And Into 4Q We Go.........

Monday, October 2, 2017 - The start of the new quarter brings some new hopes to Investors and continued strength throughout the US markets. It also brought along some big news in the ETF industry as Invesco PowerShares announced that they agreed to buy Guggenheim’s ETF business for $1.2B. Guggenheim’s ETFs have about $33B in AUM which will certainly add a lot of value to the fourth largest US ETF issuer.

All three major indices are up for the quarter and got a nice boost with the announcement of the new tax plan that the Republican party is trying to put in place.

One of the most favorable parts of the new proposed tax plan is the corporate tax cut from 35% to 20%. That can add multiples to the P/E ratios of many of the large-cap stocks and have an even greater impact on the small and mid-cap ones which tend to pay a higher rate.

Though still early in the process, it did not stop investors from pouring money into small-cap names and some ETFs were there to ride the wave – one of the most notable was the Russell 2000 ETF, IWM, which added 3.57 points or 2.46% this week. The iShares Russell 1000 Growth ETF, IWF also had a positive week adding 1.74 points.

Taking a look back at the quarter, there were 7 ETFs that added over $1B to their AUM. To no surprise, four of the seven, IVV, IEFA, LQD and HYG are iShares funds, two of the seven, XLF and SPY, are from StateStreet and the last, VEA is from Vanguard. Check out the chart below to see the flows.

Ticker	3Q Net Fund Flow	% of AUM	AUM
IVV	$3.82B	3.12%	$126.29B
IEFA	$2.92B	9.22%	$34.56B
LQD	$1.57B	4.23%	$38.58B
VEA	$1.37B	2.25%	$61.99B
HYG	$1.25B	7.30%	$18.33B
XLF	$1.24B	4.95%	$26.19B
SPY	$1.02B	.41%	$249.39B

In our weekly Quant Movers, names like the iPath S&P MLP ETN (IMLP), WisdomTree Dynamic Currency Hedged Japan Equity Fund (DDJP) and WBI SMID Tactical Value Shares (WBIB) made the largest gains to their scoring adding 12.03, 11.27 and 10.07 points respectively. On the opposite end of the scoring spectrum, the “dogs” of the week included the ALPS International Sector Dividend Dogs ETF (IDOG), PowerShares Cleantech Portfolio (PZD) and PowerShares India Portfolio (PIN), which lost 12.03, 10.09 and 10.04 points to their overall score respectively.

Also, since it is the beginning of the quarter, be sure to look out for the rebalance and reconstitution of the ETFG Model Portfolios. To learn more about them, check out: http://www.etfg.com/about-model-portfolios.

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