Best ETFs of the week: VIX, US Treasury Bonds and Thematic ETFs

Fed announces sooner-than-expected rate hike projections: stock markets down, volatility and long-term treasuries up

On Friday, the Fed (the US Central Bank) shocked investors when it announced that it was expecting to increase interest rates again. The rate hikes could start as soon as 2023. This is much sooner than expected. The Fed’s last announcement in March said that there would be no increases until at least 2024.

Volatility suddenly increased in the markets following the Fed announcement. Stocks ended the week in the red, but US treasury bonds were up with the Fed’s heightened inflation expectations. On the currencies side, the American dollar gained strength last week. Its value jumped against most of the other currencies, ending a bearish period of more than one year.

Top ETFs of the Week: VIX, US Treasuries and Thematic ETFs

Top 10 Europe

1. Lyxor S&P 500 VIX Futures Enhanced Roll ETF: +8,47%
2. WisdomTree Cloud Computing ETF: +7,48%
3. KraneShares ICBCCS SSE STAR Market 50 Index ETF: +5,04%
4. WisdomTree Cybersecurity ETF: +4,93%
5. HANetf Solar Energy ETF: +4,57%
6. iShares $ Treasury Bond 20+yr ETF: +4,49%
7. WisdomTree Short GBP Long USD: +4,35%
8. VanEck Vectors Digital Assets Equity ETF: +4,32%
9. Lyxor US Treasury 10+Y (DR) ETF: +4,30%
10. SPDR Barclays 10+ Year U.S. Treasury Bond ETF: +4,30%

Top 10 Americas

1. ProShares VIX Short-Term Futures ETF: +12,77%
2. Horizons BetaPro S&P 500 Vix Short-Term Futures ETF: +10,03%
3. Simplify Volt Cloud and Cybersecurity Disruption ETF: +6,58%
4. WisdomTree Cloud Computing Fund ETF: +5,31%
5. ProShares VIX Mid-Term Futures ETF: +4,72%
6. iShares S&P/TSX Capped Information Technology Index ETF: +4,30%
7. PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF: +4,20%
8. iShares 25+ Year Treasury STRIPS Bond ETF: +4,19%
9. Franklin Disruptive Commerce ETF: +3,70%
10. Vanguard Extended Duration Treasury ETF: +3,48%

Last week’s best performing ETF is a fund tracking the volatility of the S&P 500 index. This world-famous stock index measures the performance of the largest 500 companies in the US. The VIX is the familiar name given to the Chicago Board Options Exchange's CBOE Volatility Index, which is a popular measure of the volatility of the S&P 500 index.

There are just 3 European ETFs replicating the performance of the VIX index. Volatility usually trends down and tends to spike up suddenly when markets are stressed. It is therefore rare to see volatility-based ETFs among the top performing ETFs of the week. This shows the presence of high volatility in the markets last week, especially on Friday.

ETFs tracking long-term US government bonds also performed well last week. Three US treasuries ETFs are present in the top. Heightened inflation expectations as well as the small market crash of Friday pushed investors to “fly to quality”. This term is used when investors seek refuge in assets that are perceived less risky.

Last but not least, Thematic ETFs are again amongst the top performers of the week. Among the best performing themes we find Cloud Computing, Cybersecurity, Solar Energy and Digital Assets.

Bottom ETFs of the Week: Commodities and Gold miners plunge

Bottom 10 Europe

1. Xtrackers Physical Rhodium ETC: -10,37%
2. WisdomTree Soybean Oil: -10,29%
3. L&G Gold Mining ETF: -9,91%
4. 21Shares Stellar ETP: -9,37%
5. ZKB Palladium ETF AA : -8,88%
6. VanEck Vectors Gold Miners ETF: -8,88%
7. WisdomTree Soybeans - EUR Daily Hedged: -8,84%
8. iShares Gold Producers ETF: 8,75%
9. VanEck Vectors Junior Gold Miners ETF: -8,55%
10. WisdomTree Copper - EUR Daily Hedged: -8,51%

Bottom 10 Americas

1. iShares Silver Bullion ETF: -14,97%
2. BMO Equal Weight Global Base Metals Hedged to CAD Index ETF: -13,78%
3. Global X Copper Miners ETF: -12,71%
4. Evolve Global Materials & Mining Enhanced Yield Index ETF: -12,53%
5. Purpose Ether ETF: -12,47%
6. SPDR S&P Metals and Mining ETF: -12,15%
7. Ninepoint Silver Equities Class: -12,03%
8. iShares S&P/TSX Global Base Metals Index ETF: -11,50%
9. CI First Asset Gold+ Giants Covered Call ETF: -11,25%
10. ETFMG Prime Junior Silver ETF: -11,19%

In last week’s bottom performers, we find commodities ETFs – both traditional and crypto – as well as gold miners ETFs, which performance is strongly correlated to the price of Gold.

Commodities have performed extremely well since the start of the Covid-19 pandemic. Indeed, difficulties in production lines and transport lead to shortages of raw materials and boosted commodities prices. Some commodities had double-digit growth over the past twelve months.

Now investors are expecting a general improvement in factory production and manufacture, transport and in the economy. This could significantly reduce raw material shortages in the medium term. As a result, investors have sold their commodities holdings and the prices were pushed down.

There is also a Crypto ETF amongst last week’s worst performers. The cryptocurrency market is suffering following the Chinese government restrictions. The 21Shares Stellar ETP and the Purpose Ether ETF, both in these rankings, have lost respectively 48% and 31% in one month.

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