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Top & Flop ETF Areas of Q2

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The second quarter of 2018 was all about trade tensions, the Fed’s and the ECB’s hawkish stances and OPEC’s decision to boost output marginally. The trio was strong enough to leave an impact on the global market.

So, it would be intriguing to find ETF areas which topped and the ones that flopped in the quarter. Notably, SPDR S&P 500 ETF (SPY - Free Report) , SPDR Dow Jones Industrial Average ETF (DIA - Free Report) and Invesco QQQ Trust (QQQ - Free Report) added about 5.4%, 2.8% and 10.4% in the quarter.

Top ETF Areas

Energy

There has been an oil price rally as evident from an 18.2% three-month rise in United States Oil (USO - Free Report) . And then, OPEC members signed a deal to boost output by a lower-than-expected margin (read: Winning and Losing Sectors ETFs Post OPEC Decision).

“People probably feared 1.5 million barrels a day.” But Saudi Arabia said the renewed deal will result in a nominal output rise of around 1 million barrels per day (bpd). This was a pleasant surprise for the space, sending oil higher and benefitting ETFs like Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) (up 31.3%), Invesco S&P SmallCap Energy ETF (PSCE - Free Report) (up 27.9%) and First Trust Nasdaq Oil & Gas ETF FTXN (up 28.3%) in the last three months.

REIT

REIT and Real Estates are known for high yield and perform well with economic growth. So, as the Fed turned hawkish in Q2, encouraged by solid U.S. growth momentum (especially when compared with other developed economies) and bond yields jumped, some REIT ETFs that offer benchmark-beating yields rallied.

These are Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report)  (yields 7.20% annually and up 15%), NuShares Short-Term REIT ETF NURE (yields 3.3% annually and up 14.5%), IQ US Real Estate Small Cap ETF (ROOF - Free Report) (yields 5.38% annually and up 14.2%) and Hartford Multifactor REIT ETF RORE (yields 3.51% and up 13.4%).

Internet

The technology sector seems to have passed a bad phase earlier in the year due to the Facebook debacle. A deluge of upbeat earnings results has boosted sentiments in the space in Q2. Though trade tensions occasionally posed threat to the space, plenty of emerging technologies and Trump’s tax cuts favored the space. SPDR S&P Internet ETF added about 17.7% in the last three months.

Flop ETF Areas

Brazil

Like all other emerging markets, Brazil investing fell prey to rising rate worries in the United States. The strengthening of the dollar weighed on emerging market currencies. Plus, a truckers’ strike in protest against rising oil prices paralyzed the economy. Franklin FTSE Brazil ETF FLBR (down 28%) and iShares MSCI Brazil Capped ETF (EWZ - Free Report) (down 27.4%) were among the key losers (read: Trump, Tariff & Geopolitics Lead May: 10 Top ETF Stories).

Turkey

The aftereffects of policy tightening in the United States caused sell-offs in the lira. Plus, double-digit inflation and political woes led Turkey ETF to a nine-year low in Q2. iShares MSCI Turkey ETF (TUR - Free Report) was off 27.5% in the quarter (read: Erdogan Victory Takes Turkish ETF to 9-Year Low).

Argentina

This is yet another emerging market country that bore the brunt of rising rate worries and a stronger dollar in the United States. Global X MSCI Argentina ETF (ARGT - Free Report) lost about 23.9% in Q2 (read: Should These 3 Emerging Country ETFs Fear Fed Rate Hikes?).

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