7 of the Worst ETFs That 2018 Had to Offer

Fortune did not favor these funds in 2018.

As the year ends, the time is right to explore what went right in your portfolio in 2018 — and, of course, what didn’t. Everyone makes mistakes, so having a loser in your portfolio is nothing to be ashamed of. However, there is a select group of ETFs that offer dramatic tales of underperformance that should serve as cautionary tales on what not to do with your money. As an added benefit, they may make you feel better about your own stock losers that aren’t quite so bad!

Invesco China Technology ETF (ticker: CQQQ)

China’s economy continues to struggle as it matures, with growth rates that have steadily cooled from better than 10 percent GDP expansion in 2010 to a predicted 6.5 percent this year. Worse, China missed its third quarter GDP estimate — the first time in three years the nation has come in under expectations, and a sign that the troubles could be only beginning. In an environment like this when investors choose to go “risk off,” the high-flying technology names that were so popular several years ago have been left by the wayside. Top component Tencent Holdings (TCEHY) is off almost 30 percent this year.

2018 performance: -39 percent

VanEck Vectors India Small-Cap Index ETF (SCIF)

When you hear that India’s economy posted a growth rate of 7.1 percent at the end of the third quarter, your first reaction may be to applaud. But when you consider GDP growth was 8.2 percent the prior quarter and was well under expectations, things don’t look so rosy. Worse, India’s challenges come as a general election looms and Prime Minister Narendra Modi is increasingly facing criticism for not delivering on his lofty economic promises. The resulting uncertainty has been a huge drag on stocks in the region, and smaller companies like those in SCIF have been particularly hard hit.

2018 performance: -39 percent

PowerShares S&P SmallCap Energy Portfolio (PSCE)

Most investors who have watched the energy sector in the last few months know that oil and gas prices have been under pressure in a big way; oil is now back at around $45 a barrel after trading over $70 as recently as September. This has taken a toll on a number of related stocks in the sector, but smaller energy stocks have naturally been harder hit because they don’t have deep pockets and big credit lines to help them during tough times. For example, Oklahoma-based explorer Laredo Petroleum (LPI) is down over 60 percent in 2018 and is one of many hard-hit components that make up PSCE.

2018 performance: -41 percent

Amplify Advanced Battery Metals and Materials ETF (BATT)

The BATT ETF is focused on materials providers who are part of the supply chain for fast-charging batteries used in vehicles and electronics. The story of these battery technologies was compelling a few years ago, but now it’s old news — and thanks to a race to meet market demand and cash in, the last year has been characterized by a gross oversupply of materials like lithium. As a result, prices for battery metals have been tumbling and have taken a toll on components that explore and mine for these materials. Though the fund only launched this summer, it has quickly lost ground.

2018 performance: -44 percent, since its June launch date

SPDR S&P Oil & Gas Equipment & Services ETF (XES)

Amid the rollback in energy prices, equipment and services companies have been particularly hard hit. That’s because big oil companies frequently scale back spending with these service providers quickly when pricing softens up and they lose their desire to keep production levels high. With several components like C&J Energy Services (CJ) down more than 50 percent this year, it has been a bloodbath for XES as a result of this trend. And unless prices firm up in the near future, it’s unlikely for that dynamic to change in 2019.

2018 performance: -51 percent

iShares MSCI Turkey ETF (TUR)

While there has rightly been a lot of focus around turmoil in the U.K. amid Brexit discussions or uncertainty over U.S.-China trade policies, some of the worst international investing fallout has come in Turkey over the last year or so. Growth has ground to a halt after the collapse of its currency, the lira, and fears of a sovereign debt crisis. Forecasts are now calling for recession in 2019, and stocks in the region have taken a beating as a result. That has obviously been very bad for this ETF, which is one of the few ways for U.S. investors to directly invest in Turkish stocks.

2018 performance: -51 percent

VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)

Several years ago, there was big interest in so-called “rare earth” metals that are used in high-tech applications but are hard to come by in nature. Thus this VanEck fund was born in 2010, and for a time enjoyed serious investor interest. Unfortunately for speculators, in early 2018 there was a massive discovery of rare earth elements off the coast of Japan that some experts forecast will last for nearly 800 years’ worth of industrial needs. Throw in fears of a global slowdown sapping demand, and the supply-demand dynamics sent the rare earth stocks that make up this fund into a tailspin this year.

2018 performance: -52 percent

These are the worst ETFs of 2018.

To sum up, these are among the worst ETFs by performance for 2018:

— Invesco China Technology ETF (CQQQ)

— VanEck Vectors India Small-Cap Index ETF (SCIF)

— PowerShares S&P SmallCap Energy Portfolio (PSCE)

— Amplify Advanced Battery Metals and Materials ETF (BATT)

— SPDR S&P Oil & Gas Equipment & Services ETF (XES)

— iShares MSCI Turkey ETF (TUR)

— VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)

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7 of the Worst ETFs That 2018 Had to Offer originally appeared on usnews.com

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