Trump & Earnings Effect: Hit And Flop ETFs Of Last Week

The U.S. stock market witnessed huge volatility last week on President Donald Trump’s slew of policies and a deluge of earnings results. This is especially true as the Dow Jones saw the biggest one-day drop since October to start the week on Monday after Trump’s policies of immigration and travel restrictions sparked concerns over global trade, economic growth and political stability.

On the other hand, the benchmark logged in the best day of the year on Friday driven by Trump’s actions on financial regulations. The President has stepped-up his efforts to reduce regulations on banks and examine the Dodd-Frank Act, which was enacted in the aftermath of the financial crisis to impose stricter regulations on banks. The move led to a strong rally in the financial stocks, helping the Dow Jones to reclaim the above 20,000 threshold. Further, encouraging earnings reports and upbeat job data also supported the rally.

As per the Earnings Preview, the Q4 earnings season is faring better than the recent years with not only earnings growth on track to reach the highest level in two years but also total earnings for the quarter on track to be a new quarterly record.

Given this, several ETFs saw a huge spike in the week while a few were laggards. Below, we have highlighted some of them:

Best ETFs

VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report)

Gold benefited from the twin tailwinds of uncertainty over Trump trades and weak U.S. dollar last week. The yellow metal logged in the biggest weekly advance in seven months, rising 2.4%. Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains than their bullion cousins in the rising metal market.

As a result, GDXJ emerged as the biggest winner last week, gaining 6.4%. This is a small cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 54 stocks in its basket, it is pretty well spread out across each component with none holding more than 6.06% of assets. Canadian firms dominate the fund’s portfolio at 65.9%, though Australia (11.6%) and the U.S. (10.8%) round out the top three. The product is by far the largest and most popular in the gold mining space with AUM of $3.4 billion and average daily volume of more than 20.2 million shares. It charges 56 bps in annual fees.

PureFunds ISE Junior Silver ETF (SILJ - Free Report)

The Trump administration and weak greenback also boosted the appeal for silver. Additionally, silver continued its solid run on positive developments in China, a pickup in global manufacturing and industrial activities, and improving global trends. 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. Given this, silver mining ETFs gained more than silver ETFs with SILJ gaining 6.5%.  

The product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. Holding 24 stocks in its basket, the fund is heavily concentrated on the top three firms that collectively make up for 41.1% of assets while other firms hold no more than 5.1% share. Canadian firms take the lion’s share at 82%, while the U.S., and Peru take the reminder. The fund has managed assets worth $49.4 million and trades in solid volume of around 188,000 shares a day. It charges 69 bps in annual fees.

BioShares Biotechnology Products Fund (BBP - Free Report)

The biotech and pharma sector was the hot corner last week following the spate of stronger-than-expected earnings from the top players as well as Trump’s move to reduce drug regulations and push for faster drug approvals. While several biotech ETFs gained, BBP stole the show, climbing 6% last week.

The ETF follows the LifeSci Biotechnology Products Index, which measures the performance of biotechnology companies with a primary product offering that has received the U.S. Food and Drug Administration’s approval. Holding 36 stocks, the product has moderate concentration across components with each holding less than 5.3% share. Small caps dominate with 54%, followed by 26% in large caps and the rest in mid caps. The product has accumulated AUM of about $35.7 million and charges 86 bps in fees per year. Volume is light trading about 14,000 shares a day. BBP has a Zacks ETF Rank of or ‘Buy’ rating with a High risk outlook.

Worst ETFs

VanEck Vectors Steel ETF (SLX - Free Report)

Given strong demand in China, steel prices have recovered post Trump election. This trend seems to reversing following the draft of Trump’s $1 trillion infrastructure plans that would hurt the demand picture for steel in China. Given this, SLX was the biggest loser last week, falling 3.6%.

The fund tracks the NYSE Arca Steel Index and provides exposure to a small basket of 27 stocks. It is heavily concentrated on the top two firms, which account for 26.1% share while the other firms hold no more than 6.73% of assets. American firms dominate the fund’s returns at 36.6%, followed by Brazil (21.8%), United Kingdom (14.1%) and the Netherlands (10.9%). The ETF has amassed $104.4 million in its asset base while trades in lower volumes of about 92,000 shares a day on average. It charges 55 bps in fees from investors.

iShares U.S. Telecommunications ETF (IYZ - Free Report)

Though many of the telecom titans have reported assuring earnings results so far, they have not been able to maintain their share price strength. As such, telecom ETFs like IYZ lost 3.3% last week. This is one of the most popular ETFs in the broad telecom space with AUM of $570.7 million. The product tracks the Dow Jones U.S. Select Telecommunications Index, giving investors exposure to 23 stocks while charging 44 bps in fees and expenses.

The ETF is highly concentrated on the top two firms with a combined 19.6% share while the others hold less than 6.3% of assets. In terms of industrial exposure, integrated telecommunication services takes the top spot at 51.9% while wireless telecommunication services make up for 27.6% share. IYZ has a Zacks ETF Rank of 4 or ‘Sell’ rating with ‘Medium’ risk outlook.

ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN (EEH - Free Report)

Given a huge level of volatility, EEH lost investors’ attention last week and shed 3%. The fund’s unique momentum strategy that seeks to increase exposure to the sub-indices that outperformed the S&P 500 and reduce allocations for the underperformers does not pay off. The note comes with a cash payment at scheduled maturity or early redemption based on the performance of the SPECTRUM Large Cap U.S. Sector Momentum Index and is issued in the USA by Swedish Export Credit Corp. This ETN is unpopular and illiquid with $1.9 million in AUM and average daily volume of under 1,000 shares.

Disclosure: None.

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