As we proceed through the final quarter of the year, the time has come to evaluate what was hot and what not this year. After all, the year can be remembered for some negative events including a brutal sell-off in January thanks mainly to China-led woes and sharply falling oil prices, a Brexit-driven crash in June, persistent global growth worries and heightened volatility due to the presidential election in November.
Neither the S&P 500 (INX) nor the Dow Jones Industrial Average (DJI) or the NASDAQ Composite (IXIC) has returned more than 5% so far (as of October 26, 2016), having gained 4.7%, 4.4% and 4.9%, respectively.
The uptick reflects recent buoyancy in the tech space, better corporate earnings and a relief rally in the market at the start of Q3.
In such a situation, a look at the few worst-performing ETFs in the year-to-date frame makes more sense.
Some of the ETFs have shed more than 50% so far this year and are creepy enough to spook investors prior to Halloween (read: 4 ETFs & Stocks to Treat You on Halloween and After).
iPath S&P 500 VIX Short-Term Futures ETN (VXX) – Down 60.9%
Though the year has been pretty volatile, volatility related exchange-traded products ended up deep in the red. Other products like VelocityShares Daily Long VIX Short-Term ETN (VIIX) and ProShares VIX Short-Term Futures ETF (VIXY) have lost about 60.7% and 60.7%, respectively, this year (as of October 26, 2016).
Barclays Inverse U.S. Treasury Aggregate ETN (TAPR) – Down 39.5%
As the Fed has remained dovish in 2016 after enacting a liftoff in December 2015, bond yields have been extremely low for the most part of the year. Especially, the Brexit referendum dampened risk-on sentiments across the globe in mid-2016, inspired risk-off trade and dragged down U.S. Treasury bond yields. All these went against the product which is an inverse U.S. Treasury ETN (read: Top and Flop ETFs of 1H).
VanEck Vectors Solar Energy ETF (KWT) – Down 35.1%
Solar stocks are victims of the general misconception that oil price and solar market fundamentals are directly related to each other. Further, weak earnings from a few industry bellwethers weighed on solar ETFs. Guggenheim Solar ETF (TAN) is down over 35% so far this year (as of October 26, 2016) (read: Solar ETFs Lose Their Shine on Weak Earnings).
BioShares Biotechnology Clinical Trials Fund (BBC) – Down 33.3%
Biotech stocks and ETFs have been battered this year as investors lost appetite for risk that cursed this high-growth, high-beta segment. Also, increased regulatory scrutiny over high drug prices and political uncertainty surrounding healthcare reform in this election year have also acted as deterrents.
Biotech ETFs like ALPS Medical Breakthroughs ETF (SBIO) andPowerShares Dynamic Biotechnology and Genome (PBE) have also shed 27.7% and 24.2%, respectively (as of October 26, 2016) (read: ETFs to Play as Biotech Juggles Election & Earnings).
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