Economic Warning Signs: 3 Underperforming ETFs

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Source: Thinkstock

Source: Thinkstock

Recently I wrote an article in which I pointed out three ETFs that significantly outperformed the market during the first half of the year. These funds were:

  1. The Market Vectors Junior Gold Miner ETF (NYSEARCA:GDXJ)
  2. The iShares Barclays 20+ Year Treasury Bond ETF (NYSEARCA:TLT)
  3. The SPDR S&P 500 Oil and Gas Exploration and Production ETF (NYSEARCA:XOP)

While it would have been great to own these funds, one thing they have in common is that their outperformance suggests that the economy isn’t so strong. After all, people buy gold and Treasuries when they are concerned about the economy and when they are reluctant to own stocks. Furthermore, the XOP rose primarily because the oil price rose, and a rising oil price makes virtually everything in the economy more expensive, which could end up weakening future growth.

In this article, I have pointed out three ETFs that are underperforming. Unfortunately, the fact that these funds are underperforming further indicates that economic growth may be tepid or negative.

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