ETF Trends
ETF Trends

ETF Trends publisher Tom Lydon appeared on Fox Business Network’s Closing Bell with Liz Claman on Tuesday to discuss the three best and worst performing ETFs of 2017.

The best performing fund is the Ark Innovation ETF (ARKK), which is up 74.3 percent year-to-date.

It is one of two ARK Invest ETFs that holds exposure to bitcoins through a Bitcoin Investment Trust.

Its holdings include Tesla 5.8%, Bitcoin Investment Trust 4.7%, Twitter 4.3%, Athena Health 4.2%, Amazon 4.0%, Illumine 4.0%, Intellia Therapeutics 3.1%, Nvidia 3.1%, and Bluebird Bio 2.5%.

The second best performing fund is the WisdomTree China Ex State Owned Enterprises Fund (CXSE), which is up 70.8 percent.

It is not exposed to large, state-owned Chinese companies, notably banks/industrials. It has a greater focus on innovations in technology 34.7% and consumer discretionary 24.0%.

Holding include Alibaba 9.6%, Tencent 9.0%, Baidu 6.1%, jd.com 4.0%, ctrip.com 3.1%.

Finally, the third best performing fund is the Kraneshares CSI China Internet ETF (KWEB), which is up 68.2 percent YTD.

This ETF directly capitalizes on Chinese tech, internet, eCommerce and growing domestic consumption. Its holdings include Tencent 10.9%, Alibaba 10.4%, Baidu 9.3%, jd.com 5.8%, Tal Education 5.7%, ctrip.com 5.1%, 58.com 4.9%, Weibo Corp 4.5%, Autohome 4.4%, and Sina 4.4%.

As for the worst performing ETFs of 2017, the United States Natural Gas Fund (UNG) is down 33.9 percent year-to-date.

It may have suffered from contango in the futures market – later dated contracts cost more than near term contracts, so a futures-backed ETF that rolls contracts upon maturity would sell low and buy high on every contract.

Rising shale production in the future will also translate to rising excess natural gas.

The second worst performing ETF of the year is the PowerShares S&P Smallcap Energy Portfolio (PSCE), which is down 31.4 percent YTD.

Energy and crude oil have been among worst performing areas of the U.S. market due to ongoing global supply glut.

Low crude prices dragged on the energy sector, especially small-caps and services sectors, as they are heavily involved in U.S. shale oil production. The nascent, small shale oil industry, which has higher production costs, has been the worst hit when oil prices plunged.

Finally, the third worst performing ETF of 2017 is the SPDR S&P Oil & Gas Equipment & Services ETF (XES), which is down 26.6 percent year-to-date.

It equally weights components, so it’s filled with more smaller companies that traditional market cap-weighted equipment/services funds.

Energy and crude oil have been underperforming in ongoing global supply glut. OPEC, though, has taken steps to curb production, stabilizing crude prices.

While the energy sector has been the worst performing area, the more stable oil prices could support a rebound in the segment, leaving a potential cheap value sector play.

However, rising oil prices would likely be capped by increasing u.s. shale oil production.

For more information on ETFs, visit our ETF Performance reports category.