The general market is reeling from the impact of the Omicron variant as both investors and governments scramble on how to tackle the new Covid-19 strain.
Although exchange-traded funds (ETFs) have acted as a cushion in such a situation, the market has mainly traded in the red over the last seven days. Worth noting is that November was a roller-coaster ride for many stocks, which has naturally impacted the exchange-traded funds (ETFs) that track them.
The negative returns have appeared to dampen the gains made in the ETF market in 2021. For example, by mid-November, U.S. ETFs had recorded inflows of about $750 million, with assets under management surpassing $7 trillion.
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Although the global ETF market has been in the red over the last seven days, several have earned positive gains mainly driven by projected policy changes.
Inverse ETFs turned the market green by recording significant gains mainly driven by plans by Federal Reserve to increase interest rates in the future. The Fed has argued that the economy is strong despite the high inflation.
Inverse ETFs register significant gains
Direxion Daily Small Cap Bear 3X Shares (NYSEARCA: TZA) is the biggest gainer at 15.72%. The ProShares Ultra ProShort Short Dow 30 (NYSEARCA: SDOW) is another winner at 8.89%. The Direxion Daily S&P 500 Bear 3X Shares (NYSEARCA: SPXS) has also gained 7.30%.
Slight gains have also been registered under fixed income EFTs with iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT), spearheading the gains at 3.89%.
Elsewhere, Vanguard’s Total Stock Market Index ETF (NYSEMKT: VTI), which tracks the index covering the entire US Stock Market, is down 3%. Similarly, The SPDR Dow Jones Industrial Average ETF (NYSE: DIA), which tracks the Dow Jones, is also down 3.19%.
The Direxion Daily S&P500 Bull 3X Shares (NYSEARCA: SPXL), which offers daily leveraged exposure to a market-cap-weighted index of 500 large-cap and midcap U.S. companies selected, was the biggest loser under leverage by 7.99%.
For specific U.S. sectors, technology ETFs are also in the red, led by Direxion Daily Semiconductor Bull (NYSEARCA: SOXL) that tracks the performance of U.S. companies engaged in the design, distribution, manufacture, and sale of semiconductors is down 5.43%.
SPDR S&P Regional Banking ETF (NYSEARCA: KRE) from the financial sector has also plunged 5.36%. The energy stocks’ correction impact has also spilled to ETFs, with SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP) leading the plunge at 8.68%.
Asia ETFs trading in the red
China’s ETFs are also dominantly in the red zone as iShares MSCI China ETF (NASDAQ: MCHI) emerging among the notable losers at 4.12%. In Japan, iShares MSCI Japan ETF (NYSEARCA: EWJ) has been down 2.63% over the past week.
European ETFs are have also made slight losses, with iShares MSCI Germany ETF (NYSEARCA: EWG) plunging 2.73%.
With rising inflation figures focusing on precious metals, ETF tracking both gold and silver have also experienced high volatility over the seven days. SPDR Gold Trust (NYSEARCA: GLD), which tracks the price of gold bullion, is slightly down at 1.13%, while iShares Silver Trust (NYSEARCA: SLV) is at -5.05%.
Despite most ETFs recording negative returns in the last seven days, they remain a solid avenue of getting involved in the stock market. Overall, due to ETFs’ low entry fees, they are emerging as the perfect option for building wealth, and investors will be hoping for a rebound soon.
