Last week saw a tough fight between the bulls and the bears, though ultimately the bulls forged ahead despite some big question markets regarding several international issues. On the whole, the week was pretty volatile thanks to some grim updates from Eastern Europe including the Malaysian Airlines jet crash near the Russian/Ukrainian border, escalating violence in Gaza and fresh sanctions imposed by the U.S. against Russia.
In fact, on Thursday, the downing of the Malaysian airline led S&P 500 to suffer its worst slide since April 10 (down 1.18%), as per a Reuters report. However, U.S. stocks finally managed to rebound on Friday and ended the week on a positive note with the Dow having climbed 0.9%, the S&P 500 up 0.5% and the Nasdaq gaining 0.4% for the week.
This bullishness in the U.S. markets reflect a relatively positive start to the Q2 earnings season with total earnings for the 73 S&P 500 members to have reported results (as of Thursday, July 17th) jumping +5.5% from the same period last year on 3.8% higher revenues.
In addition, potential deals on the merger and acquisition front and strong growth data from China boosted investors’ sentiment. China’s economy expanded at a better-than expected pace of 7.5% during the second quarter, allaying slowdown concerns within the economy.
Given the mixed sentiments worldwide, some of the ETFs/ETNs emerged as winners last week while a few lost in the double digits. Below, we have highlighted some of the big gainers and losers from the week:
iPath Global Carbon ETN (GRN) – Up 8.6%
While the above product was one of the worst performers in the week before last (ended July 11), it was the best performing product in the U.S. unleveraged market last week.
Some of the major reform measures proposed last week by the UK to the EU Emission Trading System (ETS) to improve the emissions “cap and trade” system caused this ETN to rise 8.6%. Among them, the UK has called for cancellation of surplus allowances before 2020 to help restore the balance between supply and demand.
GRN tracks the Barclays Global Carbon Index Total Return, which measures the performance of the most highly traded carbon-related credit plans. The fund is unpopular and illiquid with an asset base of under $2 million and average volume of 6,000 shares
Emerging Global Shares INDXX India Infrastructure Index Fund (INXX) – Up 8%
Indian markets bounced back nicely last week, being buoyed mainly by the first budget from the Modi led government. The ETF got a boost as the new Indian government unveiled plans to invest heavily in the country’s infrastructure sector while the country’s Reserve Bank also announced steps to encourage infrastructure lending.
This relatively unpopular ETF with an AUM of $65.5 million was the best performer in the Indian ETF space with gains of 8%, though the product sees decent average trading volume of more than 100,000 shares a day.
The fund tracks the Indxx India Infrastructure Index to provide exposure to 31 infrastructure companies. From a sector perspective, Industrials, Utilities and Basic Materials are at the top three spots.
iPath Pure Beta Coffee ETN (CAFE) – Up 6.75%
Coffee has been one of the star performers in the commodity world this year thanks to extreme weather conditions in the top growing region – Brazil – leading to supply shortages. CAFE gained roughly 7% last week though the ETN is unpopular and illiquid with just $7.6 million in AUM and average daily volume of a little over 15,000 shares.
The product charges investors 75 basis points a year in fees, and looks to select the futures contract that best mitigates the impact of roll yield on the underlying investment using the Barclays Capital Pure Beta Series 2 Methodology.
iPath Seasonal Natural Gas ETN (DCNG) – Down 11.45%
Recent predictions about a milder summer in the U.S. and reduced demand from power plants caused this natural gas ETN to slump more than 11% last week. The ETN tracks the Barclays Capital Natural Gas Seasonal TR Index, which reflects the investment returns in a rolling position in Henry Hub Natural Gas futures contracts plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
The product is also quite unpopular and illiquid with an asset base of $1.3 million and average volume of under 10,000 shares. The ETN charges 75 basis points as fees.
ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN (EEH) – Down 8.9%
Quite unexpectedly, this fund which was performing quite well a week back, slumped last week to shed nearly 9%. The ETN follows a momentum strategy and seeks to increase exposure to the sub-indices that outperform the S&P 500 and reduce allocations for the underperformers.
EEH is pretty unpopular and illiquid, managing a small asset size of under $1 million, having an average trading volume of over 3,000 shares a day. The ETN charges 75 basis points as fees and has gained 11% in the year-to-date frame.
Citi Volatility Index ETN (CVOL) – Down 6.7%
Volatility ETNs/ETFs linked to the CBOE Volatility Index or the VIX plunged last week, as investors seemed confident of a recovering economy going forward. The fund tracks the Citi Volatility Index Total Return to measure directional exposure to the implied volatility of large cap U.S. stocks.
The index combines a daily rolling long exposure to the third- and fourth-month futures contracts on the CBOE Volatility Index with a short exposure to the S&P 500 Total Return Index. CVOL with an asset base of under $5 million and average trading volume of over 50,000 shares lost 6.7% last week.
IPATH-GLBL CRBN (GRN): ETF Research Reports
EMERG-GS IIIIF (INXX): ETF Research Reports
IPATH-PB COFFEE (CAFE): ETF Research Reports
IPATH-SE NA GAS (DCNG): ETF Research Reports
ELEMENTS SPECTR (EEH): ETF Research Reports
C-TRAC VOLAT IX (CVOL): ETF Research Reports
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