Daily ETF Roundup: VXX Surges 19%, EFA Plummets On Euro-Fears

by on November 9, 2011 | ETFs Mentioned:

Today brought new meaning to the phrase one step forward, two steps back. After a bustling October, one of the best months for stocks in the last decade, November has gotten off to a terrible start. Markets tanked today as investors mulled over worsening fears of debt issues abroad. Today saw almost no major asset class post a session in the black; the Dow surrendered nearly 400 points while the S&P tanked by 3.7%. But the hits didn’t stop there, as oil, which managed to hold its ground for a while, finished down about 0.9% while gold lost 1.4%. Investors have grown increasingly frustrated with gold recently as the precious metal that was once considered a safe haven, has become semi-correlated to major equities [see also Three Long/Short Ideas For Euro Zone Debt Drama].

All eyes have now shifted to Italy, the world’s 8th largest economy, as their ten year yields hit dangerous levels today, finishing about 7%. The last three countries to exhibit this figure (Greece, Portugal, and Ireland) were all forced to take a bailout. And to make matters worse, Italian Premier Silvio Berlusconi announced yesterday that he would be relinquishing his position upon Italy receiving its austerity package, leaving the country shrouded in uncertainty. But Italy is not alone, as Greece still needs to find a new Prime Minister after it was announced that George Papandreou will be handing in his resignation today; this move was postponed to Thursday in order to find a replacement. With all of the turmoil overseas, markets were extremely active in today’s trading. Below, we outline two of the most notable performances on the day [see also Ten Best ETF Performers Over The Last Five Years (Including A Few Surprises)].

One of the biggest ETF winners on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX). The volatility fund saw its share price surge by nearly 19% as the VIX popped in light of today’s massive sell-off. The fund saw its volume spike to 28.7 million, crushing its trailing one-month ADV. With today’s massive gains, this ETN is up about 29% in 2011 while its trailing six month returns are topping 90%. Though VXX is primarily a trading instrument, its recent performance has made it a candidate for a short term hold as markets seem to have no defense for today’s economic blunders [see also ETF Misnomers: Why You Never Judge A Fund By Its Cover].


One of the biggest ETF losers on the day came from the MSCI EAFE Index Fund (EFA), which tracks an index dedicated to equity markets in European, Australasian, and Far Eastern markets. Though Greece and Italy do not represent major holdings in the fund, it still suffered a dismal day as it dropped 5.1%. With today’s performance in the books, EFA has lost almost 14% in 2011 and many investors fear that is still has a ways to go. For as long as the drama in Europe persists, EFA will remain on shaky ground [see also Ten ETFs No One Is Thankful For].

Disclosure: No positions at time of writing.