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4 Worst Performing Sector ETFs of September

After a turbulent August, there was an economic lull in September, apart from a dovish Fed holding back a rate hike again. While this decision against a lift-off could be viewed from a positive angle as stocks could soar on access to cheap money inflows for a few more days, this accommodative decision sparked off global growth worries and was actually perceived as a negative.

In any case, global indices including the U.S. endured the worst quarter in four years with September offering flat-to-minute gains to the key U.S. indices. Several sector ETFs were in deep red in the month with streaks of green for a few. While awful trading activities in sector ETFs like energy and materials did not surprise us as the duo kept the ball rolling southward for long, a few came across as surprise losers.

In such a scenario, investors must be interest in knowing the sector ETFs that gave investors a rude shock in September. For them we detail four sector ETFs below:

Healthcare - PDR S&P Pharmaceuticals ETF (XPH) (down 22.3%)

The month of September can easily be remembered for the tumult in the healthcare sector, instigated mainly by the biotech meltdown. A single tweet by presidential candidate Hillary Clinton over pricing on life-saving drugs caused this entire turmoil.

Questions over biotech pricing following a 5,455% price hike (in about two months) by a privately held biotech company Turing Pharmaceuticals for a drug called Daraprim and Valeant Pharmaceuticals International Inc. 's ( VRX ) 525% and 212% price hikes for two heart drugs marred the safe haven charm of healthcare. While these issues crushed the overall biotech and healthcare space, this pharmaceutical ETF lost the most.

Energy - First Trust ISE-Revere Natural Gas ETF (FCG) (down 21.9%)

Now who can forget energy? The rout in oil and gas prices has been hammering energy stocks for long. Poor demand and a huge inventory addition went against this natural gas-related ETF. There is also a buzz that this winter is likely to be warmer due to El Niño and natural gas thus will lose its seasonal tailwind (read: Inside the Crash in the Natural Gas Equity ETFs ).

As almost 50% of Americans use natural gas for heating purposes, the related investing instruments normally jump ahead of winter. But things are likely to be cool this year. Probably this is why FCG lost the most (about 22%) in the energy pack.

Material - SPDR S&P Metals & Mining ETF ( XME ) (down 19.7%)

The metal and mining industry has been a dreadful area as commodities were battered by China-related worries (one of the major consumers of metals in the world) and the strength in the greenback. Capex cuts and withdrawn projects hit hard stocks related to this area. Slumping activities led this material ETF to lose about 19.7% in September and tagged the worst performer in the material equities ETF batch (read: 6 ETFs to Watch in September ).

Industrials - SPDR S&P Aerospace & Defense ETF (XAR) (down 7.8%)

The Aerospace & Defense sector may be in fairly good shape on a recovering U.S. economy, higher demand for fleet from abroad and commercial sales. But the space faltered in September on a budget battle.

The Pentagon might have a hard time in 2016 if Congress fails to cut the deal on the federal budget in the next few months. As per analysts, big weapon and the modernization program might be ill fated. Quite expectedly, this budget dilemma played foul on this otherwise buoyant aerospace and defense fund which lost 7.8% in the industrials equities ETF space (read: The Complete Guide to Aerospace & Defense ETFs ).

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SPDR-SP PHARMA (XPH): ETF Research Reports

FT-ISE R NAT GA (FCG): ETF Research Reports

SPDR-SP MET&MIN (XME): ETF Research Reports

SPDR-SP AER&DEF (XAR): ETF Research Reports

VALEANT PHARMA (VRX): Free Stock Analysis Report

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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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