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Real Estate ETF Falls 82% in Three Months

With pessimistic predictions of a longer-than-forecast global recession, the World Bank spooked the stock market into testing the recent rally.

Eight of the 10 exchange traded funds with the worst grades from Ratings rise at twice the pace of their underlying indexes' declines. Even this week's dip in stocks hasn't come close to bringing the funds into the black. But they could jump back quickly if equities extend their declines.

The ratings are based on month-end data. All of these ETFs earned the lowest possible grade of E-minus by combining high volatility risk and poor reward performance.

The worst-rated, UltraShort Real Estate ProShares (SRS), obliterated shareholder value, declining 82% in three months and 78% over the past year. Betting against the stocks in the FTSE/Xinhua China 25 Index has proved to be just as lethal, with the UltraShort FTSE/Xinhua China 25 ProShares (FXP) down 70% in three months and 84% in 12 months.

The other two ETFs listed play the long side of natural gas prices. At $4 per million British thermal units, the price of natural gas is just off the 8 ½-year low of $3.15 set April 28. The current slump is being blamed on weak global demand on lower industrial consumption, high stockpiles and mild weather in the U.S. in May and June, resulting in less need for gas-generated electricity for air conditioning.

Over the span of a year, the iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (GAZ) and the United States Natural Gas Fund (UNG) lost 77% and 76%, respectively. Ratings grades can be interpreted as follows: A is "excellent" or "buy." B is "good" or "buy." C is "fair" or "hold." D is "weak" or "sell." And E is "very weak" or "sell." A plus or minus sign designates that a fund is in the top or bottom third of funds with the same letter grade.
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SKK $0.00 0.00%
EEV $27.80 0.00%
GAZ $0.49 0.00%
FXP $59.35 0.00%
SRS $54.72 0.00%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

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