Hit And Flop ETFs Of February

After a brutal sell-off in January and amid heightened uncertainty, the major U.S. bourses are on track to end the month of February in the green. Stocks advanced in the back end of the month with two consecutive weeks of gains courtesy of the bargain hunting, a recovery in crude oil prices and abating fears of a recession in the United States.

In particular, a slew of encouraging data pertaining to retail sales, consumer spending, producer prices, factory production and inflation points to regained momentum in the U.S. economy after a sluggish fourth quarter. Additionally, the second estimate of Q4 GDP data came in much higher than the initial estimate as the economy expanded at a faster rate of 1% annually than 0.7% reported by the Commerce Department in January.

Further, hopes of stimulus from the central banks in Europe and Japan renewed confidence in global economic growth. However, concerns over corporate profits, global economic growth, and uncertainty in the timing of next interest rate hike continued to weigh on the stocks during the month. As a result, investors’ flight to safety in gold also continued with bouts of volatility.  

That being said, we have highlighted the three best and worst performing ETFs of February.  

Best ETFs

iShares MSCI Global Gold Miners ETF (RING – ETF report) – Up 33.0%

Global uncertainty and financial market instability have brought back the allure for metals, especially gold, boosting their demand. Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains than their bullion cousins in the rising metal market. In fact, RING is the biggest winner, having surged nearly 33% in value. This fund follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 30 securities in its portfolio.
 
The product is heavily concentrated on the top three firms – Barrick Gold (ABX – Analyst Report), Newmont Mining (NEM – Analyst Report) and Goldcorp (GG) – which combine to make 29.5% of total assets. Canadian firms take the lion’s share at 51.2%, while South Africa (19.4%) and the U.S. (11.4%) round out the top three. RING is the cheapest choice in the gold mining space, charging just 0.39% in fees and expenses. The fund has been able to manage assets worth $78.9 million.
 
Materials Select Sector SPDR (XLB – ETF report) – Up 8.5%

The material sector has been gaining strength with robust performances in its chemical business as well as metals & mining, and steel industries. Growing automotive, a solid residential construction market and increasing production are expediting growth. That said, the most popular fund XLB with AUM of $2 billion, has gained 8.5% in February. It tracks the Materials Select Sector Index, charging investors 14 bps in fees per year.