With just a short time left in Wednesday’s trading session, it appears likely that the S&P 500 will finish April with a modest loss.
Finishing April in the red is a fate that will befall over 600 traditional exchange traded funds and data from ETFScreen.com turns up plenty of momentum funds that have fallen on hard times since early March.
April’s worst non-leveraged ETFs run the gamut of social media, biotechnology, Internet and other momentum fare that investors have discarded. The list starts with the…
Global X Social Media Index ETF (NasdaqGM: SOCL)
April decline: 15.1%
Comment: SOCL’s April woes cannot be pinned on just one or two stocks, although Tencent Holdings and Facebook (NasdaqGS: FB) are off 15% and 5%, respectively. Those stocks combine for 26.7% of SOCL’s weight. LinkedIn (NYSE: LNKD), Sina (NasdaqGS: SINA) and Twitter (NYSE: SOCL), among others, also weighed on SOCL in April as all three finished the month with deep double-digit losses. [Social Media Slump Spells Trouble for Nasdaq]
KraneShares CSI China Internet Fund (NasdaqGM: KWEB)
April decline: 15.4%
Comment: Many of the same factors that have afflicted SOCL and other Internet-related ETFs pressured KWEB in April. The ETF does, however, have an important catalyst coming down the pike: Alibaba’s initial public offering, which is expected later this year. KWEB will likely be among the first ETFs to add Alibaba to its lineup following the IPO. [Alibaba Results Nudge China Internet ETF Higher]
KWEB was not April’s only China Internet ETF offender.The Powershares Golden Dragon Halter USX China Portfolio (NYSEArca: PGJ) and the Guggenheim China Technology ETF (NYSEArca: CQQQ) also struggled during the month.
Global X Uranium ETF (NYSEArca: URA)
April decline: 14.3%
Comment: URA was flirting with $18 at the start of April. Now, it looks like the ETF could soon fall below $15. URA finished the month on a seven-day losing streak.
SPDR S&P Biotech ETF (NYSEArca: XBI)
April decline: 12.7%
Comment: The biotech swoon started in earnest in March. Among the ETFs dedicated to the industry, none have looked good over that time. In fairness to XBI and rival biotech funds, the worst of the selling pressure appears to have abated as XBI gained about 4% from April 15 through the end of the month.
Guggenheim Solar Energy Index ETF (NYSEArca: TAN)
April decline: 10%
Comment: TAN, last year’s top-performing non-leveraged ETF, is still clinging to a year-to-date of almost 7%. That gain obfuscates TAN’s tumble, one started in early March and has sent the largest solar ETF into bear market territory along with it momentum brethren. [Solar ETF Enters Bear Market]
First Trust Dow Jones Internet Index Fund (NYSEArca: FDN)
April decline: 9.3%
Comment: No surprise that FDN pops up on this list as it is home to a high concentration of Nasdaq stocks that are in bear markets. One of many problems for FDN has been Amazon.com (NasdaqGS: AMZN). Shares of the e-commerce giant lost 11.4% in April and have plunged 23.5% this year.
PowerShares DWA SmallCap Momentum Portfolio (NYSEArca: DWAS)
April decline: 9%
Comment: A lot air has come out of the small-cap trade. Over the past month, the iShares Russell 2000 ETF (NYSEArca: IWM), which tracks the Russell 2000 Index, saw $2.4 billion in outflows and iShares Core S&P Small-Cap ETF (NYSEArca: IJR), which follows the S&P 600 Index, saw $272.7 million in outflows, according to ETF.com data. [Small-Cap ETF Fallout: Hedge Funds Most Bearish Since ’04]
Professional traders have also been seen taking large bearish bets against IWM in recent weeks. Those anecdotes speak to the weakness in DWAS. The other side of the story is that if momentum and small-cap stocks come back into favor, DWAS should shine because it easily outperformed IWM in 2013, a favorable year for small-caps.
Tom Lydon’s clients own shares of Amazon and Facebook.