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5 ETF Areas Investors Keep Away From

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The year 2018 has been all about an improving U.S. economy, slowdown in other developed economies, call for protectionism by President Trump, a hawkish Fed, policy tightening at a few other central banks as well as emerging market pain with Turkey being at the center point of crisis.

Recently, stressed ties with the United States and its President’s authoritarian attitude dealt a heavy blow to Turkish currency and stocks. The crisis was so acute that global stocks bore the brunt (read: Profit From Turkish Turmoil With These Global Inverse ETFs).

Against this backdrop, while some investing areas stood out, some fell flat. Let’s see which ETF areas could not make it to investors’ good books in the recent months.

Technology

FANGs seem to be falling out of favor. Many analysts believe that overvaluation is a concern for these stocks.Bank of America Merrill Lynch analysts raised warnings ahead of FAANG investing and asked investors to sell the sector “on signs [that] inflows have reached bubble territory.” In fact, Facebook saw “the biggest one-day wipeout in value terms in U.S. stock market history” last month after reporting earnings (read: Is There a Bubble in FAANG? Buy These Tech ETFs).

Probably this is why Technology Select Sector SPDR ETF (XLK - Free Report) has gained only $14.8 million in assets in the past two months (as of Aug 17, 2018) and once-hot Invesco NASDAQ Internet ETF (PNQI - Free Report) amassed no more than $14.1 million.

Financials

Financial Select Sector SPDR Fund (XLF - Free Report) fell out of investors’ favor, having lost about $1.62 billion in assets in the past two months. Flattening of the yield curve could be a reason for this. After all, within the financial markets, investors took their hands off of both risky and safe havens, “with outflows from both stocks and bonds and Treasuries losing the most since December 2016,” per an article published on CNBC. Com.

Europe

Investors maintained the course of exiting European stocks, for the 23rd week, with outflows of $2.9 billion. Vanguard FTSE Europe ETF (VGK - Free Report) lost about $332.7 million in assets in the past two months. Concerns like the looming Brexit, political uncertainty in Italy, crisis in Turkey and higher chances of default and otherwise slowing Euro zone economy plagued the funds (read: ETF Asset Report of Q2).

Emerging Markets

The recent souring of relationship between the United States and Turkey and the consequent plunge in lira appears to be rattling global markets more than what was initially feared. The emerging market bloc has been majorly at the receiving end.  This alongwith the Fed policy tightening and the resultant rise in the greenback led iShares MSCI Emerging Markets ETF EEM) shed about $2.87 billion (read: ETFs That Are Hardly Hurt by the Turkey Turmoil).

Gold

A surging greenback went against the commodity investing, including gold.The prospects of faster-than-expected rate hikes by the Fed caused SPDR Gold Trust (GLD - Free Report) to lose about $2.18 billion over the past two months (as of Aug 17, 2018).

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