ETF Select 100: Which Were The Worst-performing Funds In January?

According to data from Selftrade and ITI Group, the iShares $ Treasury Bond 7-10yr UCITS ETF was the worst-performing fund last month, falling 4.85%, while the iShares $ Short Duration Corporate Bond UCITS ETF and iShares $ Treasury Bond 1-3yr UCITS ETF were close behind, dropping 4.07% and 3.84%, respectively.

Furthermore, the iShares $ TIPS UCITS ETF and iShares Global Corporate Bond UCITS ETF completed the bottom five, slumping 3.62% and 2.87%, respectively.

Concerns over central bank policy and higher-than-expected inflation caused global bond markets to sell-off on 29 January with 10-year Treasury yields rising to 2.73%, their highest point since April 2014, while two-year Treasury yields reached the highest level since September 2008, climbing to 2.16%.

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Simon Glover, chairman of ITI Group, said: "It was no surprise that interest rates turned a little higher and so ETFs offering exposure to bonds filled our five worst performers this month. Some are now calling the end to what has been a thirty-five-year bull market for bonds.

"Interest rates in the market had already started to rise during January and consequently bond prices fell, resulting in bond ETFs filling our bottom ten ETF Select 100 performers in January, as the price of a bond moves inversely to its interest rate.

"It seems likely that there will be more pain to be felt in the bond markets over coming months."

Emerging market ETFs were impacted the least by January's sell-off and were boosted by continued strong global growth.

As a result, the Vanguard FTSE Emerging Markets ETF and the iShares Core MSCI Emerging Markets IMI UCITS ETF were in the top five best performers climbing 6.53% and 5.73%, respectively.

Elsewhere, energy ETFs were boosted by rising oil prices, with the db x-trackers Stoxx Europe 600 Basic Resources UCITS ETF topping the performance charts by returning 10.92%. However oil prices have since experienced a slight downturn after the EIA predicted US shale output would hit record levels.

Brent crude climbed as high as $70 on 12 January before falling back, marking a significant rise from the $44.8 a barrel lows seen in June 2017. It is currently trading at $66.6 a barrel.

Glover continued: "Crude oil continued to appreciate as nearby stocks continued to draw down and gold also gained, in part reflecting a weaker US dollar which has lost nearly 3% against the euro so far this month."

Commenting on ETF flows on Selftrade's platform, Mark Taylor, chief customer officer for Selftrade from Equiniti, said: "While regular investors see long-term positives for the UK market we continue to detect short-term concern around the highs of the FTSE and as a result positive flows into the FTSE 100 Daily Short ETF - which remains in our top 5 buys.

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"This month we have also seen concern that the Chinese market may be approaching a correction point as we start to see sell-offs for the first time in the DB X-TRACKERS MSCI CHINA IDX ETF which features in our top five sells for the month of January."