Top & Flop ETFs of November
November was kind to the stock market with major bourses logging the best monthly gain since June. The S&P jumped 3.4%, the Dow climbed 3.7% and the Nasdaq gained 4.5%. The rally was mainly fueled by optimism around the U.S.-China trade deal and better-than-expected corporate earnings (read: 5 ETFs That Deserve Special Thanks in 2019).
The fixed-income world, which saw astounding strength due to trade issues, lost all its sheen with risk-on sentiments and rise in yields. The bullish backdrop also diminished the safe haven appeal, pushing precious metals down, in particular gold. The yellow metal saw its worst month since 2016. Overall, commodities had a mixed month.
Many corners of the market saw smooth trading while a few lagged. Below we have highlighted ETFs from the best and worst zones of November.
The biotech space of the broad healthcare sector outperformed others in November, courtesy of a series of positive news including study results, regulatory backdrop and deal activities. Additionally, uncertainty over trade lent a boost to the sector, given its non-cyclical nature, which in turn, provides a cushion to its portfolio. While most of the biotech ETFs surged, Virtus LifeSci Biotech Clinical Trials ETF BBC topped the list, up nearly 17% in the month.
This fund has a novel approach to biotechnology investing with exposure to companies that are in the clinical trial stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index. BBC has amassed $29 million in its asset base and charges 79 bps in fees per year from investors. It trades in light average daily volume of around 4,000 shares and holds 96 securities in its basket. The product carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Biotech Tops in November: Best ETFs & Stocks).
Pakistan ETF was especially powered by the positive outcome from the International Monetary Fund's quarterly review of the economy, following the government’s step to stabilize the economy. Additionally, the MSCI's decision to keep the country classified as an emerging market added to the strength. Global X MSCI Pakistan ETF PAK has gained 14.7%. It provides investors access to the 31 largest, most-liquid companies in Pakistan by tracking the MSCI All Pakistan Select 25/50 Index. It has a lower level of $48.9 million in AUM and charges 87 bps in fees and expenses. Additionally, it trades in lower volumes of about 69,000 shares and has a Zacks ETF Rank of #4 (Sell) with a Medium risk outlook.
Coffee prices rallied on tightening supply concerns and rising global demand. In particular, slow harvests in Latin America led to supply crunch. As a result, iPath Series B Bloomberg Coffee Subindex Total Return ETN JO spiked 11.4% last month. It tracks the Bloomberg Coffee Subindex Total Return, which reflects the returns that are potentially available through unleveraged investment in futures contracts on coffee. The ETN has AUM of $67.0 million and average daily volume of 74,000 shares. It charges 45 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Top & Flop ETFs of Last Week).
Nickel is hovering near a four-month low and saw its steepest monthly loss in eight years due to lower demand from the stainless steel industry, nickel’s main consumer.. Also, the impact of an Indonesian ore export ban, which led the metal higher to start Q3, has waned. As such, iPath Bloomberg Nickel Subindex Total Return ETN JJN declined 19.5% last month. The note tracks the Bloomberg Nickel Subindex Total Return, which provides returns through one futures contract on nickel. The product is unpopular and illiquid with AUM of just $7.3 million and average daily volume of around 1,000 shares. Expense ratio came in at 0.75%. JJN has a Zacks ETF Rank #3 with a High risk outlook.
Natural gas price dropped on record production levels and forecasts for milder-than-usual December weather. Notably, natural gas saw its biggest November drop since 2001. iPath Bloomberg Natural Gas Subindex Total Return ETN GAZ delivers returns through an unleveraged investment in the natural gas futures contract plus the rate of interest on specified T-Bills. It follows the Bloomberg Natural Gas Subindex Total Return Index. The product is unpopular and illiquid with AUM of $3.4 million and average daily volume of 2,000 shares. Expense ratio comes in at 0.45%. GAZ was down about 17%.
The hype regarding marijuana stocks has faded with many of them losing two-third or more of their value in a few months. In particular, a slew of disappointing earnings and U.S. Food and Drug Administration’s warning that cannabidiol can cause liver injury and other damage has taken away the sheen from cannabis-related stocks. While all the marijuana ETFs declined, Global X Cannabis ETF POTX lost the most, down 15.3%. This ETF, which seeks to invest in companies across the cannabis industry, tracks the Cannabis Index and holds 26 stocks in its basket. It has accumulated $4.6 million in its asset base within three months of debut and trades in average daily volume of 14,000 shares. Expense ratio comes in at 0.50% (read: Cannabis ETFs in Focus on Thanksgiving Weekend).
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iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO): ETF Research Reports
Global X MSCI Pakistan ETF (PAK): ETF Research Reports
iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (GAZ): ETF Research Reports
iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN): ETF Research Reports
Virtus LifeSci Biotech Clinical Trials ETF (BBC): ETF Research Reports
Global X Cannabis ETF (POTX): ETF Research Reports
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