44.85 -1.94 (-4.33%) Sell

Waiting to invest in EQM? Avoid at the moment as it significantly underperformed

13 min read

EQM significantly underperformed today. On a longer term basis, investors in EQM MIDSTREAM PARTNERS, LP made -0.01% per day. Monday's performance of -4.33% was a underperformance compared to it's daily average.

[Themes containing EQM]

EQM showed a strong bearish trend over the last 3 months. During this period EQM delivered -20.37% and saw a maximum drawdown of -23.14%. There was a short signal during this period which returned +20.37%.


EQM has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 29 Apr, 2016 to 7 Nov, 2018. Over the last 2 years 11 months and 10 days, EQM underperformed the SP500 index on 53% days.

EQM returned losses on 59% days in the last three months. During this time, it delivered on average -0.34% per day. It delivered it's worst daily return of -5.51%, during this period, on Friday, 30 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 19 Sep, 2018 and ended on 26 Sep, 2018. This bearish trend lost -8.43% of investor capital.

The last 12 months saw EQM's investors making profits in 4 months and incurring losses in 8 months. EQM was less consistent in delivering monthly returs than SP500 index. EQM was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -17.3% compared to -7.28% returned by SP500 index in Oct 2018. EQM had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -32.93%. It is interesting to note that both EQM and SP500 index significantly outperform during months when quarterly/annual results are announced.

If you do chose to invest in a share, invest for the lifetime.
-- Sandeep Sahajpal

EQM is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in EQM's volatility from 20 Sep, 2018 to 14 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that EQM has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

SP500 index has more chance of extreme outcomes than EQM. Therefore, SP500 must receive a lower allocation than EQM in your portfolio. SP500 index usually has shorter drawdown period than EQM.

On a general note (since you are interested in EQM), if you are evaluating EQM as an investment candidate, then you should read about CATY which has delivered similar performance and can help diversify your portfolio.

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