Monday, April 10, 2017

Actions and Reactions

Monday, April 10, 2017 - For the first time in a long while, we can finally say that there was bipartisan agreement this week. No, that’s not a belated April fool’s joke, rather a factoid from some current events that kicked off the second quarter. President Trump launched an airstrike this week on Syrian forces led by Bashar al-Assad. This was in response to al-Assad’s use of chemical warfare against civilians and rebel troops which killed over 60 people. The leader of the free world was met with something other than his usual backlash; support, not just by his counterparts in America but governments around the world. Though an attack like this always brings uncertainty, which is always a bad signal for the market, the sat relatively quiet all week with the major US Indices only taking minimal losses.

Our Top ETFG Quant Mover gains have come in internationally focused ETFs. This came mainly in Chinese focused ones as our model may have captured some signals from the recent Trump, Xi Jingping meeting. Names like the First Trust ISE Chindia Index Fund (FNI) and the Powershares Golden Dragon China Portfolio (PGJ) were both double digit gainers in their Quant scores. They both have an overall rating of B.

In ETFG Quant Mover losers, U.S. focused ETFs continued their trend downwards with many notching double digit loses. The model bought in names like iShares S&P 500 Value ETF (IVE), iShares Edge MSCI Min Vol USA ETF (USMV), FlexShares Morningstar US Market Factor Tilt Index Fund (TILT) and iShares US Financials ETF (IYF). They lost 13.63, 12.09, 11.67 and 11.30 respectively to their overall scores.  As mentioned last week, this could be due to the fact that the Trump trade is starting to slow down and investors may be weary that U.S. equities are currently overvalued.

In our Risk model, triple levered ETPs led the way again. The model takes into account the structure of the products which is why many triple levered products wind up being the most risky. These funds included three Direxion Funds, one based on Latin America (LBJ), another based on Natural Gas (GASL) and the last based on Energy (ERX). These all support overall risk scores of 10, 9.79 and 9.62 respectively.

Last week marked the start of Q2 for the U.S. economy but Q1 bought some big time inflows to the investment vehicle with U.S. Listed ETPs bringing in over $135B in assets. iShares Core S&P Small Cap ETF (IJR) was a big recipient of that money taking in over $29B during the 3-month period, according to the ETF Global Fund Flow summary. The fully indexed SPDR S&P 500 ETF Trust (SPY) was on the opposite end of that with investors pulling out over $1B during the same time period.

We are excited to see what this quarter has to bring for the Industry but from what we can see, there are no signs of it slowing down anytime soon! Be sure to keep up with some of the best ideas from the ETFG team by looking at our Weekly Select List. This list is determined by the top scoring products in our ETF Quant model.

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