As we near the spookier time of the year, it is fair to say many investors have been stung by the monster that is COVID-19. While some sectors and themes have seen fantastic performances as markets recovered over the summer, some have had frightful periods of prolonged underperformance.

With less than two months until the end of a horror year, in the run-up to Halloween, ETF Stream has selected the ETFs that have tricked and treated investors this year.

Treats

The technology sector was seeing significant growth potential in the lead up to 2020 which was propelled even further following the global lockdown seen in Q1. As a result of businesses having to quickly react to employees working remotely, cloud technology played a vital role in enabling companies to continue as normal.

Therefore, the WisdomTree Cloud Computing UCITS ETF (KLWD) has had a stellar year so far having climbed 74.5%. Its largest holding Zoom, which many firms adopted for their conference call platform, jumped 658.4% this year alone. As some large and developed countries such as France are going into a second lockdown, these sorts of companies will continue to grow in demand.

WisdomTree cloud computing ETF trounces rivals this year amid stellar performance

Another theme that has benefited from people staying at home is the gaming industry. As an alternative to socialising and interacting outside, some resorted to gaming as a means of entertainment.

The VanEck Vectors Video Gaming & eSports UCITS ETF (ESPO) has a year-to-date return of 62.9%, in tandem with over $400m inflows, according to ETF Logic. As a result, ESPO has seen its assets under management balloon to $685m since its inception in July 2019.

Several commodity ETPs have not only offered a safe haven for investors during periods of volatility, but they have also produced some attractive returns, most notably silver. The second favourite precious metal has been riding on the coattails of gold while also benefiting from a weakening US dollar.

The Invesco Physical Silver ETC (SSLV) has seen its net asset value (NAV) climb 29.3%, year-to-date. The commodity could however turn unfavourable towards the end of 2020 as the dollar begins to recover slightly. This has been down to a number of factors including the upcoming presidential election and the possibility of a new stimulus.

Invesco cuts fees on gold ETC for second time this year

Similarly for gold, the iShares Physical Gold ETC (SGLN) has returned 22.9% YTD as the yellow metal has been very popular among investors this year. IGLN has attracted $5.9bn in net new assets this year along with the Invesco Physical Gold ETC (SGLD) and the Amundi Physical Gold ETC (GOLD) also seeing $4.7bn and $2.1bn inflows, respectively.

Tricks

As some technology sector and themes rallied as a result of businesses having to work remotely, others were left helpless as the volume of consumers declined, notably, the energy sector.

The demand for travel fell dramatically and as a result, much of the energy sector was oversupplying. The Invesco US Energy Sector UCITS ETF (XLEP) has seen its value more than half this year. Similarly, the iShares S&P 500 Energy Sector UCITS ETF (IUES) and iShares Oil & Gas Exploration & Production UCITS ETF (IOGP) have both seen returns of -50%.

The financials sector has also struggled as many of the European banks have made underwhelming revenue for the year. The Lyxor EURO STOXX Banks UCITS ETF (BNKE) has fallen 44.6% this year.

At the end of Q3, HSBC announced its quarterly revenue was down 11% from the previous year which has largely been put down to the interest rate cuts being implemented by central banks across the world.

The UK equity market has been an unappealing option for investors this year, not only for the impact caused by the spread of coronavirus, but also because of the Brexit negotiations continuing until the end of the year.

The FTSE 100 is down 26.6% for the year while most other leading developed indices are back into positive territory. Nonetheless, investors have still been adding assets to ETFs with the exposure.

The iShares Core FTSE 100 UCITS ETF (ISF) has had $1.4bn inflows YTD while the Vanguard FTSE 100 UCITS ETF (VUKE) has attracted $613.6m.

Amundi moves FTSE 100 ETF to ESG index

BlackRock’s UK dividend-focused ETF, the iShares UK Dividend UCITS ETF (IUKD) as a result of its overweighting to financials as it has underperformed the FTSE 100 by a further 5.9%. Those hoping to benefit from the income from this ETF would have been left disappointed as a result of 445 companies listed on the London Stock Exchange having to cancel, cut or suspend dividend payments this year.

Looking forward, given that some industries such as energy and aviation have not gone back to business functionality seen pre-COVID-19, these dividend payouts do not look like they will be rebounding any time soon.

For others, the decision not to pay dividends to please investors has created an opportunity for them to realign in-house and repair structural faults. Therefore, when it comes to the next payout, there might be a few treats in store, even after Halloween.

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