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The Worst ETFs Of 2010
It has been another volatile year for the equity markets and where we go from here is open for debate. In the ETF world, the SPDR S&P 500 ETF (NYSE:SPY), a gauge of U.S. large-cap stocks, has grinded out a 10.6% gain year to date. However, not all ETFs have been quite as fortunate. Here are four of the worst performing ETFs from 2010.
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Out of Gas
The United States Natural Gas Fund (NYSE:UNG) faced yet another massacre this year. Shares of UNG are down 40.5% on the year and this beating comes on the heels of a 2009 that produced a 58.4% loss for the fund. There is no telling when this shellacking may end.
Right now, the supply and demand curve is not setting up favorably for natural gas prices. U.S. stockpiles are presently 10% above their five-year average. On the plus side, UNG did chalk up a 4.0% gain on Wednesday as investors hoped that unseasonably cold temperatures could help get natural gas prices back on track. Howeverm it will take quite a turnaround for this ETF to gain back long-term investors' confidence.
Solar energy had its own share of concerns to worry about in 2010. Solar panel makers battled lower average selling prices as well as relatively stable prices from competing forms of energy such as petroleum. The Claymore/MAC Global Solar Index (NYSE:TAN) has dropped 27.4% this year. To make matters worse, a tax-grant program that solar energy developers have relied on in the past is currently set to expire at the end of this year.
On Thin Ice
The ProShares UltraShort 20+ Year Treasury Fund (NYSE:TBT) has shed 24.1% of its value this year. This trend should not come as a major surprise. Economic headwinds have pushed many investors into safer asset classes such as Treasuries. Accordingly, this ETF which bets against long-term Treasuries, has floundered.
TBT made up some ground this fall as worries about the U.S. budget deficit grabbed the spotlight. Investors piling money blindly into long-term Treasuries has been an unsettling trend for a couple of years and it could lead to investors getting caught as they head for the exit. TBT is one way that investors can bet on long-term Treasuries getting jammed in the short term.
As tough as conditions may have been in the U.S. economy in 2010, Spain may have faced an even greater deal of adversity with the European debt crisis that has been unfolding. (For related reading, see The Scariest Financial Moments Of 2010.) Year-to-date, the iShares MSCI Spain Index (NYSE:EWP) has surrendered 21% of its value. Better times may be just around the quarter though. On Sunday, the country's economy minister said that Spain is not in need of a financial bailout and that it is on track to churn out positive economic growth in its 2011 fiscal year.
The Bottom Line
The past 12 months have made for a wild ride in the ETF arena. Natural gas and solar energy turned out to be laggards among energy funds while bets against long-term Treasuries or for Spanish equities met their own share of resistance. The challenge for investors now is to determine which of these ETFs are trading at bargain prices and which ones may have even more room to fall in 2011.
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IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio
Out of Gas
The United States Natural Gas Fund (NYSE:UNG) faced yet another massacre this year. Shares of UNG are down 40.5% on the year and this beating comes on the heels of a 2009 that produced a 58.4% loss for the fund. There is no telling when this shellacking may end.
Right now, the supply and demand curve is not setting up favorably for natural gas prices. U.S. stockpiles are presently 10% above their five-year average. On the plus side, UNG did chalk up a 4.0% gain on Wednesday as investors hoped that unseasonably cold temperatures could help get natural gas prices back on track. Howeverm it will take quite a turnaround for this ETF to gain back long-term investors' confidence.
Solar energy had its own share of concerns to worry about in 2010. Solar panel makers battled lower average selling prices as well as relatively stable prices from competing forms of energy such as petroleum. The Claymore/MAC Global Solar Index (NYSE:TAN) has dropped 27.4% this year. To make matters worse, a tax-grant program that solar energy developers have relied on in the past is currently set to expire at the end of this year.
The ProShares UltraShort 20+ Year Treasury Fund (NYSE:TBT) has shed 24.1% of its value this year. This trend should not come as a major surprise. Economic headwinds have pushed many investors into safer asset classes such as Treasuries. Accordingly, this ETF which bets against long-term Treasuries, has floundered.
TBT made up some ground this fall as worries about the U.S. budget deficit grabbed the spotlight. Investors piling money blindly into long-term Treasuries has been an unsettling trend for a couple of years and it could lead to investors getting caught as they head for the exit. TBT is one way that investors can bet on long-term Treasuries getting jammed in the short term.
As tough as conditions may have been in the U.S. economy in 2010, Spain may have faced an even greater deal of adversity with the European debt crisis that has been unfolding. (For related reading, see The Scariest Financial Moments Of 2010.) Year-to-date, the iShares MSCI Spain Index (NYSE:EWP) has surrendered 21% of its value. Better times may be just around the quarter though. On Sunday, the country's economy minister said that Spain is not in need of a financial bailout and that it is on track to churn out positive economic growth in its 2011 fiscal year.
The Bottom Line
The past 12 months have made for a wild ride in the ETF arena. Natural gas and solar energy turned out to be laggards among energy funds while bets against long-term Treasuries or for Spanish equities met their own share of resistance. The challenge for investors now is to determine which of these ETFs are trading at bargain prices and which ones may have even more room to fall in 2011.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
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