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Worst ETFs of April roundup: Although U.S. markets started strong in April, they ended in the red. To blame in part was a major selloff in various momentum stocks. Additionally, a slow recovery from a harsh winter, political unrest in Ukraine, and less-than-optimal employment data fueled uncertainty on many levels of the economy, including stocks and exchange-traded funds (ETFs).
While some ETFs still managed a banner month in April, others did not. Sectors such as energy, health, and real estate appeared to flourish while others, particularly in the technology sector, struggled.
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The funds highlighted below were some of the worst ETFs of April.
Five of the Worst ETFs In April 2014
Global X Social Media Index ETF (SOCL)
Social media stocks, such as Facebook (Nasdaq: FB) and Twitter (NYSE: TWTR), experienced a major sell-off in April – and the performance of SOCL reflects it. It fell 5.72% in April, and has dropped 22.9% in 2014.
SOCL was organized in November of 2011 to track the performance of the Solactive Social Media Index. Its top holdings – Facebook, Twitter, LinkedIn (NYSE: LNKD) and Yelp (NYSE: YELP) – comprise approximately 48% of the fund's total holdings.
Global X Uranium ETF (URA)
Organized in November 2010, this fund was set up to follow the performance of Solactive Uranium Index.
The Fukushima disaster that occurred in March 2011 brought about a collapse in the uranium industry that's not yet seen a reversal. This is evident in URA's performance over the past few months. While the performance has been less than stellar in 2014, April posted a 10.78% drop, making URA one of the worst ETFs of April.
ProShares Ultra VIX Short-Term Futures (UVXY)
UVXY was organized in October 2011 with a goal of daily investment results of 200% of the S&P 500 VIX Short-Term Futures Index. It has experienced significant declines this year, largely due to investors reorganizing their portfolios to funds that carry a smaller risk.
The month of April saw UVXY drop 10.03%, a drop in the hat of its 51.42% drop over the last 12 months. Year-to-date, UVXY is down 20.16%.
Direxion Daily Russia Bull 3X Shares (RUSL)
This fund was incorporated in the U.S. in May 2011, and is structured to perform at 300% of the Market Vectors Russia Index.
With top fund holdings that include financials such as Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS), the fund has consistently declined in the markets since the beginning of the year. It posted a loss of 14.34% in April and an even worse drop of 56.45% year-to-date, making it one of the worst ETFs of April.
Some of the factors behind the poor performance can be attributed to the geopolitical unrest that continues to create tension in financial markets, and which has prompted investors to seek out the safer blue chips.
Direxion Daily Gold Miners Bull 3x Shares (NUGT)
Launched in December of 2010 and incorporated in the U.S., this fund was set up to achieve daily investment results that reflect 300% of the NYSE Arca Gold Miners Index.
Compared to funds that track similar indices, Direxion Daily Gold Miners Bull 3x Shares has had a fair share of struggles. With primary holders that include another ETF (Market Vectors Gold Miners), NUGT is not the worst of the worst ETFs of April because it has actually recovered some of its 70.96% losses over the past three years within the first four months of 2014. However, the recovery of 35.53% only accomplishes about half, and in April, NUGT saw a small decline of 0.99%.
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