Worst-Performing Stock ETFs

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 third quarter of 2026, the worst-performing stock ETFs included large blend fund Tema Space Innovators ETF NASA and mid-cap blend fund Invesco S&P Spin-Off ETF CSD. Data in this article is sourced from Morningstar Direct.

Screening for the Worst-Performing ETFs

When evaluating ETFs, investors should focus on long-term returns across multiple years and market cycles. However, short-term returns can provide valuable information about biases within strategies.

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

The 10 Worst-Performing ETFs for Q3 2026

1. Tema Space Innovators ETF NASA
2. Invesco S&P Spin-Off ETF CSD
3. Tema US Manufacturing & Reshoring ETF WELD
4. Tema Electrification ETF VOLT
5. Invesco Dorsey Wright SmallCap Momentum ETF DWAS
6. TCW Transform Systems ETF PWRD
7. Invesco S&P SmallCap 600 Pure Growth ETF RZG
8. Thrivent Small-Mid Cap Equity ETF TSME
9. Inspire Growth ETF GLRY
10. Invesco S&P SmallCap Momentum ETF XSMO

Metrics for the Worst-Performing Stock ETFs

Tema Space Innovators ETF

• Morningstar Rating
  : N/A
• Expense Ratio
  : 0.75%
• Morningstar Category
  : Large Blend

The $1.2 billion Tema Space Innovators ETF ranked first for the quarter, falling 21.21%. The Tema ETF, which is actively managed, lagged the 0.99% gain on the average large blend fund. The fund launched in March 2026 and does not have a one-year record.

The Tema Space Innovators ETF has not yet been awarded a Morningstar Medalist Rating.

Invesco S&P Spin-Off ETF

• Morningstar Rating: ★★★★
• Expense Ratio: 0.65%
• Morningstar Category: Mid-Cap Blend

The $214.8 million Invesco S&P Spin-Off ETF was the second-worst-performing ETF in the third quarter, with a 15.38% loss. The passively managed Invesco ETF fell further than the 4.69% loss on the average fund in Morningstar’s mid-cap blend category for the quarter. Over the last year, the fund has gained 36.16%, outperforming the 11.34% gain on funds in its category, placing it in the 2nd percentile for the period.

The Neutral-rated Invesco S&P Spin-Off ETF was launched in December 2006.

Tema US Manufacturing & Reshoring ETF

• Morningstar Rating: ★★★★★
• Expense Ratio: 0.75%
• Morningstar Category: Mid-Cap Blend

The $280.6 million Tema US Manufacturing & Reshoring ETF ranked third for the quarter, falling 15.31%. The Tema ETF, which is actively managed, fell further than the 4.69% loss on the average mid-cap blend fund. Over the past year, the fund has risen 24.14%, outperforming the 11.34% gain on funds in its category, placing it in the 6th percentile for the period.

The Neutral-rated Tema US Manufacturing & Reshoring ETF launched in May 2023.

Tema Electrification ETF

• Morningstar Rating: N/A
• Expense Ratio: 0.75%
• Morningstar Category: Mid-Cap Blend

The $752.2 million Tema Electrification ETF was the fourth-worst-performing ETF in the third quarter, with a 15.20% loss. The actively managed Tema ETF fell further than the 4.69% loss on the average fund in Morningstar’s mid-cap blend category for the quarter. Over the last year, the fund has gained 23.87%, outperforming the 11.34% gain on funds in its category, placing it in the 7th percentile for the period.

The Neutral-rated Tema Electrification ETF launched in December 2024.

Invesco Dorsey Wright SmallCap Momentum ETF

• Morningstar Rating: ★★
• Expense Ratio: 0.6%
• Morningstar Category: Small Blend

The fifth-worst-performing ETF in the third quarter was the $408.1 million Invesco Dorsey Wright SmallCap Momentum ETF. The passively managed Invesco ETF declined 14.90%, falling further than the average small blend fund, which dropped 7.24%. Over the last year, the fund has climbed 17.53%, outperforming the 14.52% gain on funds in its category, placing it in the 27th percentile for the period.

The Neutral-rated Invesco Dorsey Wright SmallCap Momentum ETF launched in July 2012.

TCW Transform Systems ETF

• Morningstar Rating: ★★★★
• Expense Ratio: 0.75%
• Morningstar Category: Large Blend

The $1.5 billion TCW Transform Systems ETF was the sixth-worst-performing ETF in the third quarter, with a 14.33% loss. The actively managed TCW ETF lagged the 0.99% gain on the average fund in Morningstar’s large blend category for the quarter. Over the last year, the fund has gained 7.90%, underperforming the 13.17% gain on funds in its category, placing it in the 86th percentile for the period.

The Neutral-rated TCW Transform Systems ETF launched in February 2022.

Invesco S&P SmallCap 600 Pure Growth ETF

• Morningstar Rating: ★★
• Expense Ratio: 0.35%
• Morningstar Category: Small Growth

The seventh-worst-performing ETF in the third quarter was the $121 million Invesco S&P SmallCap 600 Pure Growth ETF. The passively managed Invesco ETF declined 14.04%, falling further than the average small growth fund, which dropped 9.58%. Over the last year, the fund has climbed 15.20%, outperforming the 11.34% gain on funds in its category, placing it in the 29th percentile for the period.

The Bronze-rated Invesco S&P SmallCap 600 Pure Growth ETF launched in March 2006.

Thrivent Small-Mid Cap Equity ETF

• Morningstar Rating: ★★★
• Expense Ratio: 0.65%
• Morningstar Category: Mid-Cap Blend

The $894.2 million Thrivent Small-Mid Cap Equity ETF was the eighth-worst-performing ETF in the third quarter, with a 13.31% loss. The actively managed Thrivent ETF fell further than the 4.69% loss on the average fund in Morningstar’s mid-cap blend category for the quarter. Over the last year, the fund has gained 9.36%, underperforming the 11.34% gain on funds in its category, placing it in the 65th percentile for the period.

The Silver-rated Thrivent Small-Mid Cap Equity ETF launched in October 2022.

Inspire Growth ETF

• Morningstar Rating: ★★
• Expense Ratio: 0.8%
• Morningstar Category: Mid-Cap Blend

The ninth-worst-performing ETF in the third quarter was the $164.4 million Inspire Growth ETF. The actively managed Inspire ETF declined 13.12%, falling further than the average mid-cap blend fund, which dropped 4.69%. Over the last year, the fund has climbed 2.27%, underperforming the 11.34% gain on funds in its category, placing it in the 88th percentile for the period.

The Neutral-rated Inspire Growth ETF launched in December 2020.

Invesco S&P SmallCap Momentum ETF

• Morningstar Rating: ★★★★★
• Expense Ratio: 0.35%
• Morningstar Category: Small Blend

The $2.9 billion Invesco S&P SmallCap Momentum ETF ranked tenth for the quarter, falling 12.73%. The Invesco ETF, which is passively managed, fell further than the 7.24% loss on the average small blend fund. Over the past year, the fund has risen 11.61%, underperforming the 14.52% gain on funds in its category, placing it in the 73rd percentile for the period.

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

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.

How to Find Top ETFs for the Long Term

ETFs are often equated with low-cost indexing. However, the ETF marketplace has grown increasingly complicated. Some ETFs track a very narrow part of the market or pursue specific themes. Some ETFs invest based on a particular factor or a combination of them. And now there are actively managed ETFs.

Use these Morningstar resources to help find the best ETFs for the long term:

• Learn about the types of exchange-traded funds, their costs, and how to invest in them by reading Morningstar’s Guide to ETF Investing.
• Find the highest-rated ETFs across all investment categories in The Best ETFs and How They Fit in Your Portfolio.
• Review Morningstar director of personal finance Christine Benz’s suggested ETF portfolios for those saving for or already in retirement, including Tax-Efficient Retirement-Saver Portfolios for ETF Investors, Tax-Sheltered Retirement-Saver Portfolios for ETF Investors, ESG Tax-Sheltered Retirement-Saver Portfolios for ETF Investors, Tax-Sheltered Retirement-Bucket Portfolios for ETF Investors, and Tax-Sheltered ESG Retirement-Bucket Portfolios for ETF Investors.
• Research ETFs based on your personal selection criteria by using our Morningstar Investor Screener. The tool, which is available to Morningstar Investor members, allows investors to screen ETFs based on various criteria, including asset class, Morningstar Category, Medalist Rating, and fee level.
• Visit Morningstar’s ETF page for the latest articles and videos from our ETF specialists.