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NEW YORK (ETF Expert) --A fellow money manager recently tweeted, "I'm praying for bad econ news so that the Fed will keep buying bonds. I don't know what else to pray for." I felt the writer's pseudo-pain and promptly bit down on my lower lip.

After all, think about what we celebrate in the investment universe today. We want the economy to sputter or meander, just so our central bank will push interest rates into the proverbial basement. We're addicted.

Last week the U.S.

Dow Jones Industrials

rallied more than 200 points after learning that, for the third consecutive month, jobs increased by less than 200,000. The 175,000 new jobs in May beat watered down expectations, but job growth still remains far too anemic for the Federal Reserve to rein in its bond-buying program. In other words, rates will likely remain contained and U.S. stocks can continue to rally.

Or will they? At least three ETF categories are struggling mightily. And while ongiong rate manipulation might help turn one category back around (i.e., REITs), it isn't going to help the other two segments (i.e., Asia-Pacific and Natural Resources).

Let's take a closer look at these three groupings:


Real estate investment trusts are required to distribute 90% of their taxable income. The certainty of a distribution is attractive to income investors in much the same way that master limitted partnerships (MLPs) attract a legion of loyalists. By the same token, a 30-year fixed mortgage rising from 3.4% to 4%-plus has already hindered refinancing demand and might take a toll on home-buying itself. In turn, REIT ETFs became particularly vulnerable to

Fed "tapering talk."

If funds like

Vanguard REIT

(VNQ) - Get Vanguard Real Estate ETF Report

can discover support at a 100-day, intermediate average, however, the brutally quick correction may end as quickly as it began. Why? For one thing, the U.S. job market as well as the economy as a whole will remain sub-par. That will keep the Fed on its bond-buying binge whereby rate sensitive ETFs like VNQ could respond.

For the moment, though, the overwhelming majority of REIT ETFs are down more than 10% from a 52-week high. Additionally, they sit below their respective 100-day trendlines, which may make them "falling knives" rather than bargain buys. The list of sad-sacks include:

First Trust S&P REIT

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TheStreet Recommends

(FRI) - Get First Trust S&P REIT Index Fund Report


iShares FTSE NAREIT Residential

(REZ) - Get iShares Residential and Multisector Real Estate ETF Report



(RWR) - Get SPDR Dow Jones REIT ETF Report



(RWO) - Get SPDR Dow Jones Global Real Estate ETF Report


iShares DJ Real Estate

(IYR) - Get iShares U.S. Real Estate ETF Report


2. Asia-Pacific ETFs.

Having lived on and off in the region for a number of years in the 1980s and 1990s, few investment advocates have believed as strongly in China's economic rise as well as the Asian neighbor theme; that is, China's rapid internal growth benefits neighboring countries that can provide the second-largest economy with products and services.

More recently, the Asia-Pacific investing theme has fallen on hard times. China's manufacturing sector has been slowing and its leaders have been less willing to "stimulate" through monetary easing. What's more, Japan's massive yen devaluation has made the products of other countries in the region less competitive.

It may take a while for Asia-Pacific ETFs to recover their mojo. For now, it makes more sense to resist the urge to swing for the fences. Struggling country ETFs include:

iShares MSCI Thaliand

(THD) - Get iShares MSCI Thailand ETF Report


Market Vectors Indonesia

(EPHE) - Get iShares MSCI Philippines ETF Report


iShares MSCI Philippines



iShares South Korea

(EWY) - Get iShares MSCI South Korea ETF Report


iShares Singapore

(EWS) - Get iShares MSCI Singapore ETF Report


3. Natural Resources ETFs.

In the same manner that China's growth slowdown has adversely affected country ETFs in Asia, corporations involved in raw material production and distribution are hurting. Not only are fertilizer producers and metal miners having difficulty exporting to China, six consecutive quarters of recession in the eurozone is about as disturbing as it gets. Severe downtrends have occurred in funds like

iShares Global Materials

(MXI) - Get iShares Global Materials ETF Report


Global X Fertilizer/Potash

(SOIL) - Get Global X Fertilizers/Potash ETF Report


WisdomTree Global Natural Resources


as well as

SPDR S&P Global Natural Resources

(GNR) - Get SPDR S&P Global Natural Resources ETF Report


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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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