Monday, October 24, 2016

Riding the Cyclone

Monday, October 24, 2016 - If one tried to compare the Stock Market this year to an amusement park ride, The Cyclone in Coney Island would be the uncanny response. Bumpy rides that leave you with a headache at the end of the day.

This past week, we again saw up and downs throughout the week in major U.S. Indexes with the S&P 500 finishing slightly up for the week and the Dow Jones finishing slightly down. The reason for the razor-thin movements can be summed up in one word, uncertainty.

The most memorable presidential season in recent memory is coming to a head where investors believe we will either have more of the same or a complete unknown and if the Federal Reserve would’ve stayed true to their word at the end of last year, we would be going on our 4th interest rate hike of 2016 in the next two months.

All of this, of course, plays its part in the ETF realm where the shift to passive investing is becoming more and more apparent and well reported as it’s been difficult for active managers to beat their respective benchmarks in recent times.

In the past 30 days, we’ve seen close to $12B make its way into North American focused ETFs of which $5.36B went to equity funds according to the ETFG Fund Flow report. Within that, we saw the greatest inflow into a single ETF in the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) which added close to $2.5B in the period. HYG carries a 5 Red Diamond Risk rating in the ETFG Risk Rating summary.

As for our ETFG Quant Movers, the JPMorgan Alerian MLP Index ETN (AMJ) saw the greatest change in its scoring with a 16 point move upwards. It now sits with a 64.99 score and an overall “B” rating.

For the next two and a half weeks until the November 8th election, the markets may still make investors feel as though they’ve been riding The Cyclone for a bit too long. After that, well stay tuned as the mystery ride awaits!

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