September's Worst Performing ETFs: Five Names to Avoid
With September historically being a bearish month for the stock market, it's essential to identify the ETFs that tend to underperform. According to Schaeffer's Senior Quantitative Analyst Rocky White, five exchange-traded funds (ETFs) have consistently struggled in September over the past decade.
The Communication Services SPDR (XLC) is one such ETF that has averaged a 25% loss in September, with an average return of -2.28%. The ETF's recent weekly loss and year-to-date breakeven threshold make it a concern. Its holdings in Meta Platforms (META) and Alphabet (GOOGL) may be vulnerable to Big Tech profit-taking.
Another underperforming ETF is the SPDR S&P Pharmaceuticals (XPH), which has finished September lower eight times in the last decade, with an average return of -2.07%. The pharma ETF's recent decline since its Aug. 19 record peak of $74.34 may be due to profit-taking in names like Moderna (MRNA) and Merck (MRK).
The Financial Select Sector SPDR (XLF) has only ushered in two September wins in 10 years, with a -3.4% average return. Despite its recent rebound off $57 and July seasonality that impressed the trading team, central bank headwinds could trip up the ETF later in the month.
The iShares U.S. Real Estate (IYR) has finished a mere two of its last 10 Septembers higher, with a grim average loss of 3.6%. Its year-to-date gain of 9.2% may be at risk if the Fed decides to hike interest rates.
The worst ETF to own in September is the Real Estate Select Sector SPDR (XLRE), which carries a grim 20%-win rate and average loss of 3.7%. The ETF's recent weekly drop and consolidation around $44 make it a concern.