ETF Winners & Losers of Last Week

Sweta Killa

Wall Street saw wild swings last week buoyed by U.S.-China trade conflicts, weak global economic data, low inflation, decline in yields and political unrest in Hong Kong. In fact, U.S. stocks saw the biggest one-day drop of the year on Aug 13 as 10-year Treasury yields broke below 2-year yields, resulting in an inverted curve for the first time since June 2007 and signaling that the world’s biggest economy could be heading for a recession.

However, delay in tariff, higher hopes of near-term support from major central banks, stronger-than-expected retail sales and better earnings from semiconductor firms led to a rally to end the week. Markets are anticipating that the European Central Bank will cut rates in September and resume a bond-buying program, according to Reuters. China is also planning to roll out a domestic stimulus package to support disposable income, while Mexico is the latest country to cut interest rates last week (read: Make the Most of Positive Trade News With These Sector ETFs).

In spite of the two-day rally, Wall Street still logged its third consecutive weekly loss. Given this, we have highlighted last week’s best and worst performing ETFs:

Winners

PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF ZROZ


Treasury ETFs gained as yields fell sharply on a flight to safety. Notably, the products tracking the long end of the yield curve provide a safe haven and thus ZROZ, which follows the BofA Merrill Lynch Long Treasury Principal STRIPS Index, gained 7.1% last week. It holds 20 securities in its basket with effective maturity and effective duration being 27.35 years each. This fund has $337.6 million in AUM and a light average daily volume of 31,000 shares. It charges 15 bps in annual fees and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Play the Bond Bull Market With These ETFs).

Breakwave Dry Bulk Shipping ETF BDRY

Shipping stocks sailed smoothly last week as Typhoon Lekima disrupted shipping in the East China Sea leading to a rise in the dry bulk freight costs. As a result, BDRY rose 6.5% last week. This is an actively managed ETF that seeks to provide exposure to daily changes in the price of dry bulk freight futures by tracking the performance of a portfolio consisting of a three-month strip of the nearest calendar quarter of futures contracts on specified indexes that measure rates for shipping dry bulk freight. The fund has accumulated about $1.9 million in AUM. It trades in a paltry volume of about 8,000 shares per day on average and charges a higher annual fee of 1.85% (see: all the Industrial ETFs here).

Invesco China Technology ETF CQQQ

This ETF, which offers exposure to the technology segment of the Chinese market, gained 5.1% last week. The rally was driven by bargain hunting and strong prospects in the Chinese technology sector. Notably, China has emerged as a world technology superpower, second only to the United States. The ETF follows the AlphaShares China Technology Index, holding 90 stocks in the basket. It manages an asset base of $479.5 million while trading in good volume of around 188,000 shares a day. Expense ratio comes in at 0.70%. CQQQ carries a Zacks ETF Rank #2 (Buy) with a High risk outlook.

Losers

Global X MSCI Argentina ETF ARGT

Argentina’s stock market collapsed following the unexpected outcome of the primary election for the presidential candidate. The S&P Merval Index plummeted 48% on Aug 12, representing the second-largest single-day drop in any global stock market since 1950, according to Bloomberg. The historic decline has sparked fears that South America’s second-largest country is on track for another default. As a result, ARGT, which invests in the largest and most-liquid securities with exposure to Argentina, shed 24.8% last week. It tracks the MSCI All Argentina 25/50 Index and holds 28 stocks in its basket. The fund has managed $75.8 million in its asset base and trades in average daily trading volume of nearly 106,000 shares. It charges 59 bps in fees and expenses and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Country ETFs to Watch as Trade Rout Continues).

Arrow Dogs of the World ETF DOGS

This ETF follows the AI Dogs of the World Index (ex USA), which selects securities based on a contrarian approach that looks for value in securities in which a return reversal is expected during a rolling 12-month period for markets that previously experienced negative relative performance. It holds 95 stocks in its basket and charges a higher fee of 1.64%. The product has accumulated $4.1 million in its asset base while trades in a light average daily volume of under 1,000 shares. It lost 16.5% last week.

ETFMG Alternative Harvest ETF MJ

Cannabis stocks were weighed down by bouts of disappointing results from some major industry players. MJ is the world’s largest ETF to target the global cannabis industry and tracks the Prime Alternative Harvest Index, which is designed to measure the performance of companies within the cannabis ecosystem, benefiting from the global medicinal and recreational cannabis legalization initiatives. The fund holds 40 securities in its basket with Canadian firms making up more than half of the portfolio while American firms comprise 26.8%. The ETF has AUM of $941.3 million and trades in a robust volume of around 603,000 shares. It charges 75 basis points in annual fees (read: Cannabis Expert Tim Seymour's Favorite Pot Stocks and ETF).

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