The stock markets and exchange traded funds continued to reach new highs over May but began to falter toward the end of the month as investors took the opportunity to take profits. Meanwhile, safe-haven Treasury prices are getting pummeled with yields on benchmark 10-year notes back above 2%.
With interest rates rising, long-term Treasury bonds have been falling – bond prices have an inverse relationship with yields. PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund (NYSEArca: ZROZ) and Vanguard Extended Duration Treasury ETF (NYSEARca: EDV) are both down about 10% for the trailing month. They are amontg the worst-performing unleveraged ETFs for the period. [Treasury Bond ETFs Pressured by Fed, Improving Data]
The Dow Jones Industrial Average was 3.7% higher over May. Meanwhile, the Nasdaq Composite increased 4.9% and the S&P 500 rose 3.8%.
The top non-leveraged ETFs over May include the Guggenheim Solar ETF (NYSEArca: TAN) up 27.1%, First Trust NASDAQ Clean Edge Green Energy Index Fund (NYSEArca: QCLN) up 22.3% and Market Vectors Solar Energy (NYSEArca: KWT) up 21.5%.
Solar ETFs are burning up as industry growth outshines expectations that a string of negative factors would weigh on solar stocks. The sector is finally catching a break after the dismal performance last year. [Solar ETF Rallies Over 50% in a Month]
Shares of electric car maker Tesla (NasdaqGS: TSLA), a major component of QCLN, surged on impressive earnings and a positive report from Goldman Sachs. [Tesla’s Surge Buoys Inflows to Green Energy ETF]
The worst performing non-leveraged ETFs for the month include the iShares MSCI Australia Small-Cap Index Fund (NYSEArca: EWAS) down 12.8%, iShares FTSE EPRA/NAREIT Asia Index Fund (NYSEArca: IFAS) down 12.1% and IQ Australia Small Cap ETF (NYSEArca: KROO).