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September is traditionally the worst month of the year for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2017 has revealed that September ended up offering positive returns in 30 years and negative returns in 38 years, with an average return of a negative 0.64%, which is worse than any other month.
However, this September was moderate for the equity market. Though trade tensions flared up between the United States and China with both imposing additional tariffs on each other, market did not react that badly. The Fed enacted the third-rate hike of 2018. Overall, rising rates and an oil price jump boosted Dow Jones ETF SPDR Dow Jones Industrial Average ETF (DIA - Free Report) (up 1.4% in the past month). The S&P 500-based ETF (SPY - Free Report) added 0.2% in the month while the tech-heavy Nasdaq-100 ETF (QQQ - Free Report) lost about 0.3%.
Against this backdrop, we highlight below the winning and losing ETFs of September.
Wining ETFs
ETFMG Alternative Harvest ETF (MJ - Free Report) – Up 16.57% in the past one month (as of Sep 28, 2018)
This cannabis-related ETF went through the roof in September, courtesy of growing legalization of the plant for recreational use. Canada’s legalization of recreational marijuana will start from Oct 17, 2018. The move made Canada the first G-7 country to legalize the drug for both medical and recreational purposes nationwide. Global beverage companies are taking huge interest in it to create a new cannabis-induced product line (read: Pot Stocks Are on a High: Play These Cannabis ETFs).
Turkey stocks were heavily sold off in August. The selloff in the lira, double-digit inflation, aftereffects of policy tightening in the United States, political woes, persistent concerns about economic stability and worsening diplomatic ties with the United States had dealt a heavy blow to Turkey stocks.
However, to shore up the currency, the Central Bank of Turkey raised its benchmark interest rate by 625 bps to 24% on Sep 13 2018, beating market expectations of a 425-bp hike. The move made borrowing costs reach the highest level since 2004 (read: Top Foreign ETFs of Q3).
The automotive industry, mainly involved in the manufacturing of catalytic converters for vehicles, is a big driver for palladium. So, a jump in new-car registrations in the European Union during July and August drove palladium prices, per analysts. Also, China’s focus on building domestic demand drove several metals, including palladium. Moreover, higher demand (which outstripped supplies) lent momentum to the metal (read: 4 Reasons Why Palladium ETF is Shining).
Losing ETFs
Columbia India Small Cap ETF – Down 19.63%
After a solid rally last year, India ETFs slowed down in 2018. The small-cap space bore the brunt, thanks to overvaluation concerns. Policy tightening by the Fed and the resultant rise in the greenback, the contagion of the selloffs in Turkey and Argentina and an upswing in oil prices went against India investing in recent times (read: Are India ETFs No More a Hot Investing Spot?).
iPath Bloomberg Lead Subindex Total Return ETN – Down 15.5%
The underlying Bloomberg Lead Subindex Total Return reflects returns that are potentially available through an unleveraged investment in the futures contracts on lead. The expected adverse impact of the US-China trade war and the fear of lower global growth have weighed on base metal demand.
iPath Bloomberg Cocoa SubTR ETN – Down 13.5%
Ample supplies, uncertainty about demand and a hugely-fluctuating futures market boosted cocoa prices.
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Top and Flop ETFs of September
September is traditionally the worst month of the year for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2017 has revealed that September ended up offering positive returns in 30 years and negative returns in 38 years, with an average return of a negative 0.64%, which is worse than any other month.
However, this September was moderate for the equity market. Though trade tensions flared up between the United States and China with both imposing additional tariffs on each other, market did not react that badly. The Fed enacted the third-rate hike of 2018. Overall, rising rates and an oil price jump boosted Dow Jones ETF SPDR Dow Jones Industrial Average ETF (DIA - Free Report) (up 1.4% in the past month). The S&P 500-based ETF (SPY - Free Report) added 0.2% in the month while the tech-heavy Nasdaq-100 ETF (QQQ - Free Report) lost about 0.3%.
Against this backdrop, we highlight below the winning and losing ETFs of September.
Wining ETFs
ETFMG Alternative Harvest ETF (MJ - Free Report) – Up 16.57% in the past one month (as of Sep 28, 2018)
This cannabis-related ETF went through the roof in September, courtesy of growing legalization of the plant for recreational use. Canada’s legalization of recreational marijuana will start from Oct 17, 2018. The move made Canada the first G-7 country to legalize the drug for both medical and recreational purposes nationwide. Global beverage companies are taking huge interest in it to create a new cannabis-induced product line (read: Pot Stocks Are on a High: Play These Cannabis ETFs).
iShares MSCI Turkey ETF (TUR - Free Report) – Up 14.91%
Turkey stocks were heavily sold off in August. The selloff in the lira, double-digit inflation, aftereffects of policy tightening in the United States, political woes, persistent concerns about economic stability and worsening diplomatic ties with the United States had dealt a heavy blow to Turkey stocks.
However, to shore up the currency, the Central Bank of Turkey raised its benchmark interest rate by 625 bps to 24% on Sep 13 2018, beating market expectations of a 425-bp hike. The move made borrowing costs reach the highest level since 2004 (read: Top Foreign ETFs of Q3).
ETFS Palladium Trust (PALL - Free Report) – Up 11.73%
The automotive industry, mainly involved in the manufacturing of catalytic converters for vehicles, is a big driver for palladium. So, a jump in new-car registrations in the European Union during July and August drove palladium prices, per analysts. Also, China’s focus on building domestic demand drove several metals, including palladium. Moreover, higher demand (which outstripped supplies) lent momentum to the metal (read: 4 Reasons Why Palladium ETF is Shining).
Losing ETFs
Columbia India Small Cap ETF – Down 19.63%
After a solid rally last year, India ETFs slowed down in 2018. The small-cap space bore the brunt, thanks to overvaluation concerns. Policy tightening by the Fed and the resultant rise in the greenback, the contagion of the selloffs in Turkey and Argentina and an upswing in oil prices went against India investing in recent times (read: Are India ETFs No More a Hot Investing Spot?).
iPath Bloomberg Lead Subindex Total Return ETN – Down 15.5%
The underlying Bloomberg Lead Subindex Total Return reflects returns that are potentially available through an unleveraged investment in the futures contracts on lead. The expected adverse impact of the US-China trade war and the fear of lower global growth have weighed on base metal demand.
iPath Bloomberg Cocoa SubTR ETN – Down 13.5%
Ample supplies, uncertainty about demand and a hugely-fluctuating futures market boosted cocoa prices.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>