While most enjoyed 2012′s rather impressive track record, other not-so-lucky investors fell pray to those corners of the market most affected by the global economic slowdown. Some of the worst performers were the usual subjects, namely volatile commodities and alternative energy equities, but others might have been somewhat surprising. From the frustrating natural gas market to investments in a popular Latin American country, we outline the ten worst-performing ETFs in 2012 (Year-to-date returns as of 12/20/2012) [see also How To Pick The Right ETF Every Time]:
1. C-Tracks ETN Citi Volatility Index Total Return (CVOL), Down 90%
This year’s biggest loser was CVOL, which was able to lose almost 100%. The index this fund is designed to measure directional exposure to the implied volatility of large cap U.S. stocks, but sadly for Citigroup, U.S. stocks didn’t take any major hits this year.
2. Dow Jones-UBS Coffee ETN (JO), Down 43%
This hyper-targeted ETN is a single commodity sub-index that currently consists of one coffee futures contract at a time. With the whole world obsessed with this caffeine fix and supply guts on the rise, it may come as a surprise that JO and CAFE have performed so poorly in 2012 [see also 13 Rapid Fire ETF Ideas For 2013].
3. Gold Explorers ETF (GLDX), Down 32%
Gold explorers and miners have fallen on hard times this year, as rising production and operating costs continue to hammer the industry. And although gold prices have fared well, the uptick in the precious metal has not been able to compensate for gold miners’ and explorer’s rising costs, forcing this ETF, as well as GDXJ and GGGG, to log in some hefty losses on the year [see also Mining Boom ETFdb Portfolio].
4. Market Vectors Solar Energy ETF (KWT), Down 31%
While alternative energy might be good for the environment, it has proved problematic for investors. This ETF provides exposure to publicly-traded companies from around the world that derive the majority of their revenues from solar power products and services, which have not performed well since the global economic slowdown.
5. Pure Beta Softs ETN (GRWN), Down, 24%
This ETN offers exposure to a basket of natural resources known as the “soft” commodities: coffee, cocoa, cotton and sugar. With the exception of cocoa, it has been an abysmal year for the other soft commodities, forcing this ETF, along with JJS, CANE and CTNN, to post double-digit losses on the year.
6. DJ-UBS Natural Gas Subindex Total Return ETN (GAZ), Down 23%
This fund can make or break an investor, depending on when it’s bought and sold, but it has never been considered a long-term investment. And considering GAZ’s abysmal fall this year, that sentiment could not be more true [Download 101 ETF Lessons Every Financial Advisor Should Learn].
7. Global Carbon ETN (GRN), Down 22%
GRN is one of the more bizarre products in the rapidly-expanding ETF universe; this ETN is linked to an index that consists of carbon-related credit plans. Considering its very narrow focus, it is perhaps not surprising to see this fund among some of the worst performers of the year.
8. Market Vectors Coal ETF (KOL), Down 21%
KOL’s dismal performance in 2012 has illustrated just how much coal has fallen out of favor as an energy source. The U.S. Energy Information Administration attributes the decline to lower demand, which stems directly from the drop in natural gas prices.
9. FTSE Argentina 20 ETF (ARGT), Down 16%
As with many Latin American countries, Argentina also fell victim to Brazil’s economic slowdown. With its largest trading partner struggling to stay afloat, equities from Argentina took a major hit this year, forcing this ETF to post double-digit losses [see also LatAm Centric ETFdb Portfolio].
10. WTI Crude Oil Fund (CRUD), Down 12%
Yet another volatile commodity, WTI crude oil futures contracts exhibited some significant price swings this year as supply disruptions and waning demand from a slowing global economy weighed heavily on the commodity.
Disclosure: No positions at time of writing.