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Top and Flop ETFs of 1H

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The first half of 2016 saw bears overpowering bulls for most of the time. The bears gained strength due to nagging China and oil-induced sell-offs at the start of the year and a shocking Brexit to finish the timeframe. Just the initial phase of Q2 brought relief to the broader market with the U.S. economy coming up with some solid economic reading.

Against this backdrop, it would really be enticing to find out the investing areas and their ETFs that trumped the market and the ones that fell on their mouth.


PureFunds ISE Junior Silver ETF SILJ Up 181.1%

Due to the flight to safety for most part of this year, safe haven metals like gold and silver thrived in the first half of 2016. A dovish Fed so far this year has stalled the strength in the greenback, spreading joy within broad-based commodity investing – a trend which saw silver becoming one of its highest beneficiaries.

Silver rose to a 1-1/2-year high to close out the first half of 2016. Actually, many investors have started to view silver as a leveraged play of gold, as per ETF Securities. Probably, this is why silver mining surged higher than gold mining products.

Plus, silver has high usage in industrial activities with about 50% of total demand coming from industrial applications. With manufacturing activities in the U.S. and China showing signs of life lately, though not immense, investors’ interest in silver mining stocks has grown.

Among other silver miners which skyrocketed over 125% (as of June 29, 2016), iShares MSCI Global Silver Miners (SLVP) and Global X Silver Miners ETF (SIL) deserve a mention (read: Forget Gold; Buy Silver Mining ETFs Instead).

Global X Gold Explorers ETF GLDX – Up 137.4%

As explained above, one of the safest havens gold broke all barriers in 1H and so did gold mining ETFs. Apart from GLDX, VanEck Vectors Junior Gold Miners ETF GDXJ, iShares MSCI Global Gold Miners RING and Sprott Gold Miners ETF SGDM have surged over 100% this year (read: 5 Things Every Investor Needs To Know About Gold Mining).

iShares MSCI All Peru Capped ETF EPU – Up 50%

The Peruvian market has delivered a stunning performance so far this year (as of June 29, 2016), thanks to a spurt in commodity prices. Peru is a commodity centric economy. In fact, it is one of the largest producers of gold and silver in the world. This makes it clear why EPU is in the top-performers’ list (read: Peru ETF Shining on Gold Rally).

Market Vectors Coal ETF KOL – Up 46.4%

We saw wind shifting in the coal industry with KOL adding over 46% so far this year (as of June 29, 2016). Investors should note that coal was out of investors’ favor for long due to the growing popularity of the alternative energy space and soft global industry fundamentals. However, renewed optimism in the oil patch in Q2 acted as a catalyst to the entire energy sector, brightening up even this coal equities ETF (read: Coal ETF on the Mend: Will the Momentum Last?).

DB German Bund Futures ETN BUNL – Up 41.5%

This is yet another beneficiary of risk-off sentiments sparked off by Brexit-induced sell-offs. Also, the return of deflationary threats kept European equities edgy from the start of the year while pushing up the safe bid German bonds. In fact, the ECB’s negative interest rate policy also dragged down German yields into the negative territory several times in 1H16, showering gains on BUNL.


Barclays Inverse U.S. Treasury Aggregate ETN TAPRDown 49.7%

Thanks to a dovish Fed, bets on a faster rate hike in the U.S. were off the table for most of 1H. Also, with global growth falling prey to Brexit, Fed rate hike possibilities in the near future seem non-existent at the current level. This explains the latest move in the inverse U.S. Treasury ETN.  

BioShares Biotechnology Clinical Trials Fund BBC – Down 37.6%

Shift of investors’ preference from the high beta space like biotech hit related funds hard in 1H16. Further, sector specific issues including increased regulatory scrutiny over high drug prices, political uncertainty surrounding healthcare reform especially in the face of the November election and deceleration in earnings growth compounded the woes. Among other biotech underperformers, ALPS Medical Breakthroughs ETF SBIO, PowerShares Dynamic Biotech & Genome ETF PBE and iShares Nasdaq Biotechnology IBB lost about 28%, 27% and 24%, respectively.

WisdomTree Japan Hedged Financials Fund DXJF – Down 36%

At its January-end meeting, BoJ set its key interest rate at negative 0.1% to boost inflation and economic growth. However, the introduction of negative interest rates weighed on the financial sector as these stocks perform favorably in a rising rate environment. Also, a soaring yen on safety bid and a soggy U.S. dollar due to moderation in domestic growth left no scope for this currency-hedged Japanese financial ETF (read: Top and Flop Country ETFs of Q1).

Guggenheim Solar ETF (TAN - Free Report) – Down 32.6%

Solar stocks are victims of the general misconception that oil price and solar market fundamentals are directly related to each other. Further, weak earnings from a few industry bellwethers weighed on solar ETFs (read: Solar ETFs Lose Their Shine on Weak Earnings).

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