After a blockbuster start to 2018, the rally in the global stock market fizzled out to end the quarter. This is especially thanks to a series of challenges including inflation fears, speculation of faster-than-expected rates hike, Washington turmoil, and protectionist and anti-trade Trump policies. A massive tech selloff was the major culprit that sent the global stocks into a tailspin lately.
American equities are on track for the worst quarter since 2015 while European equities also saw the worst slump in two years. In fact, the S&P 500 has shed about $2.34 trillion since late January and erased 40% of market cap gains since Donald Trump was elected to office. Investors should note that the Trump rally has boosted global markets in a big way in more than a year. Now with the rally fading, global markets have been hit hard.
Other asset classes like commodities or fixed income have seen mixed trading. This is because although the risk-off trade brought the precious metals and bonds in the limelight, increased confidence, solid corporate earnings and the new tax legislation dampened their demand.
That said, some corners of ETF investing have performed well while some are lagging. Below, we have highlighted the best and worst zones of Q1 and their ETFs in detail:
Volatility has been the key theme in the first quarter as the CBOE Volatility Index (VIX), also known as the fear gauge, traded in a wide range of high of more than 50 and a low of below 9. As a result, volatility products were the biggest gainers. In particular, Rex Volmaxx Long Vix Weekly Futures Strategy ETF (VMAX – Free Report) has surged 100%. It seeks to benefit from a negative correlation between the VIX Index and the equity market.
The ETF provides long exposure to the VIX Index by holding a combination of VIX futures contracts that are near expiration. It has amassed $3.3 million in AUM and charges 2.90% in fees per year. It sees a meager volume of about 11,000 shares a day.