 million in AUM and charges 85 bps in fees per year. It trades in an average daily volume of 7.4 million shares.
KraneShares Global Carbon Offset Strategy ETF ) – Down 40.8%
KraneShares Global Carbon Offset Strategy ETF provides investors access to global carbon offset futures contracts, previously unavailable through an ETF. It tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. These futures contracts include Nature-Based Global Emission Offsets (N-GEOs) and Global Emission Offsets (GEOs), which trade through the CME Group, the world's largest financial derivatives exchange.
KraneShares Global Carbon Offset Strategy ETF has gathered $1.3 million in its asset base and trades in a volume of 7,000 shares a day on average. It charges 79 bps in annual fees.