Stocs across the world have seen a spectacular run in 2021, supported by the wider rollout of COVID-19 vaccines, huge stimulus, optimistic profits and reopening of trade. However, tightening central bank policies, inflationary pressures, Chinese regulatory crackdown and slower growth in China continued to weigh on investor sentiment.
Central banks around the world, such as Russia, Brazil, Norway, Hungary and Chile, have raised interest rates to keep inflation under control, while some are tightening. The Federal Reserve has signaled a more aggressive unwinding of its monthly bond purchases during the pandemic, paving the way for three interest rate hikes in 2022 to fight inflation. The European Central Bank maintained its accommodative policy in October while continuing its asset purchases at a moderately slower pace in Q4 compared to Q2 and Q3.
In the commodity world, as the luster of gold and silver faded, industrial metals and energy got hot. Industrial metals like copper, platinum and tin have jumped in optimism about the economic recovery. Agricultural commodities are not declining either, as corn has strengthened in the face of China’s buying frenzy. The price of oil has returned to pre-COVID levels due to rising demand and tightening supply.
In view of this, we’ve highlighted the best and worst performing areas of 2021 and their ETFs:
Breakwave Dry Bulk Shipping ETFs BDRY, which is the only freight forward ETF exclusively focused on dry bulk transport, was the biggest winner, with a gain of around 267%. The spectacular rally was prompted by lingering supply chain problems around the world caused by the pandemic. This has bolstered demand for dry bulk shipping, pushing prices higher (read: Shipping ETF tops in 2021: what’s behind the push?).
The Breakwave Dry Bulk Shipping ETF provides exposure to the dry bulk shipping market through a portfolio of near date freight forward contracts on dry bulk indices. It holds freight forward contracts with a weighted average of about three months until expiration, using a combination of one to six month freight forward contracts, based on the current schedule. .
The Breakwave Dry Bulk Shipping ETF has accumulated around $ 63.8 million in assets under management and trades a good volume of around 324,000 shares per day on average. It charges an annual fee of 3.47% higher.
Supply problems coupled with the acceleration in demand led to higher tin prices. iPath Bloomberg Tin Subindex Total Return ETN JJT is up 121.4%. The product tracks the Bloomberg Tin Subindex Total Return, which generates returns through an unleveraged investment in tin futures.
iPath Bloomberg Tin Subindex Total Return ETN has been able to manage $ 18.5 million in assets under management and trades a moderate volume of approximately 3,000 shares per day. The expenditure rate is 0.45%. The iPath Bloomberg Tin Subindex Total Return ETN has a Zacks Rank # 5 (strong sell) ETF with a high risk outlook (read: Industrial metal ETFs win in 2021: what’s next in 2022?).
Natural gas is rising due to tight supplies and low inventories, giving natural gas stocks and ETFs an edge. First Trust ISE-Revere Natural Gas Index Fund FCG provides exposure to US companies involved in the exploration and production of natural gas. He follows the ISE-REVERE Natural Gas index and holds 43 shares in his basket.
The First Trust ISE-Revere Natural Gas Index Fund has accumulated $ 433.9 million in its asset base while charging 60 basis points of annual fees. Volume is good, with 1.3 million shares traded per day on average. The product jumped 98.5% and has a Zacks ETF Rank # 2 (Buy) with a high risk outlook (read: 5 top ranked ETFs on the market in 2021).
The worst areas
Although stock market volatility has increased in recent months, it has been in the background for most of 2021. As such, volatility products have been the biggest losers. Specifically, VIX ProShares Short-Term Futures ETF VIXY plunged 72.2%. It offers long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a VIX monthly futures portfolio with a weighted average of one month before expiration.
The ProShares VIX Short-Term Futures ETF has raised $ 265.7 million in assets under management and charges 85 basis points of fees per year. The fund trades an average daily volume of approximately 4.4 million shares.
Chinese authorities introduced a series of laws this year, largely aimed at the tech industry. The crackdown wiped out billions of dollars in value to the country’s internet giants. While many Chinese ETFs have suffered losses, KraneShares CSI China Internet Fund KWEB lost 51.7%. This product provides exposure to companies based in China whose business or primary businesses are in the Internet and Internet related industries. It tracks the CSI China Overseas Internet Index. KraneShares CSI China Internet Fund has 55 securities in its basket and charges 70 basis points of annual fees to investors.
KraneShares CSI China Internet Fund has raised $ 6.8 billion in its asset base and trades an average daily volume of 14.6 million shares. The product has a Zacks ETF # 5 (Strong Sell) ranking with a high risk outlook.
China’s regulatory crackdown has also hit the education sector with Global X Education ETF EDUT plunging 50.3%. It seeks to invest in companies providing products and services that facilitate education, including online learning and the publication of educational content, as well as those involved in early childhood education, higher education and vocational education globally).
The Global X Education ETF tracks the Indxx Global Education thematic index and has 39 stocks in its basket. With assets under management of $ 6.2 million, it charges 50 basis points in annual fees and trades an average daily volume of 4,000 shares.
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ETF ProShares VIX ShortTerm Futures (VIXY): ETF Research Reports
First Trust Natural Gas ETFs (FCGs): ETF Research Reports
KraneShares CSI China Internet ETF (KWEB): ETF Research Reports
iPath Series B Bloomberg Tin Subindex Total Return ETN (JJT): ETF Research Reports
ETF Breakwave Dry Bulk Shipping (BDRY): ETF Research Reports
ETF Global X Education (EDUT): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.