Tuesday, May 30, 2017

Marching Higher

Tuesday, May 30, 2017 - A tragic terrorist attack in Manchester, Russia-US collusion claims escalating, possible links between North Korea and the major computer virus “WannaCry”, the second largest economy getting a downgrade on their debt and a stock market finishing the week in the green. Yes, those are all events that transpired last week, the last possibly being the biggest head-scratcher of them all as the Dow finished up almost 200 points, the S&P 500 up over 20 points and the Nasdaq just shy of a 100 point weekly gain. The market seems as if it is on a mission to continue its trek higher, no matter what the circumstances. In part, this may be attributable to earnings season finishing up with a revised forecast for the S&P 500 being expected to grow 13.9% from the same period last year, which would be the highest growth since 2011.

Speaking of growth, that is exactly what the ETF industry continues to do. Developed Market ETPs added over $3B last week through Wednesday according to our ETFG Fund Flow Summary. The fund flow summary also shows that in the last 30 days, investors have been taking money out of North American based ETPs and putting it into European based ETPs, removing $11B and putting in more than $5B respectively. A big recipient of this inflow has been the iShares MSCI EAFE ETF (EFA). EFA has taken in $3.36B in the month of May which is almost 5% of its total AUM. On the contrary, the SPDR S&P 500 ETF Trust (SPY) has been experiencing some significant outflows in the same time period. Over $10B has been taken out of the largest ETP in the month of May, accounting for about 4% of its AUM.

We see the same types of trends taking place in our ETFG Quant Movers. Some of the biggest gainers last week were non-US tracked ETPs including the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (ASHR), the CSOP MSCI China A International Hedged ETF (CNHX) and the Global X MSCI Argentina ETF (ARGT). Each ETF gained 9.61, 9.04 and 8.05 points to their score respectively. In the Quant losers, we saw names like the iShares S&P 500 Value ETF (IVE), iShares S&P Small-Cap 600 Growth ETF (IJT) and the SPDR S&P Dividend ETF (SDY). These funds lost 7.10, 6.81 and 6.36 to their overall quant score respectively.

We will see what this short week of trading brings for the US stock market and if anything can knock it off of its continued trend upward. One thing to always look out for is the monthly payroll data that will come out for May on Friday. This is usually news that investors trade off of but then again that logic hasn’t been the case for quite some time.

From all of us at ETFG, we hope all of you had a great Memorial Day Weekend and thank our troops for the sacrifices they make every single day for us.

Thank you for reading ETF Global Perspectives.

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