Not So Precious: Q2’s Worst ETFs Have Naughty Similarities

June 27th at 7:30am by Tom Lydon

There are just two trading days left in the second quarter, but if the quarter ended today, the SPDR S&P 500 (NYSEArca: SPY) would finish with decent though not spectacular gain of 2.6%. Investors should not be deceived by that number because over 202 ETFs and ETNs are cruising toward quarterly losses of at least 10%.

The 20 worst offenders of that group are, well, offensive with quarterly losses ranging from 35.4% at the bottom to 84% at the top or worst. Even when removing the six leveraged funds from that list, the losses are still horrific. Interestingly, though perhaps not surprisingly, the remaining 14 ETFs and ETNs share something in common: They all offer exposure to precious metals. [Gold Miners ETF Races to 2008 Lows]

Of the 14 worst-performing non-leveraged ETFs in the second quarter, 10 are mining equities plays. Gold miner stocks are falling harder than bullion prices amid speculation the Federal Reserve will step back from its monetary easing. The list includes includes the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ), which is nursing a 51.1% quarterly loss. GDXJ is heading for a July 1 reverse split. [Gold Miner ETFs Take a Header]

GDXJ is in the third spot on the “Naughty 20″ list. View the full list here. The next worst-performing non-leveraged ETFs for the quarter are the PureFunds ISE Junior Silver (Small Cap Miners/Explorers) (NYSEArca: SILJ) and the Global X Gold Explorers ETF (NYSEArca: GLDX). The average quarterly loss for that pair is roughly 49%.

In addition SILJ, five other explicit silver ETFs and ETNs appear on the list. That group includes the iShares MSCI Global Silver Miners (NYSEArca: SLVP), the PowerShares DB Silver (NYSEArca: DBS) and the ETFS Physical Silver Shares (NYSEArca: SIVR). The average quarterly loss for that trio is over 38%. [Silver Miners: Cheap or Risky?]

Holdings in six major silver ETFs tracked by Reuters fell to 16,139 tonnes as of Monday, their lowest since December, Reuters reported. In late April, holdings in gold exchange traded products slid to 166.3 metric tons, then a monthly decline record.

If there is any silver lining, no pun intended, it is those that have been bold to bet against the aforementioned ETFs, either via the options market or with inverse ETFs, have been handsomely rewarded. Less than 10 ETFs are showing second-quarter gains of 30% or more, but four are bearish plays on gold or silver. That list includes the Direxion Daily Gold Miners 3X Bear Shares (NYSEArca: DUST), which has more than tripled just this quarter.

Direxion Daily Gold Miners 3X Bear Shares

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Tickers