Best & Worst August ETFs

August was the cruelest month for the U.S. stock market with volatility levels peaking and China roiling the markets. The worries intensified when China unexpectedly devalued its currency on August 11, triggering off a brutal sell-off across the globe and deepening fears of global growth.

The slide in the stocks continued following the weak Chinese factory activity data and the dovish Fed minutes. All these market gyrations raised questions on the six-year bull market and pushed the major bourses into the correction territory, pushing them 10% down from their recent heights (read: Top ETF Stories of August).

However, the latest slew of better-than-expected economic data, fresh China stimulus, and bargain hunting helped stocks to recover from the correction territory. Still, the uncertainty over the interest rates hike is looming large as one of the Fed officials hinted at an unlikely September rise in interest rates while another sees the hike in the cards.  

Notably, Dow Jones tumbled 6.6% in August, indicating the largest monthly loss since May 2010 while the S&P 500 and Nasdaq Composite Index dropped 6.3% and 6.9%, respectively, representing the biggest monthly loss since May 2012. Added to the woes are weakness in the emerging markets and the slump in commodities.

Though oil prices continued their plunge in the month leading to a further slump in the broad commodities, most of the losses were erased in the final two days of last week. Notably, U.S. oil surged 17% in just two days, representing the biggest two-day rally in six years. On the other hand, the risk-off sentiments led to a flight-to-safety among investors, giving a boost to Treasuries and gold.

That being said, we have highlighted the two best and worst ETF performers of last month.  

Best ETFs

C-Tracks on Citi Volatility Index ETN ((CVOL - ETF report)) – Up 91.1%


Volatility products gained the most in August, as these tend to outperform when markets are falling or fear levels over the future are high, both of which are happening lately. As such, CVOL linked to the Citi Volatility Index Total Return, jumped about 91% last month (read: Leveraged Volatility ETFs Gain Over 100% from Global Rout).

The note provides investors with direct exposure to the implied volatility of large-cap U.S. stocks. The benchmark combines a daily rolling long exposure to the third and fourth month futures contracts on the VIX with short exposure to the S&P 500 Total Return Index. The product has amassed $5.7 million in its asset base while charging 1.15% in annual fees from investors. The note trades in good volume of more than 103,000 shares per day.

ALPS Sprott Junior Gold Miners ETF ((SGDJ - ETF report)) – Up 5.9%

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Disclosure: None.

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