Monday, April 22, 2013

Quant begins the week with the US broad market focus that has dominated so much this year with small, mid and large cap all represented in the upper ranks.  Friday’s 1st place Vanguard Information Technology Fund (VGT) leads again this morning and the damage in the tech sector has brought the iShares Dow Jones U.S. Technology Index Fund (IYW) up to 13th place, lower than last Monday but higher than most of last week.  Another Vanguard sector fund, Energy (VDE), gets 3rd place followed in 4th by the SPDR S&P Oil & Gas Exploration & Production Fund (XOP) which has scored so well so often this year.

Looking at those four on the ETFGsm Scanner, we can see the energy funds have lower valuations but higher Risk Ratings driven by more volatile price risk measures.  Despite their higher valuations, the tech funds score better in Quant’s Fundamental calculations that reference a fund to its own history. VGT’s excellent 98 edges out IYW’s 97 but both are about as high as can be. The energy funds also score well fundamentally but have better balance with their behavioral side.  XOP’s 71.5 Fundamental Score couldn’t be much closer to its 71.7 Behavioral Score.

The trade may be reliant on value investors coming in because the technical scores are not pretty with high 40s for all but IYW’s even worse 16.4.  XOP probably has the best short term prospects signaled by favorable sentiment measures led by a very high 94.7 implied volatility score, a proprietary calculation that our institutional clients have found to be an excellent input in their models. 

You can see some other sectors and countries represented among the US broad market funds in Quant’s upper ranks but the message remains consistent.  With few exceptions, the US market should remain the island in the storm that world markets have become.  ETF Global has identified the leading sectors and regions of the international equity markets since our inceptions last summer so whatever you decide should be your equity allocation, Quant suggests keeping that US focus that has worked so well this year.  You can find plenty of other suggestions among the upper ranks and the committed ETFGsm team stands ready to assist at   

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