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The month of May has been all about trade war fears, which renewed threats of global growth slowdown. It all started with the Trump administration lifting tariffs on $200 billion worth of Chinese goods from 10% to 25% on May 10 and China announcing a retaliatory move — a tariff hike on $60 billion worth of American goods to 25%, starting Jun 1. President Donald Trump is also considering additional tariffs on an incremental $325 billion of Chinese imports (read: Full-Blown Trade Spat: 5 Most-Vulnerable Sector ETFs & Stocks).
Additionally, Trump has banned Chinese firm Huawei Technologies and 26 of its affiliates from doing business with American companies effective May 17, though it provided a 90-day exemption. To hit back, China is considering restricting rare-earth exports to the United States, per media reports (read: Intensifying Trade Woes Trigger Rally in Treasury ETFs).
Understandably, the markets are volatile. The 10-year U.S. treasury yield is trading below that of the one-month, two-month, three-month, six-month and one-year for the last four days (as of May 29, 2019) (read: Recession Fear Lurking: ETFs & Stocks to Play).
The S&P 500 (down 5.5%), the Dow Jones (down 4.7%) and the Nasdaq (down 6%) were in red in the past month (as of May 29, 2019). Stocks slumped to a three-month low at the end of the month.
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) — Up 16.2%
The S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The note charges 89 bps in fees.
AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) — Up 12.8%
The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated more than other securities and holding those securities until they underperform. The fund charges 99 bps in fees.
The underlying Corn Futures index looks to reflect the daily changes of a weighted average of the closing prices for three futures contracts for corn that are traded on the CBOT.
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) ) — Down 19.6%
The S&P downgraded Halliburton (HAL - Free Report) and Schlumberger (SLB - Free Report) in late May. The news dealt a blow to oil service stocks. "Oilfield services companies will no longer be able to generate the high operating margins they did in 2014," S&P analyst Carin Dehne-Kiley said in the note.
Also, Baker Hughes’ data for the week ended May 24, showed that rig count has declined for seven weeks in a row. Market watchers are of the view that “shale producers are cutting back in a bid to conserve capital.”
Global X MSCI China Communication Services ETF ) — Down 18.4%
This China-centric fund fell prey to trade war tensions. While many China-oriented stocks and ETFs lost massively in the month, the fund CHIC led the way.
U.S. semiconductor stocks have considerable revenue exposure to China. So, escalating trade tensions weighed on this semiconductor fund to a large extent (read: Will Semiconductor ETFs Survive the Huawei Ban?).
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Top and Flop ETFs of May
The month of May has been all about trade war fears, which renewed threats of global growth slowdown. It all started with the Trump administration lifting tariffs on $200 billion worth of Chinese goods from 10% to 25% on May 10 and China announcing a retaliatory move — a tariff hike on $60 billion worth of American goods to 25%, starting Jun 1. President Donald Trump is also considering additional tariffs on an incremental $325 billion of Chinese imports (read: Full-Blown Trade Spat: 5 Most-Vulnerable Sector ETFs & Stocks).
Additionally, Trump has banned Chinese firm Huawei Technologies and 26 of its affiliates from doing business with American companies effective May 17, though it provided a 90-day exemption. To hit back, China is considering restricting rare-earth exports to the United States, per media reports (read: Intensifying Trade Woes Trigger Rally in Treasury ETFs).
Understandably, the markets are volatile. The 10-year U.S. treasury yield is trading below that of the one-month, two-month, three-month, six-month and one-year for the last four days (as of May 29, 2019) (read: Recession Fear Lurking: ETFs & Stocks to Play).
The S&P 500 (down 5.5%), the Dow Jones (down 4.7%) and the Nasdaq (down 6%) were in red in the past month (as of May 29, 2019). Stocks slumped to a three-month low at the end of the month.
Against this backdrop, let’s take a look at some of the best-and-worst-performing ETF areas in the month of May (read: May ETF Asset Report: Quality U.S. Equities Win).
Top ETFs
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) — Up 16.2%
The S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The note charges 89 bps in fees.
AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) — Up 12.8%
The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated more than other securities and holding those securities until they underperform. The fund charges 99 bps in fees.
Teucrium Corn Fund (CORN - Free Report) — Up 10.0%
The underlying Corn Futures index looks to reflect the daily changes of a weighted average of the closing prices for three futures contracts for corn that are traded on the CBOT.
Corn prices soared to a three-year high on inclement weather conditions. There are reports that US producers are suspending corn planting following a record wet spell across the country, while forecasts for more rains linger (read: 4 Agricultural Commodity ETFs Surging Double Digits in May).
Flop ETFs
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) ) — Down 19.6%
The S&P downgraded Halliburton (HAL - Free Report) and Schlumberger (SLB - Free Report) in late May. The news dealt a blow to oil service stocks. "Oilfield services companies will no longer be able to generate the high operating margins they did in 2014," S&P analyst Carin Dehne-Kiley said in the note.
Also, Baker Hughes’ data for the week ended May 24, showed that rig count has declined for seven weeks in a row. Market watchers are of the view that “shale producers are cutting back in a bid to conserve capital.”
Global X MSCI China Communication Services ETF ) — Down 18.4%
This China-centric fund fell prey to trade war tensions. While many China-oriented stocks and ETFs lost massively in the month, the fund CHIC led the way.
Invesco Dynamic Semiconductors ETF (PSI - Free Report) ) — Down 16.4%
U.S. semiconductor stocks have considerable revenue exposure to China. So, escalating trade tensions weighed on this semiconductor fund to a large extent (read: Will Semiconductor ETFs Survive the Huawei Ban?).
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 >>