Worst-Performing Stock ETFs of the Quarter

Stock exchange-traded funds, or equity ETFs, are often low-cost, tax-efficient instruments for investors to track popular indexes or leverage experienced manager choices to beat the market. The best ones serve as low-cost building blocks in a portfolio, and unlike open-end mutual funds, all ETFs are traded throughout the day on an exchange.

In the second quarter of 2024, the worst performers included ARK Innovation ETF ARKK and Pacer US Small Cap Cash Cows 100 ETF CALF. Data in this article is sourced from Morningstar Direct.

Screening for the Worst-Performing ETFs

To find the quarter’s worst-performing stock ETFs, we screened the Morningstar US Equity category for funds that trade within the United States. We excluded exchange-traded notes, along with ETFs with less than $100 million in total assets.

Among the worst-performing ETFs, four were from the small-value category, where funds fell 3.97% in the second quarter.

The 10 Worst-Performing ETFs for Q2 2024:

1. ARK Innovation ETF ARKK
2. Pacer US Small Cap Cash Cows 100 ETF CALF
3. Invesco S&P MidCap Quality ETF XMHQ
4. Invesco S&P SmallCap Value With Momentum ETF XSVM
5. Euclidean Fundamental Value ETF ECML
6. Invesco S&P SmallCap 600 Pure Value ETF RZV
7. Invesco Dorsey Wright SmallCap Momentum ETF DWAS
8. Cambria Shareholder Yield ETF SYLD
9. VictoryShares THB Mid Cap ETF MDCP
10. Nuveen ESG Mid-Cap Growth ETF NUMG

Metrics for the Worst-Performing Stock ETFs

ARK Innovation ETF

• Morningstar Rating: 1 star
• Expense Ratio: 0.75%
• Morningstar Category: Mid-Cap Growth

The worst-performing ETF in the second quarter was the $6.1 billion ARK Innovation ETF, which lost 12.21%. The actively managed ARK ETF fell further than the average 3.46% loss on funds in the mid-cap growth category in the second quarter. Over the past 12 months, the ARK Innovation ETF fell 0.40%, placing it in the 95th percentile and underperforming the 12.45% return on the category’s average fund.

The ARK Innovation ETF has a Negative Morningstar Medalist Rating, meaning our analysts expect it to be one of the worst performers within its category and think it is unlikely to deliver positive returns after fees.

Pacer US Small Cap Cash Cows 100 ETF

• Morningstar Rating: 4 stars
• Expense Ratio: 0.59%
• Morningstar Category: Small Value

With an 11.16% loss, the $8.9 billion Pacer US Small Cap Cash Cows 100 ETF was the second-worst-performing ETF on our list for the quarter. The passively managed Pacer ETF fell further than the average 3.97% loss on funds in the small-value category. Over the past 12 months, the Pacer US Small Cap Cash Cows 100 ETF gained 8.30%, placing it in the 76th percentile within its category and underperforming the 11.17% return on the average fund.

The Bronze-rated Pacer US Small Cap Cash Cows 100 ETF was launched in June 2017.

Invesco S&P MidCap Quality ETF

• Morningstar Rating: 5 stars
• Expense Ratio: 0.25%
• Morningstar Category: Mid-Cap Blend

The third-worst-performing ETF in the quarter was the $4.6 billion Invesco S&P MidCap Quality ETF, which fell 7.79%. The Invesco ETF, which is passively managed, fell further than the average 3.31% loss on funds in the mid-cap blend category. Over the past 12 months, the ETF rose 26.31% to place in the 3rd percentile within its category, outperforming the average one-year return of 13.23%.

The Invesco S&P MidCap Quality ETF has a Morningstar Medalist Rating of Silver. It was launched in December 2006.

Invesco S&P SmallCap Value With Momentum ETF

• Morningstar Rating: 4 stars
• Expense Ratio: 0.36%
• Morningstar Category: Small Value

The $745 million Invesco S&P SmallCap Value With Momentum ETF was the fourth-worst-performing ETF in the second quarter, with a loss of 7.77%. The passively managed Invesco ETF performed worse than the average 3.97% loss on funds in the small-value category. Over the past year, the ETF gained 14.45% to land in the 22nd percentile within its category, outperforming its average one-year return of 11.17%.

The Silver-rated Invesco S&P SmallCap Value With Momentum ETF was launched in March 2005.

Euclidean Fundamental Value ETF

• Morningstar Rating: N/A
• Expense Ratio: 0.95%
• Morningstar Category: Small Value

Fifth-worst was the $171 million Euclidean Fundamental Value ETF, which lost 7.57% in the quarter. The actively managed Euclidean Technologies Management ETF fell further than the average 3.97% decline on funds in the small-value category. Over the past year, the Euclidean Fundamental Value ETF rose 16.14%, finishing in the 12th percentile within its category. It outperformed the category’s average one-year return of 11.17%.

The Euclidean Fundamental Value ETF has a Morningstar Medalist Rating of Neutral. It was launched in May 2023.

Invesco S&P SmallCap 600 Pure Value ETF

• Morningstar Rating: 2 stars
• Expense Ratio: 0.35%
• Morningstar Category: Small Value

The sixth-worst-performing ETF in the quarter was the $230 million Invesco S&P SmallCap 600 Pure Value ETF, which lost 7.43%. The passively managed Invesco ETF fell further than the average 3.97% loss on funds in the small-value category. Over the past 12 months, the Invesco S&P SmallCap 600 Pure Value ETF rose 7.57%, placing it in the 81st percentile within its category and underperforming the 11.17% return on the average fund.

The Invesco S&P SmallCap 600 Pure Value ETF has a Morningstar Medalist Rating of Neutral. It was launched in March 2006.

Invesco Dorsey Wright SmallCap Momentum ETF

• Morningstar Rating: 4 stars
• Expense Ratio: 0.60%
• Morningstar Category: Small Growth

With a 6.31% loss, the $905 million Invesco Dorsey Wright SmallCap Momentum ETF was the seventh-worst-performing ETF on our list for the second quarter. The passively managed Invesco ETF fell further than the average 2.56% loss on funds in the small growth category. Over the past 12 months, the Invesco Dorsey Wright SmallCap Momentum ETF gained 9.53%, placing it in the 46th percentile within its category and putting it roughly in line with the 9.12% return on the average fund.

The Invesco Dorsey Wright SmallCap Momentum ETF, launched in July 2012, has a Morningstar Medalist Rating of Silver.

Cambria Shareholder Yield ETF

• Morningstar Rating: 5 stars
• Expense Ratio: 0.59%
• Morningstar Category: Mid-Cap Value

The eighth-worst-performing ETF in the quarter was the $1.2 billion Cambria Shareholder Yield ETF, which fell 6.24%. The Cambria ETF, which is actively managed, fell further than the average 3.79% loss on funds in the mid-cap value category. Over the past 12 months, the ETF rose 14.03% to place in the 31st percentile within its category, outperforming the average one-year return of 11.74%.

The Cambria Shareholder Yield ETF, launched in May 2013, has a Morningstar Medalist Rating of Neutral.

VictoryShares THB Mid Cap ETF

• Morningstar Rating: N/A
• Expense Ratio: 0.55%
• Morningstar Category: Mid-Cap Blend

The $101 million VictoryShares THB Mid Cap ETF was the ninth-worst-performing ETF in the second quarter, with a decline of 6.22%. The actively managed Victory Capital ETF performed worse than the average 3.31% loss on funds in the mid-cap blend category. Over the past year, the ETF gained 8.27% to land in the 87th percentile, underperforming the category’s average one-year return of 13.23%.

The VictoryShares THB Mid Cap ETF takes environmental, social, and governance criteria into consideration. This fund has a Morningstar Medalist Rating of Neutral.

Nuveen ESG Mid-Cap Growth ETF

• Morningstar Rating: 3 stars
• Expense Ratio: 0.31%
• Morningstar Category: Mid-Cap Growth

The tenth-worst performer in the quarter was the $376 million Nuveen ESG Mid-Cap Growth ETF, which lost 6.12%. The passively managed Nuveen ETF fell further than the average 3.46% loss on funds in the mid-cap growth category. Over the past year, the Nuveen ESG Mid-Cap Growth ETF rose 7.27%, finishing in the 79th percentile within the mid-cap growth category. It underperformed the category’s average one-year return of 12.45%.

The Silver-rated Nuveen ESG Mid-Cap Growth ETF was launched in December 2016.

What Are ETFs?

Exchange-traded funds are investments that trade throughout the day on stock exchanges, much like individual stocks. They differ from traditional mutual funds—known as open-end funds—which can only be bought or sold at a single price each day. Historically, ETFs have tracked indexes, but in recent years, more ETFs have been actively managed. ETFs cover a range of asset classes, including stocks, bonds, commodities, and most recently cryptocurrency.

ETFs offer investors an efficient way to gain exposure to the markets, often with low fees and ease of buying and selling. They also generally offer higher tax efficiency than open-end funds.

Stock ETFs: More Ideas to Consider

Investors who would like to find more ETF investment ideas can do the following:

• Read Morningstar’s guide to ETF investing.
• Explore the best ETFs and how they fit into your portfolio.
• Review the full list of US Stock ETFs. Funds with at least 70% of assets in US stocks are placed within the US equity categories.
• Use the Morningstar Investor Screener tool to find the best ETFs according to your specific criteria. You can search for funds based on their fees, Morningstar Medalist Ratings, manager tenures, and more.
• Use Morningstar Investor to build a watchlist of the best ETFs and easily follow their valuations, ratings, and fees.
• Watch our ETF video series, hosted by Daniel Sotiroff, for ideas to consider.