ETFs Winners & Losers Halfway Through Q3

The third quarter is seeing huge volatility triggered by U.S.-China trade conflicts, low inflation, collapse in bond yields, political unrest in Hong Kong as well as a plunge in Argentina's currency and stock markets. In fact, the U.S. Treasury yield curve temporarily inverted on Aug 13 for the first time since June 2007 as 10-year yields broke below 2-year yields, signaling that the world’s biggest economy could be heading for a recession.

Additionally, a slew of downbeat economic data across the globe also resulted in a stock market decline. The U.S. ISM manufacturing index dropped for the fourth straight month in July to record the lowest reading since August 2016. The U.S. non-manufacturing (services) index also dropped last month. United Kingdom’s economy shrank for the first time in more than six years in the second quarter and the producer-price index in China contracted for the first time in nearly three years. China’s industrial output growth fell to a more than 17-year low.

However, hopes of easing monetary policies across the globe and positivity surrounding the trade deal continue to drive the stocks higher. In the latest trade development, Washington extended a 90-day temporary license allowing China’s Huawei Technologies to continue doing business with U.S. firms.

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 Q3.

Best Zones

Shipping

Shipping stocks are sailing smoothly on the resumption of iron-ore shipments from Brazil and Typhoon Lekima, which disrupted shipping in the East China Sea leading to a rise in dry bulk freight costs. As a result, Breakwave Dry Bulk Shipping ETF (BDRY - Free Reporthas climbed 37.6% so far this quarter. This is an actively managed ETF that seeks to provide exposure to daily changes in the price of dry bulk freight futures by tracking the performance of a portfolio consisting of a three-month strip of the nearest calendar quarter of futures contracts on specified indexes that measure rates for shipping dry bulk freight. The fund has accumulated about $1.8 million in AUM. It trades in a paltry volume of about 7,000 shares per day on average and charges a higher annual fee of 1.85%.

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