Monday, March 26, 2018

Melt Up Runs Out of Steam

Monday, March 26, 2018 - Surprises from Washington continued to drive down stocks last week as investors seek a respite from Trump. While the lack of control over user data at Facebook  and the newly appointed Fed Chairman Jerome Powell’s aggressive fed tightening move clearly hit the market hard, we think that fear of a new trade war with the imposition of tariffs on certain Chinese imports and China’s counter imposition of tariffs targeting US exports to China factored heavily into the plunge. All of these factors are certainly contributing to a slow build of a crisis of confidence in the ability of the GOP to govern with Trump in the WH. It is amazing how quickly investors’ perceptions changed after the State of the Union Address. It was if someone promptly threw cold water on the “Melt Up.”

Investors drove down key US indexes last week with the S&P 500 and the NASDAQ Composite dropping to 2,588.26 and 6,992.67 respectively for a weekly loss of -5.95% and -6.54%. More impressively the Large Cap S&P is down YTD -3.19% while the NASDAQ Composite is still up 1.29% YTD.

We are not ready to abandon that the odds favor US equity markets going up, albeit at a slower rate. Why?  First, economic growth continues to accelerate worldwide and that is good news for businesses, workers and investor profits. The US, Europe and Japan are on an upward economic trajectory.  Evidence of the pickup in economic activity can be seen in the recovery of spot oil prices which are now hover around $66 (US Light Sweet). This is a far cry from the depressed prices some 24 months ago. The move in oil prices has come from increased buyer demand – which is evidence of increased economic activity, not supply constraints which generally foreshadow inflation.

Secondly, let’s consider the effects of the fiscal stimulus of the corporate tax cuts. The new found money in corporate coffers will find its way either to Shareholders in the form of increased dividends and stock buybacks, to employees in the form of wage increases and one time bonuses (i.e., Walmart, VISA, Apple), business expansion (capital investments and R&D) and lastly and most importantly, in the short term, for investors, M&A. Additionally, one cannot underestimate the economic stimulus from relaxed regulation particularly on small to mid-sized businesses. Excess regulation acts as a friction on the economy as it does not generally add tangible value to GNP. To date, the Trump Administration has significantly rolled back many Obama-era executive orders. Recent relaxation of financial regulations around banking should benefit regional banks and small to mid-sized businesses.

The risk is that if Trump suddenly abandons his business friendly policies that characterized his first 12 months in office and starts to pursue his campaign populist policies to a degree that a real trade war develops. That ultimately would affect corporate profits and the economy in a negative way. Intellectual property rights however are a serious issue for American businesses doing business particularly in China and need to be addressed.

If indeed we are in a Bull Market, investors should be prepared to buy on any pullbacks but keep a cautious eye on interest rates. Keep in mind, that markets lack the liquidity that used to be the case some 10 years ago due to changes in market structure. ETF investors in particular should be mindful that in periods of high volatility since some thematic, fixed income and strategy ETFs could suddenly see widened spreads particularly in the smaller funds. Hence, investors should keep reserves and be prepared to take advantage of such opportunities.

Our Select List and Risk and Reward Ratings should be used to evaluate the vast set of opportunities in the ETF marketplace. Investing in ETFs requires a new approach to macro investing, one in which investors are just beginning to realize. Investors and traders are advised to check the ETFG Quant Movers daily for revisions to our ratings to gain insights into the latest news developments.

Thank you 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.

Friday, March 23, 2018

Portfolio+ All Equity Model Portfolio Powered by ETF Global®

Friday, March 23, 2018 - We are excited to announce a new model portfolio strategy in partnership with Portfolio+ ETFs (a Direxion company), the Portfolio+ All Equity Model Portfolio Powered by ETF Global®.  This is the first portfolio strategy utilizing the recently expanded Portfolio+ lineup of enhanced beta or “lightly levered” funds.  The program will not charge a “management” fee, meaning the only expenses are those charged in the underlying Portfolio+ products which are substantially below that of other levered funds and in-line with those charged by Smart Beta strategies.

The Challenges
After years of studying new product launches, one thing that we have come to understand is that Advisors face unique challenges when selecting their equity exposure; such as from which market should the beta be derived? and what’s the best way to achieve it?

Not all markets are created equal, leading to a huge disparity between market returns.  ETPs have made it easier to pick and choose among different Beta sources, but most investors don’t have the time or acumen to forecast domestic returns or to determine whether Developed or Emerging Markets will have the better future risk-adjusted returns.

The Portfolio+ Solution
Regular readers of our “New-to-Market” posts may already be familiar with Portfolio+, Sponsor of six “lightly levered” funds that offer 1.25x leverage to a wide range of the most common investment benchmarks including Domestic Equities, Emerging Markets, Developed International and the Barclays U.S. AGG.  First launched in 2015 under the Direxion label, the series intended to take levered funds, long-known as a tool only for traders, and transform them into long-term holdings vehicles for investors who were already turning to Smart Beta funds to help magnify their equity exposure.  Thanks to the lower leverage target and smaller fees, the Portfolio+ funds have managed to deliver on their return goals and often with less volatility than Smart Beta funds.

Grounded in modern portfolio theory, the Portfolio+ All Equity Model combines the best of both firms to provide the Advisor a solution to those aforementioned challenges.  The ETF Global Quant-based Research, Selection and Portfolio Allocation processes optimize the balance between risk and reward within the Portfolio+ ETFs.  With 100% Equity, the program is strategic in nature, offering enhanced (i.e., lightly levered) exposure to a blend of Domestic, International and Emerging Market equities while tactically adjusting the allocation mix and retaining a high correlation to the MSCI ACWI.  Recognizing that one of the greatest drawbacks of any model strategy is fee layering, ETFG does not charge a management fee.

So how exactly is it “Powered by ETF Global?”
Our firm has long been known as a leading independent, ETF Research and Data provider anchored by our flagship ETF Global Quant Model, a dynamic quantitative ETF rating and ranking system. We rank all unlevered equity funds with at least a twelve-month track record using over 100 daily inputs to arrive at our Green Diamond Reward Scores.  The Green Diamond Reward Score combines Behavioral Finance with both Technical & Fundamental Analyses to provide forward-looking guidance on the attractiveness of funds.  The Red Diamond Risk Scores perform a similar process to address the risk quotient for all ETFs including levered and inverse that have been trading for at least 3 months.  As mentioned, the ETF Global Quant Model and ETFG Green Diamond Reward Scores drive the selection process to optimize the balance between risk and reward within the Portfolio+ All Equity Model.

The Program
Our goal in creating the Portfolio+ All Equity Model was to build a simple and straightforward strategy, offering broad exposure to Domestic and International equities with magnified returns without the complications of Smart Beta strategies.

What makes the Portfolio+ All Equity Model so dynamic is that not only will it adjust its exposure to Domestic, International and Emerging Markets, but it will also shift its domestic portfolio between Small, Mid and Large Cap funds to help position investors in the most attractive section of the style box.  Each day, the ETFG Green Diamond Ranking system drives proprietary algorithms in 25 underlying factors blending Fundamental & Technical Analyses along with Behavioral Finance metrics delivered in an easy-to-follow 1-10 scale for least attractive to most attractive.

While the model itself will be reconstituted on the first Monday of every quarter, the real work begins on the preceding Friday when the Green Diamond rankings are analyzed after market close.  Because our Green Diamond ranks exclude levered products, the model will determine the allocation by comparing the scores of unlevered funds to stand in for the Portfolio+ suite of products.  These unlevered funds share the same reference index as their Portfolio+ ETF counterpart, making them ideally suited to help.

Unlevered Reference Fund
Ticker
Portfolio+ Fund
Ticker
SPDR S&P 500
SPY
Portfolio+ S&P 500
PPLC
iShares S&P Midcap
IJH
Portfolio+ S&P Mid Cap
PPMC
iShares S&P Small Cap
IJR
Portfolio+ S&P Small Cap
PPSC
Vanguard FTSE Developed Market
VEA
Portfolio+ Developed Markets
PPDM
Vanguard FTSE Emerging Market
VWO
Portfolio+ Emerging Markets
PPEM







Starting with the Domestic portfolio, the fund whose reference fund has the highest Green Diamond score will be put in the first position with 50% of the portfolio while the second and third ranked funds will each receive 25% of the allocation.  For example, if SPY ends the quarter with the highest ranking, the Portfolio+ S&P 500 ETF (PPLC) will have 50% of the domestic allocation with the other two funds splitting the remainder.

The domestic allocation is just step one in the process.  Next comes determining the overall balance of domestic, developed international and emerging market equity exposure - their portfolio weights are selected using a different system than the domestic portfolio.  While ETFG will once again compare the Green Diamond scores of the reference funds (with the highest scoring domestic fund being used to calculate the percentage allocated to domestic funds), we believe that most Advisors would be extremely uncomfortable with emerging market exposure approaching anything like the 25% minimum weight we use for the domestic allocation.

The emerging markets allocation is capped at 10% even with the highest score while domestic would get 50% allocation and international developed would be 40%.  Or if domestic stocks had the highest ranking, they would get 60% of the allocation while emerging markets would have 5% and international developed would get 35%.  Our expectation is that over time, the macro breakdown will be in-line with that of the ACWI while still offering the possibility of outperformance both through the rotation within the domestic portfolio, adjustments to the macro mix and through the use of lightly levered funds.

Accessing the Program
The Portfolio+ All Equity Model Portfolio will join the Powered by ETF Global® suite of ETF Model Portfolio Programs offered directly from ETF Global and will be introduced to those TAMP platforms, such as SmartX and Vestmark, on which the ETF Global Dynamic Model Portfolio Programs are currently available.

For more information about the Portfolio+ All Equity Model Portfolio, please contact us at (212) 223-3834 or support@etfg.com

Thank you for reading ETF Global Perspectives!

_____________________________________________________________
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, March 19, 2018

Full of Surprises

Monday, March 19, 2018 - When it comes to upsets, the NCAA basketball tournament isn’t the only game in town this month – the market has produced its share of surprises as well. This volatility is likely to be the norm moving forward, as market influences have caused sentiment to swing widely between enthusiasm and caution.

Fears of heightened global trade tensions appeared to be the main factor weighing on sentiment early last week. Investors continued to worry about trade retaliation following the previous week’s announcement of new U.S. tariffs on steel and aluminum imports, but major trading partners in Asia and Europe appeared to be taking a cautious approach.

Markets were further unsettled by the dismissal of Secretary of State Rex Tillerson, widely considered to be a free trade advocate within the administration. Also worrisome were what appeared to be reports that President Trump had requested the preparation of a package of tariffs targeting China. The standout event next week will be the Federal Reserve's interest rate decision. While the Fed is expected to raise short-term interest rates, investors will focus on the additional information regarding the number of rate hikes it expects for the remainder of the year.

Last week added to March’s unexpected volatility, with the Dow Jones Industrial Average moving by more than 100 points each day. Stocks fell modestly for the week after a Friday rally broke a four-day losing streak for the Standard & Poor's 500 Index and partially compensated for earlier losses. Small and Mid-Caps fared better than Large-Caps. Within the S&P 500, Utilities and Real Estate sectors saw gains, helped by a decline in longer-term Treasury yields, which in comparison make their healthy dividend payments more attractive. Conversely, the much larger Financials sector, which sees lending profits squeezed by lower interest rates, was among the market’s weaker segments. Materials also performed poorly.

ETFG Quant Movers – As expected this week in the ETF Global Quant Movers, iShares Core S&P Mid-Cap ETF (IJH), Vanguard Russell 2000 (VTWO) and Schwab U.S. Mid-Cap ETF (SCHM) saw the biggest gains of 18.26%, 16.94% and 16.77% respectively in their Quant Total Score.

Losers for the week included PowerShares India Portfolio (PIN), Global X Next Emerging & Frontier ETF (EMFM) and SPDR S&P Oil & Gas Exploration & Production ETF (XOP) dropping 16.50%, 14.99% and 14.30% respectively.

Thank you 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.

Friday, March 16, 2018

Let's Meet the Speakers - Spring 2018 ETP Forum - Tuesday, April 24, 2018

Friday, March 16, 2018 - We are excited to again Chair the upcoming Spring 2018 ETP Forum on Tuesday, April 24th at The New York Athletic Club. We look forward to another terrific conference that as always will be headlined by an all star group of Panelists, Moderators and Speakers.
All the event information including updates to the speakers and agenda will be up on the event website at www.etpforum.org and the registration link is here: http://etpforum.org/etp-forum/registration

Now let’s meet the preliminary list of speakers:

Chris Romano, Director of Research, ETF Global
Doug Peta, Global ETF Strategy, BCA Research
Michael Castino, SVP, U.S. Bancorp Fund Services
Graham Day, VP of Product & Research, Innovator ETFs
Lance McGray, MD and Head of ETFs, Advisors Asset Management
Toby Loftin, Managing Principal, TriLine Index Solutions
Scott Sacknoff, CEO, Serenity Shares
David Sherrill, CFA, The Vector Group, Morgan Stanley WM
Craig Sierra, Financial Advisor, Stifel Nicolaus
Stephen Ruvituso, MD, Merrill Lynch PBIG
Julie Abbett, Executive Director and Head of ETF Sales, J.P. Morgan
Scott Kefer, Senior Portfolio Manager, Newbridge
Michael Venuto, CIO, Toroso Investments
Sylvia Jablonski, MD, Institutional ETF Strategist, Direxion
Steve Deroian, Head of ETF Strategy, John Hancock
Jim Pacetti, Director of Marketing, ETF Global
Chris Hempstead, Head of ETF Sales, Deutsche Bank Securities
Jay Hatfield, CEO and PM, Infrastructure Capital Advisors
Chris Harms, Portfolio Manager, Natixis
Shalin Madan, CEO, Bodhi Tree Asset Management
Ruggero Gramatica, CEO and founder, Yewno
Tim Seymour, CIO, Seymour Asset Management
Michael Obuchowski, Ph.D., CIO, Merlin Asset Management

Thank you for reading ETF Global Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick

_________________________________________________________________________________________
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, March 13, 2018

Sectors Jockey

Tuesday, March 13, 2018 – Friday marked the ninth anniversary of the current bull market, the second-longest in history. On the other hand, a month has now passed since the S&P 500 experienced a correction, falling 10.2% from highs reached on January 26. While stocks have rebounded by more than 7% since the lows experienced a month ago bringing all of the major indexes back into positive territory for the year to date, it has certainly been a bumpy ride.

Gains might have been even stronger if not for the week’s major headwind, concerns that new tariffs on steel and aluminum imports might lead to a broader trade war. Not to mention Chief Economic Advisor Gary Cohn announced his resignation early last week. Market watchers saw Cohn's departure as a bad omen for the White House's economic policy. However, stocks maintained the course Thursday afternoon following President Trump's proclamation that steel and aluminum tariffs would exclude imports from Canada and Mexico. Markets continued rising on Friday following February's Jobs report that showed strong gains, adding 313,000 jobs, much higher than the 205,000 expected. The Employment in Construction category rose by 61,000 in February, a key indicator in determining the health of our economy.

The technology-heavy Nasdaq Composite Index fared best and managed to set a new intraday high on Friday. The Small Cap Russell 2000 Index also performed especially well.  Along with Information Technology shares, Financials, Industrials, Business Services and Materials led the S&P 500 Index’s gains, while Utilities lagged. Following last week's rally, the S&P 500 had gained 3.5%. Economically-sensitive groups like Financials (+4.4%), Technology (+4.3%), Industrials (+4.4%) and Materials (+4.1%) were the top-performing sectors, while sectors like Consumer Staples (+1.7%), Utilities (+0.8%), and Telecom Services (+1.8%) showed relative weakness. It seems only natural that top performer ETFs  included iShares Edge MSCI Multifactor Technology ETF (TCHF), John Hancock Multifactor Industrials ETF (JHMI) and Fidelity MSCI Materials Index ETF (FMAT) up 4.7%, 4.78% and 3.62% for the week respectively.

As you would imagine, the ETF Global Quant Movers reflected these trends. Top gainers included WBI SMID Tactical Value Shares (WBIB), AlphaMark Actively Managed Small Cap ETF (SMCP) and IQ 50 Percent Hedged FTSE Europe ETF (HFXE) gaining an astounding 35.07%, 27.25%, and 23.69% respectively in their ETFG Quant Ratings. Losers for the week included SPDR S&P Semiconductor ETF (XSD), iShares U.S. Healthcare Providers ETF (IHF) and PowerShares NASDAQ Internet Portfolio (PNQI). These funds saw a percentage loss of 19.35%, 19.14%, and 16.45% respectively in their Quant Ratings.

Thank you 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.

Monday, March 5, 2018

Tariff and Turbulence

Monday, March 5, 2018 - Major US indices clawed their way back from a bad start on Friday to finish relatively unscathed. The S&P 500 and Dow Jones Industrial Average finished up 50 bps and down 29 bps respectively, while the Nasdaq was the big winner of the day up, over 1% or adding 77 points.

This is hopefully a sign of good things to come in March which is a historically good month for stocks. As for February, the US Stock Market had one of its worst months in the past year with all indices finishing down for the month. The Dow, S&P and Nasdaq started off February at 26,186, 2,821 and 7,385 and finished at 25,034, 2,732 and 7,280 respectively.

These declines were exacerbated by the news of a potential trade war brewing between the US and some if its closest allies. When President Trump announced he would be placing a tariff on imported steel and aluminum, countries like Canada and England responded quickly by announcing plans of their own to “punish” the US in trade. 

This quickly shook markets, not just because of how investors think it could affect the prices of steel and aluminum coming into the US, which will now have a 25% and 10% additional tax on them, but also because of ripple effects it could have on trade for the US in other product markets. Amid some domestic backlash and additional international retaliatory threats, time will quickly tell if and/or what actually gets enacted here...

As you would imagine, the tariff news did have an immediate impact on some ETPs that track those commodities. The VanEck Vectors Steel ETF (SLX) finished down 4.6% for the week and the iPath Bloomberg Aluminum Subindex Total Return ETN (JJU) finished down 3.28% MTD. It will be a matter of time to see how this tariff will actually affect these commodities as it does go into effect next week.

ETFG Quant Movers - Elsewhere in ETFs, our ETFG Quant Movers showed the iShares MSCI China Small-Cap ETF (ECNS), Fidelity MSCI Utilities Index ETF (FUTY) and VanEck Vectors Oil Refiners ETF (CRAK) lose the most points to their overall scores down 11.06, 10.52 and 10.42 respectively.

On the winning side, the iShares Latin America 40 ETF (ILF), SPDR S&P Dividend ETF (SDY) and FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE) added the most points to their overall scores gaining 11.25, 10.12 and 9.09 to their respective ETFG Quant scores.

Some interesting news to watch closely over the coming weeks will be the power of large passive managers to affect change on society. BlackRock, the largest asset manager in the world with much of its money coming from its iShares products, on Friday sent a letter to public gun companies in which they invest through their passive products, requesting information on business practices and future gun safety initiatives. They did disclose that they are not invested in those companies in their actively managed portion of the firm. This can be important to show how the public amass of money in ETFs can prompt social change.

Thank you 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.