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Can ETF Goblins of October Turn into Angels in November?

October end screams for attention to all things spooky and the stock market is no exception. Agreed, October was upbeat for the Wall Street with the S&P 500-based ETF SPY, Dow Jones Industrial Average-based ETF DIA and the Nasdaq-100 based ETF QQQ adding one-month returns of about 2.9%, 4.8% and 4.7%, respectively. Yet, the Halloween month left its impact on some ETFs and a look at these investment areas is called for.

No doubt, there were buoyancy in the tech space, better corporate earnings and higher chances of the passage of Trump’s tax reform proposal. But even then, there were areas that scared investors with returns in the red. After all, rising rate concerns and continued volatility in the oil patch were felt in the month.

In such a situation, a look at a few worst-performing ETFs in the month of October makes sense prior to Halloween so as to understand if these will be as creepy in November or can somehow turn around.

Volatility

As the broader market hit highs, volatility levels were at the bottom in October. VelocityShares 1x Long VSTOXX Futs ETN EVIX, which lost about 16%, follows the performance of a long position in a portfolio of VSTOXX futures designed to provide a long exposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EURO STOXX 50 Index.

Several other volatility-based ETFs like ProShares VIX Short-Term Futures VIXY, iPath S&P 500 VIX ST Futures ETN VXX and Rex VolMaxx Long VIX Weekly Futures Strategy ETF VMAX lost big in the last one month (as of Oct 27, 2017) (read: ETF Scorecard for September 2017).

If the Trump administration comes up with the tax reform, the market may continue its momentum and volatility would suffer. But if this doesn’t happen, overvaluation concerns are likely to give volatility-based products a thrust (read: Play These Inverse ETFs if Wall Street Loses Momentum).

Energy

Tensions in the energy sector are known to all by now. SPDR S&P Oil & Gas Equipment &Svcs ETF XES lost about 10.3% in the last one month. VanEck Vectors Oil Services ETF OIH and iShares US Oil Equipment & Services ETF IEZ also shed a lot.

However, at the end of the month, Brent crude jumped above $60 a barrel for the first time in more than two years. Talks of the OPEC’s output cut extension led to this gain. US Commodity Funds United States Brent Oil Fund BNO was up 4.3% in the last five days (as of Oct 27, 2017). US Commodity Funds United States Oil Fund USO too added about 3.8%. So, chances of a turnaround are likely in November.

 Precious Metal & Mining

As the greenback gained strength on rising rate prospects, metal prices started to feel the pressure. So did mining ETFs. SPDR Gold Shares GLD shed about 0.6% in the last one month. As a result, ALPS Sprott Junior Gold Miners ETF SGDJ and ETFMG Prime Junior Silver ETF SILJ lost about 6.9% and 7.6% in the last one month.

While some precious metals are in a tight spot, investors should note that investors are betting on industrial metals on upbeat global economic growth. Industrial metals, which have long been in stagnation, are now getting the love of hedge funds too. Reduction in output has finally adjusted excess supplies, leading to higher prices for industrial metals. PowerShares DB Base Metals ETF DBB can be on investors’ wish list. The fund gained 3.2% in the last one month. However, broad-based metal ETFs may decline ahead if the greenback gains (read: Why These Commodity ETFs Are on a Tear).

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GOLD (LONDON P (GLD): ETF Research Reports
 
US-OIL FUND LP (USO): ETF Research Reports
 
PRO-VIX ST FUT (VIXY): ETF Research Reports
 
IPATH-SP5 VX ST (VXX): ETF Research Reports
 
US BRENT OIL FD (BNO): ETF Research Reports
 
ISHARS-US OIL E (IEZ): ETF Research Reports
 
ISHARS-SLVR TR (SLV): ETF Research Reports
 
SPROTT-JR GLD M (SGDJ): ETF Research Reports
 
VANECK-OIL SVC (OIH): ETF Research Reports
 
PWRSH-DB B METL (DBB): ETF Research Reports
 
REX-L VIX WFS (VMAX): ETF Research Reports
 
SPDR-SP O&G EQP (XES): ETF Research Reports
 
VEL-1X L VS FTR (EVIX): ETF Research Reports
 
PF ISE-JS SC ME (SILJ): ETF Research Reports
 
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