Monday, January 29, 2018

Momentum and Earnings

Monday, January 29, 2018 - Markets got off to a fast start right out of the gate last Monday, in part due to the spending bill recently passed by Congress to fund the government for another 3 weeks. Stocks maintained this positive momentum and hit a record high in the week. Major indexes had their fourth consecutive weekly gain. The Dow Jones Industrial Average gained 2.1%, the S&P 500 gained 2.2% and NASDAQ gained 2.3%. Every sector had a positive week as well. Leading the way were Consumer Discretionary gaining 3.32%, Healthcare gaining 3.51% and Real Estate gaining 2.29%.

ETFG Equity Exposure Report - Last week saw many companies in the S&P 500 report earnings with one of them being Netflix, who surged almost 8% on Tuesday after their earnings release. The jump in share price pushed the company’s market cap to above $100 Billion for the first time. In the ETF Global Exposure Report we can simply input any stock ticker to see what ETFs have the biggest concentration to that particular stock. For Netflix, there is 6.76 billion of exposure of Netflix in the ETF universe. The biggest holders of Netflix are PNQI, Powershares NASDAQ Internet Portfolio, FNG, Advisorshares New Tech and Media ETF and First Trust Dow Jones Internet Index Fund. They hold 10.16%, 7.94% and 6.76% of their portfolio respectively in Netflix.

ETFG Weekly Select List - This week in our weekly Select List we had 2 new funds that went from being unranked last week to being number 1 in their respective categories.  BBH, VanEck Vectors Biotech ETF,  in the Global category, and FDVV, Fidelity Core Dividend ETF, in the High Dividend Yield category.  Please this week's complete Select List here - ETFG Select List - January 29, 2018

ETFG Quant Movers - This week in our biggest weekly quant movers we have  AFTY, CSOP FTSE China A50 ETF, BRF, Vaneck Vectors Brazil Small- Cap ETF, and  MXI, Ishares Global Materials ETF, as the top 3 gainers this week. They gained 30.65%, 20.86%, and 17.95% respectively in our Quant score.

On the other side in the biggest losers for the week were PXH, Powershares FTSE RAFI Emerging Markets Portfolio, VDC Vanguard Consumer Staples ETF and DTN WisdomTree Dividend EX Financials Fund. They dropped 19.03% 18.87% and 18.22% in their respective Quant Ratings.

Thank you for reading the ETF Global Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, January 22, 2018

Continuing to Melt Up...

Monday, January 22, 2018 - Upward momentum continued to drive US Equity Markets which set new more highs last week with the S&P 500 and NASDAQ Composite closing at 2,810.30 and 7,336.38 respectively for a weekly gain of .86% and 1.04%. More impressively, the indexes are up YTD 5.11% and 6.27% respectively.

All of this occurred despite concerns about another Federal Government Shutdown due to political gridlock and partisanship in Washington – which has now occurred. Investors shrugged off any concerns that the shutdown would slow down economic growth. Indeed a look at prior shutdowns shows that they had little to no effect on the economy’s trajectory.

Another significant event for investors to watch this week will be the news coming out of the World Economic Forum in Davos. While the mood at this year’s Forum is likely to be upbeat – or at least more upbeat than the past few years due to the unexpected synchronization of global economic growth, not withstanding this year’s rather ominous theme “Creating a Shared Future in a Fractured World”.

Trump is expected to deliver an address to the gathering on Friday. The significance of this cannot be underestimated as this is the first visit by a POTUS since Bill Clinton. Along with Trump, a significant entourage of high ranking US officials will be accompanying the him which begs the question if a major policy initiative will be delivered or will he deliver a populist lecture on the need to Make America Great Again and America First policies. We would wager on the former as Trump’s actual actions and family business interests seem to be more in line with these “Internationalists”.

The main themes of the conference sessions are: the deteriorating geopolitical landscape, growing income disparity, cyber-threats and environmental degradation. The last topic not being a revered topic for this Administration.

Picking up on last week’s discussion, we believe the odds favor US equity markets continuing to trend upwards. Why?  First, let’s keep in mind that the sudden acceleration of the economy has caught a lot of observers off guard, so there is still a healthy dose of skepticism out there. Economic growth continues to accelerate worldwide and that is good news for businesses, workers and investor profits.  Evidence of the pickup in economic activity can be seen in the rapid recovery of spot oil prices which are now approaching $70 (Brent). This is a far cry from the depressed prices some 18 months ago.  High prices furthermore encourage more exploration and recovery in US energy sector in general. The move in oil prices has come from increased buyer demand – which is evidence of increased economic activity, not supply constraints which generally foreshadow inflation.

Secondly, let’s consider the effects of the fiscal stimulus of the corporate tax cuts. The new found money in corporate coffers will find its way either to Shareholders in the form of increased dividends and stock buybacks, to employees in the form of wage increases and one time bonuses (ie Walmart, VISA, Apple), business expansion and R&D, and lastly and most importantly (in the short term) for investors, M&A. We expect to see repatriated cash particularly for the tech industry and old line industries to go into acquiring competitors and digital businesses. Additionally, one cannot underestimate the economic stimulus from relaxed regulation particularly on small to mid-sized businesses. Excess regulation acts as a friction on the economy as it does not generally add tangible value to GNP.  To date, the Trump Administration has significantly rolled back many Obama-era executive orders.

Major research firms are starting to recognize this new paradigm. For example Howard Silverblatt at S&P just released his earnings forecast for 2018. He revised 2017 earnings down by a few dollars to $110 as S&P analysts realized that companies are going to have to take write-downs for their deferred tax losses. However, he sees earnings growing from $110 to $138 in 2018. The $28 jump in earnings represents about 25% earnings growth.  If it actually materializes, look for the bull market to race on. A national infrastructure package would be icing on the cake. Hence we favor Ed Hyman’s observation that we could very well be in a “Melt Up”.

If indeed if we are in a Super Bull Market, investors should be prepared to buy on any pullbacks but keep a cautious eye on interest rates. Europe, having lagged in recovery compared to the US offers some good opportunities for investors as European companies restructure. Investors could enjoy not only upward valuations in equities but ride the current upward swing in the value of the Euro vs the USD.

These trends show that research tools like our Select List and Risk and Reward Ratings are increasing needed to evaluate the vast set of opportunities in the ETF marketplace. Investing in ETFs requires a new approach to macro investing, one in which investors are just beginning to realize.

Investors and traders are advised to check the ETFG Select List and the ETFG Daily Quant Movers to gain insights into the latest news developments.

Thank you for reading ETF Global Perspectives!

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Tuesday, January 16, 2018

A Step Back & A Melt Up

Tuesday, January 16, 2018 - Upward momentum continued to drive US Equity Markets which set new highs last week with the S&P 500 and NASDAQ Composite closing at 2,786.24 and 7,261.06 respectively for a weekly gain of 1.57% and 1.74%. More impressively, the indexes are up YTD 4.21% and 5.18% respectively.  Investors, sensing global reflation with the US, Europe and Japan in a synchronized global growth cycle, bid up Consumer Services, Energy and Industrial stocks. In the US, tax cuts not only will increase corporate earnings, but should act as the first act of the long awaited fiscal stimulus while a national infrastructure package will be the Second Act.

Such upward moves in the equity markets beg the question “are we in a Melt Up in stock prices?”  Ed Hyman has observed that historically in the 20th century, investors bid up stock prices rapidly during periods of low inflation and strong economic growth, i.e., 3% or better. He observed 3 Super Bull Markets since 1900 as follow:

  • US - The Roaring 20s              1925-1929
  • JAPAN  The Great Bubble      1985-1989
  • US  The Tech Bubble              1995-1999

During these periods, markets rose some 3x over a roughly 5 year period. In each of these periods, markets enjoyed a flood of liquidity and ultimately a rise in interest rates killed the bull market. Having said that, need we look no further than to today’s mania in Bitcoin and other cryptocurrencies to see a flood of liquidity seeking fast returns?

If we are in a Super Bull Market, investors should be prepared to buy on any pullbacks but keep a cautious eye on interest rates. Alternatively, if we are in the last Act of this bull market, then one should be raising cash.  We think odds are that we are in the former scenario but would not be surprised to see quick sharp selloffs due to geo-political flare ups. As the global economy prospers, folks start thinking of how dissatisfied they are with the status quo, hence geo-political market surprises.

A citation in this week’s Barron’s on the research of Louise Yamada on interest rate cycles caught our eye to support the Super Bull Market theory. Her research essentially indicates that interest rates are long cycles ranging from 22-37 years. During periods of rising rates coming off historically low rate levels indicate that deflationary pressures are abating, allowing rates to gradually rise. Inflation, however, is not yet apparent.  This typically takes years to unfold. Hence, if we are here in this point in the cycle, then we have some time to go before rates rise high enough to dampen equity markets.

These trends show that research tools are increasingly needed to evaluate the vast set of opportunities in the ETF marketplace. Investing in ETFs requires a new approach to macro investing, one in which investors are just beginning to realize. Investors and traders are advised to check the ETFG Select List and the ETFG Quant Movers daily for revisions to our ratings to gain insights into the latest news developments


Thank you for reading the ETF Global Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick

_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, January 8, 2018

January Effect in the Making?

Monday, January 8, 2018 – It’s no surprise that stocks started the year on a positive note, with the major U.S. market indexes reaching record highs. The Dow Jones Industrial Average spiked over 25,000 for the first time and the S&P 500 recorded its best weekly performance in over a year. International markets also participated in the rally, adding to their overwhelmingly strong 2017 performance. However, from an economic perspective, job gains in December were well below expectations, counterintuitive to the corporate infusion we saw a few weeks back. Fortunately, the three-month average still exceeds 200,000 and the unemployment rate (4.1%) remains at a 17-year low, reflecting the ongoing health of the labor market. This, along with two consecutive quarters of GDP growth above 3%, provides a solid fundamental backdrop to support the continued bull market. This bullish sentiment extended the gains of 2017 and the results have ultimately been predictable.

As a cold snap blanketed much of North America this past week, Energy and Materials were among the best performing sectors.  Also of note was the renewed strength in the technology space. Looking at specifics, energy stocks heated up Canada’s S&P/TSX Composite and helped push the index which saw new highs in each of the year’s first three days. The firming growth backdrop also nudged up government bond yields in major markets, including Europe, where yields stepped even higher after comments from European Central Bank executives suggested the ECB’s bond repurchase program may not be continued this year. Rising global bond yields added to pressure on the U.S. dollar, which has been weakening for the last three weeks. On the final day of 2017 West Texas Intermediate oil (WTI) climbed above $60-a-barrel following a pipeline explosion in Libya. We haven’t seen these prices since 2015, a truly unfortunate event considering consumers feel pressure of rising costs, low wages and bitterly cold temperatures!

ETF Global Quant Movers - Notable gainers were ETRACS Alerian MLP Infrastructure Index ETN and WBI SMID Tactical Growth Shares both saw changes of 12.5 and 9.5 respectively within the Quant Score.

ETF Global Model Portfolio - As some may have seen, theses Model Portfolios have recently rebalanced with several new products including The PowerShares FTSE International Low Beta Equal Weight Portfolio and The iShares Edge MSCI Multifactor Intl ETF both products are consistent winners within ETF Global Weekly Select List.

Thank you for reading ETFG Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Thursday, January 4, 2018

1Q 2018 Rebalance - ETFG Dynamic Model Portfolios

Thursday, January 4, 2018 - “Out with the old, in with the new” may be the unofficial mantra of every New Year’s Eve celebration, but investors might be hoping for an instant replay as far as their portfolios are concerned.  After all, they got an early Christmas present in the guise of tax reform which was a perfect way to cap twelve straight months of positive gains (and of course new highs) for stocks.  Big shoes to fill indeed.

The new year is also the start of another quarter which includes an update to the ETFG Dynamic Model Portfolios. All 4 of the Base portfolios and the 8 “Tilts” rebalanced on Tuesday, January 2nd and while 2017 might have been a low volatility snooze fest, there have been significant changes to the allocations for 1Q 2018.

Out with the old was also the mantra of our ETFG Quant Model with 3 fund replacements in the domestic sleeve of the portfolios this quarter and while it continues to favor both Small Cap and factor-based funds, there has been a significant shift in its underlying makeup.  The sole survivor from last quarter was the Direxion NASDAQ 100 Equal Weighted Fund (QQQE) a solid performer that remains in the top position followed by SPDR Portfolio Small Cap (SPSM), JPMorgan Diversified Return U.S. Small Cap Equity (JPSE) and iShares Edge MSCI Multifactor USA (LRGF).  Leaving the allocation are the VictoryShares US Small Cap High Dividend Volatility Weighted Fund (CSB), the Guggenheim S&P Smallcap 600 Pure Value ETF (RZV) and the JP Morgan Diversified Return U.S. Mid Cap Equity ETF (JPME.)

The replacement of CSB and RZV with two other core-Small Cap funds means the model portfolios retain significant exposure to smaller stocks but shifts that exposure to more core and growth oriented names at the expense of value stocks. Helping this trend is the addition of LRGF, which as the ticker implies has a more Large-Cap focus than its Mid-Cap oriented predecessor, JPME.

Changes to the Developed International sleeve were more modest with 2 products that continued into the new allocations and 2 new funds being added to the lineup. The model continues to favor single-country exposure although with a decidedly Asian flair as the iShares MSCI Singapore Capped ETF (EWS) replaces the iShares MSCI Spain Capped (EWP) with the iShares MSCI South Korea Capped (EWY) fund staying in the portfolio. Tensions over Catalonia may have cooled in the short-term but the long-term outcome is harder to see which has depressed EWP’s price momentum, but not to the point where a rebound might be imminent.

The model also favors factor funds with the iShares Edge MSCI Multifactor International ETF (INTF) holding onto the top position where it is joined by the PowerShares FTSE International Low Beta Equal Weight (IDLB) which replaces the VanEck Vectors Morningstar International Moat ETF (MOTI.)  IBLD and MOTI are both considered large cap funds, although the similarities end there.  MOTI has fewer holdings and focuses on companies with well-established brands while IBLD has a more Asian orientation and relies on the “low volatility” phenomenon to deliver its risk-adjusted returns.

Finally, the Goldman Sachs ActiveBeta Emerging Markets Equity (GEM) replaced the Franklin LibertyQ Emerging Markets (FLQE) ETF as the primary diversified Emerging Markets product.  Both funds rely on multifactor models with the major difference being that GEM currently has a larger average market cap, as well as, larger exposure to mainland China.

You can find an overview and performance information for the ETF Global Dynamic Model Portfolios at http://www.etfg.com/about-model-portfolios

Thank you for reading ETFG Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Wednesday, January 3, 2018

Turning the Page

Wednesday January 3, 2018 – Happy New Year from all of us here at ETF Global! Looking back, 2017 marks another monumental year for Exchange-Traded-Funds with giant leaps in both the number of products and asset flows.  ETFs gained $476 billion in net inflows, bringing U.S. ETF assets under management to $3.4 trillion and more than 2,000 products.

Stock markets rose steadily around the globe this year, with international stocks even outperforming U.S. stocks for the first time in almost a decade. The Dow Jones Industrial Average rose more than 5,000 points, its largest ever point gain in a calendar year. All other major U.S. indexes recorded solid gains, with large-cap stocks generally performing better than smaller-caps. Additionally, it was also the ninth straight year of positive total returns for the S&P 500. Improving global economic growth and rising corporate earnings are the food that feeds the bull market but we expect its pace to slow from a trot to a walk.

As expected from the shortened and quiet holiday week, markets saw little change in the final week of 2017.  In regards to the overall developments within the ETF landscape, we would like to highlight some interesting developments. As we all know Blackrock leads in ETFs, but Vanguard is coming in hot with the firm’s long history in traditional index funds and actively managed low-cost options. Vanguard has taken well over $350 billion in total assets through December beating out most other issuers by extraordinary figures. The most popular fund this year in terms of inflows, the iShares Core S&P 500 ETF, is one of the most plain vanilla funds on the market, offering exposure to the primary U.S. equity-market benchmark yet it amassed some $30.2 billion in assets.

Our proprietary research also pointed to some interesting trends: internationally and commodity focused ETFs turn up the heat within the ETF Global Quant Movers, a surprise considering the recent passing of the largest tax reform in several decades. Honorable mentions include iShares Core MSCI Emerging Markets ETF, iShares MSCI Poland Capped ETF, and PowerShares FTSE International Low Beta Equal Weight Portfolio all seeing gains a little more than 10 points within the Quant Total Score. Losers include specialty focused US ETFs such as First Trust Nasdaq Semiconductor ETF and SPDR MSCI ACWI Low Carbon Target ETF. The top-rated ETFs within ETFG Quant are IBB and FNI both saw approximately a 25% gain over this past year and have been consistently rated as the top funds.

Thank you for reading ETFG Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick

_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.