Wall Street ended higher last week primarily buoyed by positive developments in U.S.-China trade talks. The Dow Jones and the S&P 500 gained 0.9% and 0.6%, respectively, breaking a three-week losing streak.
The world’s two largest countries agreed to the first phase of a substantial trade deal wherein the United States suspended the tariff hike on $250 billion worth of Chinese goods slated to be effective next week and Beijing agreed to buy $40-$50 billion in U.S. farm products. The partial accord covers agriculture, currency, financial services and some aspects of intellectual property protections. The White House will also consider revoking its currency manipulation designation against China (read: Momentum ETFs in Focus on Trade Deal Optimism).
The move has instilled confidence over global economic growth, which has been hampered by the trade war. It marks a strong reversal in sentiment from early last week when the United States expanded the blacklist of a group of Chinese technology companies over alleged human rights violations.
The trade truce has also provided a boost to oil price, with U.S. crude posting a gain of 3.6% for the week, for the first time in three weeks.
Given this, we have highlighted last week’s best and worst-performing ETFs:
Invesco Shipping ETF (SEA - Free Report) – Up 6.6%
The trade deal and the resultant higher oil price will benefit shipping companies which transport bulk of oil and gas across the country and around the world. This ETF follows the Dow Jones Global Shipping Index, which measures the performance of high dividend-paying companies in the global shipping industry. It is home to 25 stocks with heavy concentration on the top firm. The fund has AUM of $47 million and charges 66 bps in annual fees. It trades in average daily volume of 26,000 shares.
iShares MSCI Global Metals & Mining Producers ETF (PICK - Free Report) – Up 4.7%
Trade deal though partial will boost global growth and in turn manufacturing and industrial demand. PICK, which offers exposure to global metals and mining stocks (excluding gold and silver), seems to have benefited the most from the rebound. It follows the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index, holding 197 stocks in its basket with heavy concentration on the top two firms. United Kingdom, Australia and United States are the top three countries with 26.1%, 20.2% and 10.2%, respectively. The product has amassed $205.5 million in its asset base while charges 39 bps in annual fees. It trades in volume of 141,000 shares per day on average.
S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Up 4.1%
A rise in oil price has pushed energy ETFs higher. This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of companies engaged in the oil and gas equipment and services industry. Holding 35 stocks in its basket, it is well spread across securities with none accounting for more than 5.3% of assets. The ETF charges 35 bps in annual fees and trades in solid volume of 1.4 million shares a day on average. The fund has amassed $133.8 million in its asset base and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Oil ETFs in Focus Amid Trade War Blows & Rising US Supply).
Global X Cannabis ETF (POTX - Free Report) – Down 14.3%
Pot ETFs were the major decliners last week on disappointing revenue outlooks from many of the leading players and concerns over profitability that sparked massive downgrades in ratings and target price by the analysts. While all the marijuana ETFs declined, POTX led the way higher. This ETF, which seeks to invest in companies across the cannabis industry, tracks the Cannabis Index and holds 25 stocks in its basket with none accounting for more than 9.24% of assets. It has accumulated $1.8 million in its asset base within one month of debut and trades in average daily volume of 6,000 shares. Expense ratio comes in at 0.50% (read: US Stocks' Worst Start to Q4 in Decade: ETF Winners, Losers).
ETRACS Alerian Natural Gas MLP Index ETN (MLPG - Free Report) – Down 5.8%
With the return of stock bulls, the appeal for high-yielding products has dampened pushing MLP ETFs lower. This ETN is designed to track an investment in the Alerian Natural Gas MLP Index, and pay a variable quarterly coupon linked to the cash distributions associated with the underlying MLP constituents, less investor fees. It charges 85 bps in annual fees and has managed $4.7 million in its asset base. The note trades in average daily volume of 1,000 shares.
ETFMG Prime Junior Silver ETF (SILJ - Free Report) – Down 4.7%
The risk-on trade environment has driven silver prices lower as the white metal is regarded as a store of wealth and an alternative investment to risky assets during economic and political uncertainty. SILJ provides direct exposure to the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index. It holds 32 stocks in its basket with higher concentration on the top four firms. Canadian firms take the lion’s share at 67.9% while the United States and Peru take the remainder. The fund has managed assets worth $97.3 million and trades in a good volume of about 294,000 shares a day. It charges 69 bps in annual fees (read: 4 Market-Beating Sector ETFs of the Third Quarter).
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