By no means has 2013 been a bad year for some of the largest
The Energy Select Sector SPDR (NYSE:
) and the Vanguard Energy ETF (NYSE:
) are both up more than nine percent year-to-date and both are
flirting with their highest levels since before the financial
crisis when oil prices were $40 to $50 per barrel higher than
Those performances are solid when considering shares of Exxon
) and Chevron (NYSE:
), the two largest U.S. oil companies, are up an average of just
5.5 percent this year. Still, those numbers are fantastic when
compared to some of the state-controlled oil giants that dominate
an array of emerging markets ETFs.
Down 20.2 percent this year, Petrobras (NYSE:
) remains one of the more egregious offenders among state-run oil
firms, but this
nothing new for the Brazilian oil giant
. More importantly, Petrobras is far from being the only
state-controlled oil company that is wreaking havoc on multiple
ETFs. Just look at the following group.
Global X China Energy ETF (NYSE:
) The primary drivers of performance in the Global X China Energy
ETF are China's massive state-run oil companies. That list, in
order of descending weight within CHIE, is Cnooc (NYSE:
), PetroChina (NYSE:
) and Sinopec (NYSE:
). That cadre of stocks is performing well Monday, but do not let
one day of strong performance be deceiving.
The average loss among those three stocks in just the past
month is north of 14 percent and Goldman Sachs recently pared its
price targets on PetroChina and Sinopec, China's two largest oil
companies. Those three stocks combine for about 28.6 percent of
CHIE's weight, so it is not surprising that the small ETF is down
12 percent this year.
Global X FTSE Colombia 20 ETF (NYSE:
) The Global X FTSE Colombia 20 ETF has not been immune to the
savage repudiation faced by the major single-country
Latin America ETFs this year
. Eroding commodities demand has been a primary culprit behind
the stunning drops in these ETFs in 2013, which includes a 15.1
percent tumble for GXG.
Quantifying GXG's woes is easy. The largest Colombia ETF
to Ecopetrol (NYSE:
), Colombia's state-controlled oil company. There was a time when
Ecopetrol was the shining star among Latin American state-run oil
companies. During that time, investors that opted for Petrobras
over Ecopetrol wound up kicking themselves.
That time is not now because shares of Ecopetrol have plunged
almost 32 percent this year, a decline that almost makes
Petrobras look good by comparison.
EGShares Energy GEMS ETF (NYSE:
) As an ETF devoted to emerging markets energy stocks, the
EGShares Energy GEMS ETF can be a great...when everything is
perfect in the world. "Perfect" meaning investors are bidding up
both emerging markets and energy fare.
Since this ETF tracks developing world energy stocks, it is
inevitably heavy on government-run enterprises. Russia and China
combine for 54 percent of the ETF's weight and nearly all of the
ETF' top-10 holdings are state-controlled firms.
The woes of China's oil companies have already been detailed
here, so look
at a chart of a major Russia ETF
for further details on why OGEM has struggled. Russia ETFs are
energy sector-heavy. Combine that with sliding Chinese oil names
and it is not surprising to learn OGEM is down 17.1 percent this
For more on ETFs, click
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