August was the cruelest month for the U.S. stock market with volatility levels peaking and China roiling the markets. The worries intensified when China unexpectedly devalued its currency on August 11, triggering off a brutal sell-off across the globe and deepening fears of global growth.

The slide in the stocks continued following the weak Chinese factory activity data and the dovish Fed minutes. All these market gyrations raised questions on the six-year bull market and pushed the major bourses into the correction territory, pushing them 10% down from their recent heights (read: Top ETF Stories of August).

However, the latest slew of better-than-expected economic data, fresh China stimulus, and bargain hunting helped stocks to recover from the correction territory. Still, the uncertainty over the interest rates hike is looming large as one of the Fed officials hinted at an unlikely September rise in interest rates while another sees the hike in the cards.  

Notably, Dow Jones tumbled 6.6% in August, indicating the largest monthly loss since May 2010 while the S&P 500 and Nasdaq Composite Index dropped 6.3% and 6.9%, respectively, representing the biggest monthly loss since May 2012. Added to the woes are weakness in the emerging markets and the slump in commodities.

Though oil prices continued their plunge in the month leading to a further slump in the broad commodities, most of the losses were erased in the final two days of last week. Notably, U.S. oil surged 17% in just two days, representing the biggest two-day rally in six years. On the other hand, the risk-off sentiments led to a flight-to-safety among investors, giving a boost to Treasuries and gold.

That being said, we have highlighted the two best and worst ETF performers of last month.  

Best ETFs

C-Tracks on Citi Volatility Index ETN ((CVOL - ETF report)) – Up 91.1%

Volatility products gained the most in August, as these tend to outperform when markets are falling or fear levels over the future are high, both of which are happening lately. As such, CVOL linked to the Citi Volatility Index Total Return, jumped about 91% last month (read: Leveraged Volatility ETFs Gain Over 100% from Global Rout).

The note provides investors with direct exposure to the implied volatility of large-cap U.S. stocks. The benchmark combines a daily rolling long exposure to the third and fourth month futures contracts on the VIX with short exposure to the S&P 500 Total Return Index. The product has amassed $5.7 million in its asset base while charging 1.15% in annual fees from investors. The note trades in good volume of more than 103,000 shares per day.

ALPS Sprott Junior Gold Miners ETF ((SGDJ - ETF report)) – Up 5.9%

Though the rising interest rates concern has dulled the appeal for gold over the past several months, the uncertainty in the timing of the rates hike and global concerns are compelling investors to turn their focus on gold as a store of value. Acting as leveraged plays, gold miners tend to experience more gains than the gold bullion. SGDJ targets the small cap segment of the gold mining industry by tracking the Sprott Zacks Junior Gold Miners Index. The benchmark utilizes the factor-based methodology that seeks to emphasize companies with the strongest relative revenue growth and price momentum.

In total, the fund holds a small basket of 33 stocks with the highest allocation to the top firm – Centerra Gold (CG - Snapshot Report) – at 8.8%. Other firms hold less than 5.8% of assets. In terms of country exposure, Canada takes the largest share at 74% while the U.S. receives just 13% of SGDJ. The fund has accumulated $20.1 million in AUM since its debut in March and sees a paltry volume of about 17,000 shares. Expense ratio came in higher at 0.57%. The fund gained nearly 6% in August (read: Gold Mining ETFs Benefit Most from Fed Minutes).

Worst ETFs

Market Vectors China SME-ChiNext ETF ((CNXT - ETF report)) – Down 23.9%

Though the Chinese contagion spread globally, A-shares ETFs were the worst hit by the rout. As a result, CNXT, which had a torrid run in the first half of 2015, plunged 23.9% in August. This fund offers exposure to the largest and most-liquid China A-share stocks listed and trading on the Small and Medium Enterprise (SME) Board and the ChiNext Board of the Shenzhen Stock Exchange by tracking the SME-ChiNext 100 index. It holds 102 stocks in its basket with none accounting for more than 4.30% share.

About one-third of the portfolio is allotted to information technology, while industrials, consumer discretionary and health care round off the next three spots with double-digit exposure each. The product is unpopular and illiquid with AUM of $33 million and average daily volume of more than 141,000 shares. It charges 66 bps in fees per year (read: Profit From China Sell-Off Via These Inverse ETFs).

Market Vectors Solar Energy ETF ((KWT - ETF report)) – Down 20.4%

The solar industry is entangled in vicious oil trading given investors’ misconception that oil price and solar market fundamentals are directly related with each other. Given this, KWT tumbled over 20% last month. The fund manages $17.7 million in its asset base and provides global exposure to 33 solar stocks by tracking the Market Vectors Global Solar Energy Index. It is somewhat concentrated on the top 10 holdings with 57.3% of assets.

In terms of country exposure, the U.S. and China account for the top two countries with 37.4% and 30.8% allocation, respectively, closely followed by Taiwan (15.5%). The product has an expense ratio of 0.65% and sees paltry volume of about 2,000 shares a day.

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