Tuesday, October 2, 2012

Two new members of the top 10 today confirm Quant’s recent message of aversion to the US dollar. The iShares Goldman Sachs Natural Resources Index Fund (IGE) gained 60 positions into 5th place and tied with it at that position is the SPDR Energy Select Sector Fund (XLE), gaining 6 positions to reenter the group it has been hanging around for a while now.  IGE is coded as having a “Theme” focus but if it was coded as a Basic Materials fund it would be the 6th out of 33 in that sector represented on the ETFG 100 list.  As it is, Basic Materials is the third most represented sector on that list and has the distinction of holding the number 1 rank with GDX, the Market Vectors Gold Miners ETF.  Energy is Quant’s favorite sector with 9 out of 34 funds in the top 100, 2 of them in the top 10.  Technology is considered an inflation hedge as companies spend in that area to increase productivity to counter rising input costs.  It is Quant’s third favorite sector today with 8 out of 34 funds on the ETFG 100.  It’s best scoring fund today is the SPDR Technology Select Sector Fund (XLK) in 15th place.  Health Care with 25 funds and Industrials with 23 both have 4 in the top 100.  Out of 38 funds devoted to the Financial sector, only 1 made the ETFG 100 today, the PowerShares KBW Insurance Portfolio (KBWI) in 90th place.  Consumer Staples should outperform if we are entering another recession, but Quant doesn't think that’s going to happen ranking only 1 out of 13 funds in the top 100.  Filling out the ten equity sectors, there are 25 Consumer Discretionary funds, 13 Utility funds and 8 Telecommunications funds, but none made the double digit ranks.  Quant’s message suggests the economy is going to continue to trudge along but inflation is likely to reemerge.

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