October was kind to the bulls. During the last month of the worst six-month period in which to own stocks, the S&P 500 rose 3.6% while the Nasdaq Composite climbed 2.66%. All that despite the first U.S. government shutdown since the 1990s and a near debt ceiling debacle.
Amid slack economic data and anticipation of ongoing easing from the Federal Reserve, investors pushed into stocks last month, believing that tapering is still months away and that riskier assets can rally into year-end. [October ETF Performance Report]
TrimTabs points out that combined equity fund inflows last month of $49.1 billion represent the fourth-best month on record and two of the three best inflows months have taken place this year: January and July. Industrials and technology led the way in terms of inflows at the sector level. [Industrial, Tech ETFs See Strong October Inflows]
However, October was not kind to every exchange traded fund. Volatility ETFs were punished despite the government shutdown. Select equity-based commodities funds fell out of favor and a once hot corner of the health care sector experienced its worst month in what feels like an eternity.
Here is the recap, in pictures, of Octobers 10 worst-performing non-leveraged ETFs.
Teucrium Corn Fund (NYSEArca: CORN)
October returns: -3.2%
Comment: The Teucrium Corn Fund is the only corn-related ETF. CORN tracks corn price movements through futures. After the worst drought in half a century decimated U.S. crops last year, favorable weather conditions in the U.S. and abroad are supporting crop yields.
AdvisorShares Athena International Bear ETF (NYSEArca: HDGI)
October returns: -3.5%
Comment: HDGI is an actively managed ETF that takes short positions on the least appealing international equity securities. The short equity strategy outperforms during bearish or declining market conditions, but the current market rally has weighed on the fund. Alternatively, the AdvisorShares Ranger Equity Bear ETF (NYSEArca: HDGE) provides a similar strategy for U.S. equities.
ProShares VIX Mid-Term Futures ETF (NYSEArca: VIXM)
October returns: -3.5%
Comment: Volatility spiked in the days before the U.S. debt default deadline, but a last minute proposal to raise the debt ceiling helped clear up uncertainty, pressuring CBOE Volatility Index, or “VIX,” related ETFs. VIXM holds mid-term VIX futures contracts.
Market Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX)
October returns: -3.9%
Comment: Rare earth metals, such as cerium, manganese, titanium and tungsten, have more specialized uses in specific market sectors, like jet engines, hybrid cars, smartphones, and flat screen TVs. China dominates the rare earths export marlet. REMX is the only ETF to focus on rare earth miners. REMX slid last month after a September surge.
Teucrium Agricultural Fund (NYSEArca: TAGS)
October returns: -4.4%
Comment: TAGS is a type of ETF-of-ETFs that tracks the CORN Teucrium Soybean Fund (NYSEArca: SOYB), Teucrium Sugar Fund (NYSEArca: CANE) and Teucrium Wheat Fund (NYSEArca: WEAT). Each of the four soft commodity ETFs track a basket of futures contracts from their respective markets.
Global X Uranium ETF (NYSEArca: URA)
October returns: -4.6%
Comment: Uranium, the major fuel for nuclear fission reactor power plants, has seen prices decline to near record lows, and the oversupply in the market has hindered uranium miners. However, some are pointing toward increased demand, especially in the emerging markets where new reactors are planned.
“We forecast a fairly large global uranium shortfall towards the end of this decade,” said David Sadowski, an analyst at Raymond James, said in a Globe and Mail article. “So there’s a ‘buy’ recommendation on the space.”
iShares MSCI Singapore Small-Cap ETF (NYSEArca: EWSS)
October returns: -4.6
Comment: The small-cap oriented Singapore ETF is underperforming its large-cap iShares MSCI Singapore ETF (NYSEArca: EWS) counterpart, which gained 3.9% over the past month. Singapore regulators are currently reviewing the recent volatility in small-cap stocks after a steep plunge following a quick run up in a couple of small stocks, Chun Han Wong for the Wall Street Journal.
United States Oil Fund (NYSEArca: USO)
October returns: -5.4
Comment: West Texas Intermediate crude is down to a four-month low as U.S. inventories increased. We are currently in the midst of our own oil boom, bolstered by increased activity in the shale oil and hydraulic fracturing, or “fracking,” techniques. USO tracks WTI light, sweet crude oil futures and rolls front month futures, which makes the fund susceptible to the negative effects of contango.
SPDR S&P Biotech ETF (NYSEArca: XBI)
October returns: -6.8%
Comment: Biotech stocks began to falter during the height of the U.S. debt default scare. Investors became wary about the potential ramifications of slower FDA approval cycle and steep valuations after an incredible year. Unlike other biotech ETFs, XBI equally weights its holdings and has deeper exposure to small-cap names.
ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY)
October returns: -11.8%
Comment: VIXY, like VIXM, tracks the VIX futures but focuses on short-term contracts. Short-term futures tend to act more volatile than the mid-term VIX contracts.
Max Chen contributed to this article.