Market Overview

5 Of 2012's Most Disappointing ETFs


Alright, maybe we're being a bit picky. After all, finding a plain vanilla equity-based or commodities ETF that is even down on a year-to-date basis is no easy task. Strip out the bond funds and leveraged and inverse fare and the number of ETFs that are negative slips dramatically.

Alas, we're talking about DISAPPOINTING ETFs, not just those that are negative to start the year. So the list that follows includes some ETFs that are in fact in the red and others that are positive, but should be so by greater margins.

Some of the constituents here are have potential to right the ship. Others could be in even worse shape come December. With no further ado...

Teucrium Corn Fund (NYSE: CORN) CORN was decked in January by a USDA inventories report that showed stronger-than-forecast corn supplies. That's the primary reason for CORN's glum year-to-date run and to the fund's credit, it has maid up some of those losses. What makes CORN a disappointment is that riskier assets and many of the ETFs tracking them, have been rewarded this year. Any of the ETFs backed by physical holdings of precious metals, all of which are far cheaper than CORN, have sharply outperformed this ag commodities play.

First Trust Morningstar Dividend Leaders ETF (NYSE: FDL) Yes, it should be acknowledged that the First Trust Morningstar Dividend Leaders ETF is trading just pennies away from its 52-week high. And yes, it should be acknowledged the ETF isn't down by all that much year-to-date. However, it should also be said that FDL has lagged the performance of the SPDR S&P Dividend ETF (NYSE: SDY) and the Vanguard Dividend Appreciation ETF (NYSE: VIG).

Explaining FDL's tough go in 2012 is easy. The ETF features a weight of 26.3% to utilities stocks and that group has not been embraced thus far this year.

Market Vectors Indonesia Index ETF (NYSE: IDX) We've already mentioned IDX as an emerging markets disappointment even though the fund is positive year-to-date. Then again, IDX has been sharply outpaced by the country-specific funds for the following nations: Malaysia, the Philippines, Thailand and Vietnam.

iShares MSCI South Africa Index Fund (NYSE: EZA) Normally, an almost 9% jump to start the year the year would be impressive, but in EZA's case, it's not all that much to get worked up about. South Africa is a major platinum, but getting platinum exposure through EZA would have some investors fuming because the ETFS Physical Platinum Shares (NYSE: PPLT) has more than doubled EZA's returns. Even the Vanguard MSCI Emerging Markets ETF (NYSE: VWO) has far outperformed EZA to start the year.

iShares S&P Global Energy ETF (NYSE: IXC) The iShares S&P Global Energy ETF is an ETF that, despite having almost $1.2 billion in AUM, doesn't get a lot of press. The performance has been solid thus far in 2012, but there are dents in the armor here.

First rolling the dice on BP (NYSE: BP) would have been more rewarding than playing IXC. Second, the much smaller SPDR S&P International Energy Sector ETF (NYSE: IPW) has slightly outperformed IXC despite having a much larger allocation to Royal Dutch Shell (NYSE: RDS-A), one of the laggards among global integrated oil stocks to start the year.


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