Best and Worst ETFs Halfway Through Q2

Midway through the second quarter of 2019, stocks across the globe have been on a volatile ride. While better-than-expected earnings, trade talks and signs of improving growth in many parts of the world have led the Wall Street to new highs, escalation in trade tensions between the United States and China raised global growth worries once again and triggered steep selloffs lately.

This is especially true given that Trump raised previously delayed tariffs on Chinese goods worth $200 billion effective May 10 midnight and then blacklisted Chinese firm Huawei Technologies and 26 of its affiliates, forbidding it from doing business with American companies effective May 17 (read: Will Semiconductor ETFs Survive the Huawei Ban?).

Given this, many corners of the market have seen rough trading while a few still stand tall. Below, we have highlighted ETFs from the best and worst zones at the halfway mark in Q2.

Best ETFs

Invesco KBW Property & Casualty Insurance ETF KBWP – Up 9.3%

The insurance corner of the broad financial market has been riding higher on a growing economy backed by a solid job market, growing wages and rising consumer confidence that is leading to higher demand for all types of insurance services. KBWP offers exposure to companies primarily engaged in U.S. property and casualty insurance activities. With AUM of $67.5 million, it holds 24 stocks in its basket with none making up for more than 9.1% of the assets. The fund charges 35 bps in fees per year and trades in average daily volume of 4,000 shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: ETFs From Top and Flop Zones to Start May).

Invesco Solar ETF TAN – Up 9%

Solar stocks have been on a tear thanks to rebound in global solar demand, California’s push to go solar, competitive pricing and the potential for Chinese subsidies. Higher oil prices are also contributing to the solar stock rally. TAN offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 22 stocks in the basket with heavy concentration on the top firm. American firms dominate the fund’s portfolio with nearly 52.3% share, followed by China (22.2%) and Spain (7.2%). The product has amassed $301.2 million in its asset base and charges investors 70 bps in fees per year. It trades in average daily volume of 143,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook

iShares U.S. Home Construction ETF ITB – Up 8.9%

The U.S. housing market has been shining this quarter buoyed by lower mortgage rates and decelerating home price growth that has encouraged people to buy more homes, pushing stocks and ETFs higher. ITB provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $1.2 billion, it holds a basket of 46 stocks with heavy concentration on the top three firms. The product charges 43 bps in annual fees and trades in heavy volume of around 2.8 million shares a day on average. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

Worst ETFs

ETFMG Prime Junior Silver ETF SILJ – Down 17.1%

Silver mining stocks have been on the downtrend this quarter thanks to intensifying U.S.-China trade spat, which has cast a doubt on the demand for the metal. Notably, silver is used in a wide range of industrial applications and about half of the global consumption of the industrial commodities is in China. Additionally, a few mining companies are going through tough times and struggling to generate free cash flow in a low-price environment where profit margins have been massively eroded. SILJ provides a true small-cap play on the silver mining space by tracking the Prime Junior Silver Miners & Explorers Index, holding 30 stocks in its basket with heavy concentration on the top three firms. The fund has managed assets worth $42.7 million and trades in solid volume of around 73,000 shares a day. It charges 69 bps in annual fees.

Global X MSCI Pakistan ETF PAK – Down 16.6%

Pakistan-based stocks were caught in a nasty web of trading this quarter amid escalating tensions between India and Pakistan on the disputed Kashmir region. PAK provides investors access to the largest, most liquid companies in Pakistan by tracking the MSCI All Pakistan Select 25/50 Index. It holds 34 stocks in its basket with each accounting for less than 8.6% share. The ETF has a lower level of $51.9 million in AUM and charges 87 bps in fees and expenses. Additionally, it trades in lower volumes of about 24,000 shares and has a Zacks ETF Rank of #4 with a Medium risk outlook

VanEck Vectors China SME-ChiNext ETF CNXT – Down 16.2%

Chinese stocks are seeing dismal trading with the return of trade war fears. While most of the Chinese ETFs have been declining, CNXT stole the show. This fund offers exposure to the largest and most-liquid China A-share stocks listed and trading on the Small and Medium Enterprise (SME) Board and the ChiNext Board of the Shenzhen Stock Exchange by tracking the SME-ChiNext 100 index. It holds 100 stocks in its basket with none accounting for more than 7.13% share. The product is unpopular with AUM of $30.6 million and average daily volume of around 29,000 shares. It charges 65 bps in fees per year and has a Zacks ETF Rank #3 with a High risk outlook (read: ETF Winners & Losers As China Retaliates).

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VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT): ETF Research Reports
 
Invesco KBW Property & Casualty Insurance ETF (KBWP): ETF Research Reports
 
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Global X MSCI Pakistan ETF (PAK): ETF Research Reports
 
ETFMG Prime Junior Silver ETF (SILJ): ETF Research Reports
 
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