Top And Flop ETF Areas Of May

Turning a deaf ear tothe maxim — “sell in May and go away” — Wall Street held its head high in the month. The proverb is actually ingrained in the S&P 500’s awful historical run for the May-to-October period, but was hardly apt for recent years. The S&P 500 index was up 2.8% in the last one month (as of May 30, 2018) while the Dow Jones Industrial Average advanced 2.1% and the Nasdaq composite jumped 5.6%.

But not all areas showed strength. There were pockets of steep declines in the month in other asset classes or economies. In the light of this, we highlight a few winning and losing ETF areas of the month of May.

Gainers

Semiconductor

The semiconductor space — which was hit hard by Nvidia’s suspension of self-driving car tests on public roads and Chinese trade tensions — rebounded in May. Superb earnings, rapid adoption of advanced information technologies and upbeat semiconductor sales globally made the revival possible (read: 5 Reasons to Bet on the Rebound in Semiconductor ETFs).

iShares PHLX Semiconductor ETF SOXX, PowerShares Dynamic Semiconductors ETF (TO:PSI) and First Trust Nasdaq Semiconductor ETF FTXL added 10% to 12% in the past month (as of May 30, 2018).

Healthcare

Pharma & Biotech ETFs had a decent run in the month. President Trump’s announcement of the drug plans that were in line with the interest of pharma companies favored the space. Trump’s plan also intends to put pressure on U.S. trading partners and make them pay more for medicines.

PowerShares DWA Healthcare Momentum ETF (HN:PTH) , SPDR S&P Health Care Equipment (NYSE:XHE) ETF XHE and ALPS Medical Breakthroughs ETF (SI:SBIO) advanced in the range of 7.6% to 11.2% (read: Pharma & Biotech ETFs Soar on Trump's Drug Plan).

Small-Cap

The small-cap segment has been on a tear lately on strength in the U.S. dollar and geopolitical worries. Economic well-being in the domestic land is seen as beneficial for small-cap stocks. Since the U.S. economy has been performing better than several other developed economies, several small-cap ETFs hit a 52-week high in the month. Small-cap earnings were also better in the latest reporting cycle. PowerShares Russell 2000 Pure Growth ETF PXSG added about 9.6% in the month (as of May 30, 2018) (read: Solid Small-Cap Earnings Put Spotlight on These Sector ETFs).

Losers

Brazil

In the EM bloc, Brazil deserves a special mention as the economy was hurt by the double whammy of a stronger dollar and a truckers’ strike in protest against rising oil prices. The crisis stalled Brazil’s economy. Brazilian small-cap fund iShares MSCI Brazil Small-Cap ETF EWZS lost about 15.7% in the past month.

Argentina

Not only Brazil, Argentina was also facing economic crisis in the month. The central bank has hiked interest rates three times in a span of eight days. A surging dollar and massive drop in peso led the bank to take such steps.

However, history and global records indicate that such tightening moves fail to give long-term cushion to an economy. iShares MSCI Argentina and Global Exposure ETF (TO:AGT) lost 13.6% in a month (as of May 30, 2018) (read: Inside The Slump in Argentina ETFs).

Italy

And last but not the least, Italy’s internal political crisis posed serious threat to global markets. The upheaval reached such a level that investors started mulling over Italy’s likely exit from the Eurozone. Though crisis eased somewhat at month-end, iShares MSCI Italy Capped ETF (LON:EWI) shed about 10% in the month (read: ETFs to Gain/Lose if Italy Crisis Deepens).

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