Tuesday, February 19, 2019

Trends Continue...

Tuesday, February 19, 2019 - It was another huge week for Major US Indices as all 3 ended up more than 2%. This continued strength is quite remarkable as earnings season has not been one to write home about and talks of government shutdowns and national emergencies continue to shake main street. For the week, the Dow Jones Industrial Average finished up about 776 points or 3.1% while the S&P 500 gained 61 points or 2.5% and the Nasdaq Composite was up 151 points or 2.4%.

In ETFs, we continue to see outflows in major US index tracked ETFs. IVV, the iShares Core S&P 500 ETF, QQQ, the Invesco Nasdaq ETF and IWD, the iShares Russell 1000 ETF, lost assets of $6.93B, $2.88B and $1.86B respectively in the month of February. In inflows, investors continue to flock to fixed income ETFs with BNDX, the Vanguard International Bond Fund, taking in over $2.48B or over 25% of its AUM in the month of February, all according to our ETFG Fund Flow Summary.

In the ETFG Quant Movers, we saw international based ETPs gain the most percentage points to their overall scores. The CSOP MSCI China A International Hedged ETF (CHNX), the iShares MSCI Canada ETF (EWC) and the Global X Scientific Beta Asia ex-Japan ETF (SCIX) added 10.81, 9.27 and 9.19 to their overall Quant scores respectively.

ETFG Weekly Select List - the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Because of the Sector’s success in the major indexes this week, we’d like to highlight some substantial movement in Technology when comparing this week’s Select List to last week’s. The First Trust NASDAQ Semiconductor ETF (FTXL) held strong in the first overall spot while the Global X FinTech Thematic ETF (FINX) jumped up three spots to the second overall position. It took over for the First Trust Nasdaq Cybersecurity ETF (CIBR) which got knocked out of the top 5 this week by the ETFMG Drone Economy Strategy ETF (IFLY) which is now in the 4th ranked spot. The SPDR S&P Telecom ETF (XTH) jumped up one spot to the 3rd overall position and rounding out the bottom of the top 5 was the 3D Printing ETF (PRNT).

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, February 11, 2019

Eking Out Gains

Monday, February 11, 2019 - Though volatile, the major US indices finished the week off not too far from where they started. A welcoming sign to the continued strength that the markets have seen since the start of the year even though there has been some stomach-churning headlines coming both globally and domestically.

For the week, the Dow Jones Industrial Average finished up about 50 points while the S&P 500 gained 5 points and The Nasdaq Composite was up about 34.

In ETFs, we saw major inflows into Emerging Market ETFs and Corporate Bond ones as well.  IEMG, iShares Core Emerging Markets ETF, took in more than 3.55B, about 8.5% of its AUM. VCSH and VCIT, both Vanguard Corporate Bond ETFs, also saw net flows of 3.01B and 2.57B respectively. In outflows, we continue to see money leaving major US index tracked ETFs. IVV and SPY, both of which track the S&P 500 have seen outflows of 7.25B and 7.07B in the month of February or over 4% and 2% of their overall AUM respectively.

In the ETFG Quant Movers, we saw volatility based ETPs gain the most percentage points to their overall scores. The VictoryShares US 500 Enhanced Volatility wtd ETF (CFO) and VictoryShares US EQ Income Enhanced Volatility wtd ETF (CDC) added 8.12% and 7.52% to their overall Quant scores respectively.

ETFG Weekly Select List - the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Because of the sector’s success in the major indexes this week, we’d like to highlight some substantial movement in the Industrials portion when comparing this week’s Select List to last. The First Trust NASDAQ Global Auto Index Fund (CARZ) jumped up one spot to the first overall position to be the top ranked fund in the sector. It took over for a fellow First Trust product, FTXR which got knocked out of the top 5 this week by the Fidelity MSCI Industrials Index ETF (FIDU) which is now in the 3RD ranked spot. The First Trust Global Engineering and Construction ETF (FLM) stayed put in the 2ND overall position. Rounding out the bottom of the top 5 were the SPDR Kensho Future Security ETF (XKFS) and the iShares Transportation Average ETF (IYT). They finished 4th and 5th respectively.

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, February 4, 2019

Despite All Else

Monday, February 4, 2019 - Congratulations to the New England Patriots on their 6th Superbowl victory last night and to the LA Rams on a terrific season and a hard fought game.

Now let's take a look at the markets - Mixed economic signals have posed a constant conundrum for investors over the past year. This week offered no reprieve, as a myriad of conflicting developments helped perpetuate the all too familiar atmosphere of uncertainty. Nowhere were this year's divergent and muddling signals more evident than in this week's global economic growth readings and corporate earnings results. News that the eurozone economy grew at its slowest pace in four years in 2018 sent tremors throughout the market by fueling the increasing concerns about the viability of the global economic expansion, which seems to be deteriorating across a slew of systematically important countries. Formidable economic threats are looming such as Italy's nascent recession, Brexit hurtling towards a chaotic and unresolved deadline and economic contractions in major economies including Germany, China and France. These have all fanned fears of a further decline of confidence, rise of populist and isolationist governments, fraying global economic cooperation and an overall dim global outlook. However, this gloomy economic picture was counterbalanced by more positive U.S. developments, led by an increasingly dovish posture by the Fed and continued robust jobs and wage growth reflected in January's well-above consensus payrolls report.

Corporate earnings presented an equally perplexing dilemma. Initially, stocks fell after several bellwether companies, like Caterpillar and NVIDIA, posted weaker than expected Q4 results and cut their guidance due to the impact of the intensifying global trade conflict and Chinese economic slowdown. Mixed results from tech behemoths Apple, Microsoft, and Amazon further muddied the picture. However, strong results from energy stalwarts Exxon Mobil and Chevron, along with the Fed's emerging dovish rates and balance-sheet normalization posture and an encouraging week-end jobs data, helped overcome these inauspicious developments and boost stocks for the week. It appears that, despite gathering global economic clouds, domestic economic growth and the Fed's rate and balance sheet policies wield the most influence over investor sentiment.

After registering their best January percentage gains in three decades, the DJIA and S&P 500 finished the week up 1.3% and 1.6% respectively. While, the NASDAQ rose 1.4% for the week.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings:

ETFG Quant Winners: The top five ETFG Quant gainers from this past week were First Trust Australia AlphaDEX Fund (FAUS), Invesco PureBeta MSCI USA Small Cap ETF (PBSM), iShares Global Telecom ETF (IXP), Vanguard Industrials ETF (VIS), and VanEck Vectors Generic Drugs ETF (GNRX). While there is no clear or consistent macro theme driving these funds’ recent quant outperformance, it appears sentiment and technical factors played a disproportionate role in their rise, as each of these funds experienced over 23% percentage increases in their quant behavioral scores.

ETFG Quant Losers: Our top five ETFG Quant losers this week were Vanguard Mid-Cap Value ETF (VOE), Vanguard Small-Cap Growth ETF (VBK), CSOP MSCI China A International Hedged ETF (CNHX), Amplify Transformational Data Sharing ETF (BLOK), and Reality Shares DIVCON Dividend Guard ETF (GARD). A tenuous and uncertain corporate earnings outlook, slowing Chinese economic growth, and the deteriorating fortunes of the cryptocurrency/blockchain market likely contributed to these funds outsize declines.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Following this week's mixed earnings results and the sector's bellwether status in the markets, we'd like to highlight the top ranked technology funds at the moment according to our model. From 1-5, these funds are First Trust Nasdaq Semiconductor ETF (FTXL), iShares Exponential Technologies ETF (XT), SPDR S&P Technology Hardware ETF (XTH), The 3D Printing ETF (PRNT), and ALPS Disruptive Technologies ETF (DTEC). As scrutiny on this sector increases and global economic uncertainty mounts, we recommend monitoring our select list to identify promising opportunities in the technology and broader sector, geographic and style groups.

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, January 28, 2019

Back to Work....for 3 Weeks?

Monday, January 28, 2019 - After alternating between gains and losses, stocks ended the holiday-shortened week on a positive note driven by a stopgap deal to end the government shutdown for three weeks. To begin the week, waning global growth was the prevailing market concern and weighed on market sentiment. Downward revisions to the ECB's economic outlook and IMF's 2019 and 2020 global growth forecasts underscored this unease and helped put a halt to the largely strong stock performance since the beginning of the year. However, the rest of the week was devoid of any negative developments in some of the recent market overhangs, like adverse economic data releases, the U.S.-China trade dispute, or Brexit. The absence of any negative news help swing the balance of investor sentiment towards more positive developments, like strong Q4 earnings and a long-awaited end to the government shutdown. While stocks failed to post a fifth consecutive week of gains, they erased much of their initial losses and concluded the week with some momentum. At week's end, the S&P 500 was down 0.2%, while the DJIA and NASDAQ inched up 0.1% each.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings:

ETFG Quant Winners: This week’s largest advance occurred in the ARK Web x.0 ETF (ARKW), gaining 9 points to end with a Quant score of 61.26. This is unsurprising, as technology was the best performing sector this week following a string of positive earnings releases and forward looking guidance. VanEck Vectors Semiconductor ETF (SMH) was another standout tech performer, rising 8.74 points. Other notable movers were several emerging market funds, like iShares Currency Hedged MSCI Emerging Markets (HEEM), iShares MSCI Thailand ETF (THD), and NuShares ESG Emerging Markets Equity ETF (NUEM).

ETFG Quant Losers: On the opposite side of the ledger, VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) experienced the largest quant loss, with a 8.02 point decline, perhaps reflecting the damaging ongoing trade tensions are inflicting on metals companies. The top 5 was rounded out by Invesco S&P 500 Equal Weight Energy ETF (RYE), John Hancock Multifactor Consumer Staples ETF (JHMS), Schwab US Broad Market ETF (SCHB), and iShares Global Telecom ETF (IXB).

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

In the upcoming week, investors will get a fresh look at the health of several technology giants, after Facebook, Apple, and Amazon report quarterly results. Given the outsize collective influence of these companies, their results will serve as a key barometer of the overall global economic growth picture.

Accordingly, we'd like to bring attention to the technology sector ETFs that currently boast the highest rankings according to our model. The First Trust Nasdaq Semiconductor ETF (FTXL) carries the top overall ranking, followed by iShares Exponential Technologies ETF (XT), SPDR FactSet Innovative Technology ETF (XITK), Global X FinTech Thematic ETF (FINX), and ALPS Disruptive Technologies ETF (DTEC). Due sizable exposures many of these ETFS have to the FAANG stocks, it will be interesting to monitor how the funds are impact by the results of this week's earnings reports.

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Tuesday, January 22, 2019

Strong Earnings for Financials

Tuesday, January 22, 2019 - Stocks recorded their fourth consecutive week of positive returns and built on their strong start to 2019. The gains pulled the Large-Cap benchmarks out of correction territory, or within 10% of their recent highs, but the Nasdaq Composite Index and the smaller-cap benchmarks remained below that threshold. Within the S&P 500 Index, Financials led the gains, helped by better-than-expected earnings reports from some large banks. The focus shifted to corporate earnings, with several high-profile banks reporting quarterly earnings. Altogether, earnings were better than expected, and more importantly, commentary from management teams about the outlook was positive. As a result, the Financial Services sector outperformed the broader market, finishing 6% higher. Trading volumes were somewhat muted, especially early in the week and volatility, as measured by the Cboe Volatility Index (VIX), continued its recent downward trend. The S&P 500 has now quickly recovered more than half of its losses since September's peak and finished the week up 74.45 points, the DJIA was up 710.40 points and the NASDAQ Composite rose 185.75 points.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings:

ETFG Quant Winners: This week’s biggest winner was Principal Price Setters Index ETF (PSET) gaining 8.86 points to end with a Quant score of 58.26 Principal Active Global Dividend Income ETF (GDVD) gained 8.51 points moving its score to 60.34. O'Shares FTSE Russell Small Cap Quality Dividend ETF (OUSM) posted a solid gain for the week, up 8.28 points to 52.70. Rounding out the top five were iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) and iShares Russell Mid-Cap Growth ETF (IWP) gaining 8.21 and 8.12 points respectively.

ETFG Quant Losers: This week’s biggest loser was ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB) dropping 8.89 points to a Quant score of 43.92. Gabelli Media Mogul NextShares (MOGLC) was down 8.78 to 42.26, iShares U.S. Oil Equipment & Services ETF (IEZ) fell 8.05 to 52.20. Rounding out the bottom five were Ivy Focused Value NextShares (IVFVC) and SPDR S&P Health Care Services ETF (XHS) down 7.33 and 7.12 points respectively.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Because of the sector’s success on the 1W Quant Rating of the  ETFG Heat Map, we’d like to highlight some substantial movement in the Financials Sector when comparing this week’s Select List to last. SPDR S&P Insurance ETF (KIE) remained in the top spot from last week to this week while VanEck Vectors BDC Income ETF (BIZD) made the biggest jump from fifth last week to the number two spot this week. Both iShares MSCI Europe Financials ETF (EUFN) and iShares Global Financials ETF (IXG) remained in their third and fourth spots from last week’s Select list, showcasing consistent popularity in the funds in the new year. Finally, SPDR S&P Regional Banking ETF (KRE) broke onto the list in the fifth spot after not being ranked last week. Overall, through both investments and strong earnings reporting from the major players in the sector, these Financials ETFs have been a hot ticket to start 2019.

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, January 14, 2019

Long Term vs. Short Term

Monday, January 14, 2019 - Stocks finished higher for the third straight week, with Small-Cap and International markets outperforming. For the week, the DJIA was up 562.79 points, the S&P 500 rose 64.32 points, while the NASDAQ Composite gained 232.62 points.

The market gains helped make the Russell 2000 Index the last major benchmark to emerge from bear market territory. Within the S&P 500 Index, Industrial shares performed best, helped by strength in railroads and a sharp rise in Boeing. Energy shares were also especially strong for much of the week as oil prices rallied, although they gave back a portion of their gains on Friday. Financials lagged and Health Care stocks also underperformed despite the news of another large merger in the sector—Eli Lilly’s proposed $8 billion acquisition of Loxo Oncology. Volatility continued to moderate, with the Cboe Volatility Index (VIX) hitting its lowest level in over a month, while higher-valued growth stocks outperformed slower-growing value shares.

Stocks have staged a healthy rally in the past two weeks, rewarding investors that stayed calm in the face of December's panic. This highlights the importance of a longer-term perspective, as some of the market's best days often come on the heels of its worst. For example, the late-December sell-off included the worst two-day decline (-4.8%) since 2015, which was followed the very next day by the best daily gain (+5.0%) since March 2009. We have now experienced four corrections (declines of 10% or more) in the past four years, directly in line with the average since 1900 of one correction per year.

It's a reminder that despite the uncomfortable nature of market pullbacks, volatility is in fact a normal part of investing. Being a long-term investor does not require you to ignore shifts in the market, but it does require perspective and discipline. In General, stocks are now up 10.4% from their December lows, having recouped more than 40% of the total decline. Looking at the 10%-plus pullbacks since 2010, the market regained the entire drop in an average of 90 days. This is no guarantee that recent losses will be erased in such short order, but the rally over the past few weeks is a reminder that the decline in December may not be a one-way path toward a severe bear market.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings: 

ETFG Quant Winners: Invesco S&P International Developed Momentum ETF (IDMO) took the number one spot up 14.95 points and a score of 54.38. iShares Edge MSCI Intl Size Factor ETF (ISZE) gained 13.78 points to end with a Quant score of 55.16. Invesco S&P 500 Minimum Variance ETF (SPMV) posted a solid gain in score moving up 13.65 points to a score of 55.93. Rounding out the Top Five were Oppenheimer Russell 1000 Quality Factor ETF (OQAL) and Dorsey Wright MLP Index ETN (BMLP) which rose 13.58 and 13.17 points respectively.

ETFG Quant Losers: This week’s biggest loser was Invesco S&P International Developed Low Volatility ETF (IDLV) dropping 10.68 points to a 50.56 Quant score. VictoryShares US EQ Income Enhanced Volatility ETF (CDC) fell 9.67 points to 40.01. VanEck Vectors Gaming ETF (BJK) declined 9.54 points to 41.21. iShares MSCI Italy ETF (EWI) moved down 9.49 points to 53.01. Ending out the bottom five is Invesco BLDRS Developed Markets 100 ADR Index Fund (ADRD) down 9.44 points to 45.97.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Because of the sectors success on the 1W Quant Rating of the ETFG Heat Map, we’d like to highlight some substantial movement in the Technology Sector when comparing this week’s Select List to last. SPDR FactSet Innovative Technology ETF (XITK) takes the number one spot as a newcomer, unranked last week. Dropping one spot down to second was last week’s top pick First Trust Nasdaq Semiconductor ETF (FTXL). Global X FinTech Thematic ETF (FINX), ALPS Disruptive Technologies ETF (DTEC) and iShares North American Tech-Multimedia Networking ETF (IGN) round out this week’s Technology Sector Select List. Keep an eye on our Weekly Select List for crucial insights as investors continue to turn to ETPs for portfolio diversification and security in these volatile markets.

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Tuesday, January 8, 2019

1Q 2019 Rebalance – ETF Global® Dynamic Model Portfolios

Tuesday, January 8, 2019 - We joked in our last ETFG Model Portfolio quarterly rebalance commentary that “investors who heeded that sage advice to sell in May and go away were once again disappointed.” Equities continued to push higher and that early chill, that we talked about as equities closed out weak in late September, turned into a full-blown epidemic. The long-awaited correction finally sent domestic indexes briefly into bear market territory. The tech stocks that had long dominated the market weren’t the only ones to feel the pain as Cyclicals, Industrials and even long-depressed Energy stocks felt the sting as investors turned to Treasuries and Gold. Return on capital is out, return OF capital is in!

That tech pain and the weak Christmas recovery, that helped pull the markets out of bear market territory, explain why the ETFG Dynamic Model Portfolios favor larger names with more of a growth or at least balanced orientation in the most recent reallocation that was completed on January 2nd.  All 4 of the Base Portfolios and the 8 “tilts” were updated with the domestic sleeve of the portfolio seeing a major shakeup as the two dedicated value funds, the SPDR S&P 400 Mid Cap Value ETF (MDYV) and the SPDR S&P 600 Small Cap Value ETF (SLYV), were replaced by the iShares Russell Midcap ETF (IWR) and the SPDR Portfolio S&P 500 Growth ETF. Those two additions, along with the retention of the Direxion NASDAQ 100 Equal Weighted Fund (QQQE) and the SPDR S&P 600 Small Cap ETF (SLY) gives the domestic allocation a large core feel by reducing the allocation to Financials while simultaneously raising the average market capitalization of the portfolio substantially.

Another factor that made the fourth quarter so challenging was that there was nowhere to turn. Equity volatility spread abroad with most international ETFs suffering just as badly as domestic funds over the last three months to close out the year down substantially. While there were opportunities in the third quarter for investors willing to do their homework and buy funds for specific nations, the broad equity sell-off led many to seek shelter in fixed income, leaving the international fund space a sea of red.

The turnover in our international basket reflects that with two of the four funds leaving the international allocation for the first quarter. The international sleeve retains its decidedly European flavor thanks to the retention of the SPDR STOXX Europe 50 ETF (FEU) along with the introduction of the WisdomTree Europe Hedged Equity Fund (HEDJ), while the iShares MSCI Italy ETF (EWI) is replaced by another troubled member of the EU (for now), the iShares MSCI United Kingdom Fund (EWU.)  For all the “Sturm und Drang” over the failure of the May government to deliver an acceptable Brexit deal, raising the risk the UK might endure a painful sendoff, EWU has performed in-line with the broader EU markets. EWU also retained a substantially higher fundamental score as investors remain wary of going long in such a troubled situation.  Could even a modest improvement in the sentiment surrounding Brexit lead to big gains for EWU?

One place where investors seem to be finding confidence is in Latin America. Our emerging markets allocation saw a noticeable change as the iShares Latin America 40 (ILF) was replaced by the iShares Mexico ETF (EWW). Investors were well served by ILF as the fund strongly outperformed not just broader EM funds but domestic stocks as well, thanks in large part to a strong showing by its Brazilian holdings. Yet, ILF’s Quant score has dropped as Brazilian stocks have become more overpriced. Fundamentals are only one factor as Mexican stocks have begun to outperform thanks in part to investors reevaluating President Obrador’s business stance, giving EWW the opportunity to catch-up to its peers.

You can find an overview and performance information for the ETF Global Dynamic Model Portfolios at http://www.etfg.com/about-model-portfolios To learn more about our ETFG Model Portfolio strategy, please email us at sales@etfg.com or call us at (212) 223-ETFG (3834).

Thanks for reading ETF Global Perspectives!

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.