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3 ETF Losers of 2017 That Can Rebound in Q1

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The year 2017 was great for the market with the S&P 500-based ETF SPDR S&P 500 ETFSPY , SPDR Dow Jones Industrial Average ETFDIA and PowerShares QQQ ETFQQQ adding about 18.9%, 25.1% and 31.1%, respectively (as of Dec 28, 2017).

But not all ETFs and asset classes were winners in the year. There were some corners that lost in 2017 but have chances of rebounding in the first quarter of 2018.

Energy

Oil prices made a sharp comeback to close out the year 2017, though the whole year was not so smooth. Oil hovered around the highest level in more than two years after a pipeline explosion limited output in OPEC member Libya.

West Texas Intermediate futures changed little in New York, having jumped over $60 a barrel on Dec 26 for the first time since 2015 . United States OilUSO is up 4.6% so far this year (as of Dec 28, 2017).

But the constant oil price volatility hurt energy ETFs like Guggenheim S&P 500 Equal Weight Energy ETFRYE (down 9.6%) and Energy Select Sector SPDR FundXLE (down 4.9%). But both funds gained considerably in the last one month. XLE went up 6.5% while RYE gained about 7.8% during this timeframe (as of Dec 28, 2017) (read: Energy ETFs Head to Head: XLE vs. IYE ).

Investors should also note that the OPEC output cut deal too should give a boost to oil prices and help energy ETFs. Plus, natural gas ETFs enjoy a seasonal benefit in the first quarter as extreme cold boosts demand for heating. This should keep United States Natural GasUNG and United States 12 Month Natural GasUNL on an upward trajectory. UNG gained about 10.7% in the last five days (as of Dec 28, 2017).

Coffee

Coffee prices were down about 20.6% in 2017 (as of Dec 28, 2017). But lately coffee prices are staging an uptrend. In the last five days (as of Dec 28, 2017), iPath Bloomberg Coffee SubTR ETNJO added about 2.9%. Rabobank expects a revival in arabica coffee prices. The agency sees chances of a return to a world output deficit in 2019-20 . The bank sees global coffee production surplus of 4.1m bags, as expected for 2018-19, as "relatively small."

Telecom

With tax reform seeing the light of the day, hopes are high that other Trump-induced agenda will also pass in the coming days. In a move to bolster deregulation in the telecom space, Federal Communications Commission (FCC) repealed "net neutrality" in December, "in a 3-2 vote along party lines."

The rules so far have prevented high-speed Internet service providers (I.S.P), from stopping or slowing down the delivery of websites. They also inhibited companies from charging customers additional fees for high-quality streaming and other services , as per the source.

Abandoning of the discriminatory policy in turn results in lower investments in the high-speed broadband sector. Though prolonged legal and legislative battles are expected in 2018 on this, telecom funds like Vanguard Telecommunication Services ETFVOX may benefit (read: ETF Winners & Losers if FCC Repeals Net Neutrality ).

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NASDAQ-100 SHRS (QQQ): ETF Research Reports

SPDR-SP 500 TR (SPY): ETF Research Reports

US-OIL FUND LP (USO): ETF Research Reports

SPDR-EGY SELS (XLE): ETF Research Reports

VIPERS-TELE SVC (VOX): ETF Research Reports

US-12M NATL GAS (UNL): ETF Research Reports

IPATH-BB COFE (JO): ETF Research Reports

GUGG-SP5 EW EGY (RYE): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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