Wednesday, December 12, 2012

We spend a lot of time in this space on Quant’s top 10 rankers but we have found the top 100 actually have a very good record of beating the market, so today we look throughout those broader ranks to help with your year end shopping list.  Focusing on the ten S&P equity sectors, we see 12 Technology funds in the top 100 today led by the iShares Dow Jones U.S. Technology Index Fund (IYW) in 7th place.  There are three other technology funds in the top 25 with SOXX in 12th place, IGM in 19th, VGT in 20th and QTEC in 21st place today.  That clearly makes Technology Quant’s favorite sector with 12 out of 31 funds in the top 100 ranks.  Industrials are the second most represented sector with 8 out of 22 funds making the list led by SDPR’s Industrial Select Sector Fund (XLI) staying in the top 10 at 4th place.  Quant’s third favorite sector today is Energy with 7 out of 40 funds in the top 100.  The SPDR S&P Oil & Gas Exploration & Production Fund (XOP) leads that sector in 17th place this morning, down a few places over recent days but still consistently scoring well.  The market expects Chairman Bernanke to throw more money out of his helicopter later today and that helps the Basic Materials sector that is seen as an inflation hedge.   5 out of that sector’s 40 funds are in the top 100 today but none make the top 25, XLB gets the highest rank at 31st place, around where it has been for a couple of months now.  Looking at the less favored sectors, Quant must know that Santa hasn't gotten around to our kids’ lists yet, the Consumer Discretionary sector only has 1 out of 24 funds in today’s top 100 with the SPDR S&P Retail Fund (XRT) in 97th place.  Our sweet little 4 year old with the sore throat says all he wants for Christmas is healthy snacks which fall under the Consumer Staples sector.  Only 1 out of those 13 funds makes the top 100 and that is the SPDR Consumer Staples Select Sector Fund (XLP).  That one holds his favorite providers of those healthy snacks, Kraft Foods who owns Oscar Meyer hot dogs and HJ Heinz for the ketchup.  President Obama’s favorite sector is Health Care but only 1 out 25 funds in that group make the top 100, another SDPR in XLV at 59th place.  Despite all the money falling from Bernanke’s helicopter, none of the 38 Financial sector funds make the top 100, the closest is IXG in 288th place.  However, that liquidity looks like it will keep us out of a recession as those macro bomb shelters, Telecoms and Utilities, are also absent from today’s top 100.  Of the 13 Utilities funds, the highest ranking is PSCU in 240th place today, and the highest ranking of the 8 Telcomm funds is IXP a tad higher at 207th.  Reading this distribution we are left to conclude that Quant isn't too worried about the fiscal cliff although the upward creep in risk ratings we have seen over recent weeks has reversed a little bit.  The top 10 have an average risk score of 4.46 today, higher than the top 100 average of 4.09 but lower than the all equity fund average of 4.8.  We hope the above helps with your shopping list, now we need to go out and get some discretionary consumables for our kids’ stockings.

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