Strong Earnings Face Continued Concerns

Monday, April 30, 2018 - Following a familiar pattern, stocks were whipsawed last week by the competing forces of optimism stemming from robust earnings and corporate fundamentals and the unease from rising interest rates and the specter of peaking economic growth. Stocks stumbled to begin the week, buffeted by a selloff in government bonds that pushed the 10 year treasury yield above the important psychological barrier of 3% for the first time since January 2014. The markets were further battered after industrial bellwether Caterpillar's warning that its first quarter results could represent a "high-water mark" for the year. By mid-week, market sentiment began to flag as concerns about cooling economic growth mounted.

It took strong performances from several technology blue chips to stem losses for the week. A slew of record setting revenue and profits reported by the likes of tech giants Facebook, Microsoft and Amazon were the latest affirmation of the health of the global economy. All told, more than half of the S&P 500 companies have posted first quarter results and the index is on track to record year-over-year earnings growth of 23%.

However, signs that corporate earnings remain on solid footing and geopolitical tensions are easing were unable to surmount fears that inflation and borrowing costs will continue their ascent and stock gains could stall. This murky outlook helped contribute to declines in the major indexes for the week and will likely fuel continued volatility. As of Friday's close, the DJIA, S&P 500 and Nasdaq were down 0.6%, 0.1% and 0.4% for the week.

ETFG Fund Flow Summary - Fund flow activity often reveals a telling picture of investor sentiment. Our fund flow analytics and data feed allow you to capture market sentiment and analyze flow trends from a broad, macro perspective - asset class, geography and region, development level, product structure and factor exposures - down to more targeted, granular groups - individual issuers, ETPs and underlying constituents.

Despite the gyrations of this week's market action, U.S. listed ETPs managed to attract $972 million of inflows, showing ETPs remain popular vehicles of choice amid calm or turbulent market conditions alike. The nearly $1 billion in fresh inflows pushed up total year-to-date inflows to $81.5 billion.

At the asset class level, equity based products suffered $3.2 billion in outflows amid the choppy market activity wherein optimism from robust corporate earnings was tempered by lingering concerns about interest rates, trade tensions and stalling growth. Unsurprisingly, this skittishness drove investors to safe haven products, with domestic fixed income products receiving the largest inflows as a group with over $2.6 billion. Other notable flows include $439 million to commodities, against a continued rise in energy prices and unexpectedly, $1.8 billion into international equity products.

Despite the outflows suffered as a group, there were several notable domestic equity ETFs that received sizable inflows and were among the top 10 ETFs in creations for the week. The iShares Core S&P 500 ETF (IVV) led all ETFs in creations with $1.9 billion, followed by the iShares Core MSCI EAFE ETF (IEFA), iShares 20+ Year Treasury Bond ETF (TLT), iShares Core Aggregate Bond ETF (AGG), and iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), with $1.3 billion, $828.3, $604.6, and $575.1 million respectively. The Financial Select Sector SDPR Fund (XLF) and Consumer Staples Select Sector Fund (XLP) also stood out, finishing the week 7th and 8th in inflows with $429.4 and $423.4 million, as they received boost from positive sector earnings performances.

Outflow trends this week perfectly capture the current quandary investors find themselves in. Despite the stellar earnings results and long-running market leadership provided by the technology sector and ostensibly bright outlook for small caps following this year's tax cuts, funds in these groups dominated this week's top 10 outflow leaders. Powershares QQQ Trust (QQQ) led the way with nearly $2 billion in outflows, followed by SPDR S&P 500 ETF Trust (SPY), iShares Russell 2000 ETF (IWM), iShares iBoxx $ High Yield Corporate Bond ETF (HYG), and Technology Select Sector SPDR Fund (XLK) with $1.8 billion, $1.1 billion, $682.4 million, and $616.2 million in outflows.

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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.

Earnings Lead the Way

Monday, April 23, 2018 - In a year of resurgent volatility, heightening geopolitical risks, tightening monetary policy, rising inflation concerns, and a flattening yield curve, markets received a welcomed reprieve this week as attention was directed to some positive countervailing developments. A string of upbeat earnings announcements, positive economic data, and the continued rally in oil prices propelled the major stock indexes for slight gains on the week.

18% of the S&P 500 constituents have reported Q1 earnings thus far and 80% of them have reported EPS results that exceeded consensus estimates. Investors were also encouraged by retail sales in March, that broke three months of declines, a rise in housing starts, and an uptick in manufacturing activity. A steepening of the yield curve towards the end of the week lent further encouragement to investors who have been increasingly concerned with this year's flattening trend. Crude oil is now trading at its highest level in more than three years, spurred by output cuts by OPEC, production constraints posed by African and Middle East geopolitical conflicts and a strong global economy that is fueling steady demand. These benign developments helped shift attention away from recent geopolitical and monetary policy concerns and advance the major indexes to a week of gains. The DJIA, S&P 500, and NASDAQ edged up 0.4%, 0.5%, and 0.6% each for the week.

ETFG Equity Exposure Report - Amid earnings season, our equity exposure report is a popular tool used to help gain insights into how ETFs will be affected by the earnings announcements of their underlying constituents. Financials have been among the standouts of the Q1 2018 earnings season due to a supportive environment of tax cuts, regulatory relief, renewed volatility, and a healthy global economy. Climbing treasury yields and widening net interest margins gave an additional boost to the financial sector, sending it up 1.6% this week. Sector stalwarts Bank of America, Morgan Stanley and Goldman Sachs all reported positive earnings surprises and were just a few of the notable financial companies to report earnings so far. A look at our exposure report shows that the ETFs with the largest exposures to these companies on a percentage basis are the iShares U.S. Financial Services ETF (IYG) and the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) with 9.26%, 9.27%, and 9.99% weightings. IYG and IAI were up 1.1% and 1.5% respectively for the week.

Conversely, several companies in the consumer goods and consumer staples companies suffered this week due to depressing margins triggered by increased competition, reduced pricing power, shifting consumer preferences, and flagging demand. Companies such as Procter & Gamble and Philip Morris were among the most notable laggards this week. P&G and Philip Morris each have their largest weightings in the Consumer Staples Select Sector SPDR Fund (XLP) at 11.21% and 7.89% each. Combined, these two companies account for nearly 20% of XLP. This outsized weighting and their disappointing earnings results helped sink XLP down 4.3% this week, serving as a stark reminder for investors that a full look through of an ETF's holdings is critical to understanding its true risk and reward profile.

Earnings performance will continue to command investor attention with nearly a third of the S&P 500 set to report in the week ahead. We encourage you to use our equity exposure report to monitor your exposures and navigate potential positive or adverse developments from company earnings results.

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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.

Last Call to Register - Spring 2018 ETP Forum on Tuesday, April 24th

Friday, April 20, 2018 - Registration will be closing after today for the Spring 2018 ETP Forum on Tuesday, April 24^th at the New York Athletic Club. We look forward to seeing everyone and all information including the Agenda, Speakers and Sponsors have been updated and is available on the event website which is located at www.etpforum.org. If you plan on attending, please register ASAP on the event website under the Registration tab or here: http://etpforum.org/etp-forum/registration

Thank you for reading ETF Global Perspectives!

_____________________________________________________

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.

Weekly Repetition?

Monday, April 16, 2018 - Are we repeating ourselves? Over the last three weeks, the S&P 500 has been locked in a trading range that’s about 3% wide. While daily volatility has increased, the market seems unable to make up its mind, lacking any real momentum in any persistent direction. Some of this seems to be driven by our on-again off-again trade war. Earlier in the week, stock markets rallied thanks to encouraging free trade talk from Chinese President Xi Jinping. It’s not every day that the Communist leader assists the U.S. stock market with free-trade rhetoric. Even though trade war risks receded, there were growing concerns about a missile strike on Syria and the FBI raiding Trump’s lawyer’s office. The inevitable risk temperament saw bond yields, commodity prices and the Australian dollar rise.

Additionally, Q1 earnings season is here. The guessing game about 2018 corporate profits is over and we’ve just begun to see preliminary results. The first-quarter earnings season kicked off with releases from J.P. Morgan, Citigroup and Wells Fargo. Perhaps optimism ran high as shares of banks fell sharply even as the profits were in line or above expectations.

U.S. equity markets closed lower on Friday, led by a selloff in banking stocks, but the main indexes still posted weekly gains. The Dow Jones Industrial Average fell 122.91 points or 0.5% to 24,360.14, the S&P 500 index declined 7.69 points or 0.3% to 2,656.30 and the Nasdaq Composite was down 33.60 points or 0.5% to 7,106.65. Among the hardest hit performers of the S&P 500, Wells Fargo & Company 3.4% as revenues declined while JPMorgan lost 2.7%. Despite the sell off at the end of the week, all three major indexes booked a subtle gain of approximately 2% for the week giving investors a glimpse of confidence.

Surprising news in the markets came from Bitcoin and Marijuana this week. The price of bitcoin moved higher again on Friday, jumping nearly $400 in an hour, as the cryptocurrency looked set to close out the week with a gain of over 20%. For the week, the cryptocurrency is looking at a gain of 21.3%. Some reports attributed the sharp move to the investors who had shorted bitcoin, betting on it to fall, got squeezed and were forced to buy it back. In addition, an exchange-traded fund that tracks the cannabis-related industry spiked on heavy volume on Friday, after the Washington Post reported that President Donald Trump promised Sen. Cory Gardner that he would support congressional efforts to protect states that have legalized marijuana. The Horizons Marijuana Life Sciences Index ETF surged 6.5%. The ETF traded on volume of more than 940,000 shares, nearly twice its 30-day ADTV. Another fund, the ETFMG Alternative Harvest ETF, rose 4.7% and saw a significant volume of nearly 1.5 million shares.

In these new times of returned volatility, it is important to have a clear picture of the risk within your portfolio. ETF investors should check the ETF Volatility portion of the ETFG Red Diamond Risk Rating to better understand their risk exposure in these inevitable turbulent periods. Notable funds with current high volatility scores include energy based products like First Trust Energy AlphaDEX Fund (FXN), products based in the Middle-east such as iShares MSCI Turkey ETF (TUR) and of course the Volatility linked ProShares Ultra VIX Short-Term Futures ETF (UVXY).

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.

Spring 2018 ETP Forum on Tuesday, April 24th at the New York Athletic Club

Friday, April 13, 2018 - We look forward to seeing everyone for the upcoming Spring 2018 ETP Forum on Tuesday, April 24^th at the New York Athletic Club. Our Director of Research, Chris Romano, will again serve as the event Chair for this terrific conference.

All information including the Agenda, Speakers and Sponsors have been updated and are available on the event website which is located at www.etpforum.org.  Registration remains open but we expect to reach our capacity for this venue early to middle of next week. So if you plan on attending, please register ASAP on the event website under the Registration tab or here: http://etpforum.org/etp-forum/registration

We look forward to seeing you and thank you for reading ETF Global Perspectives!

______________________________________________________

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.

Punch, Counterpunch

Monday, April 9, 2018 – Persistent threats of a trade war with China continued to exacerbate downward pressure on the markets over the last week. Moreover, an announcement of potential retaliatory tariffs on U.S. goods from China was the latest response to the steel and aluminum tariffs proposed by President Trump. The blow by blow color commentary saw The White House respond with proposed tariffs on 1,300 Chinese products worth about $50 billion and then the Chinese government responded with tariffs on $50 billion on U.S. exports in the auto, aerospace and agriculture industries.

Every sector was down last week as the Dow ended the week off .7%, the S&P off 1.4%, and the NASDAQ ended down 2.1%. Industrials, Tech, and Healthcare took the biggest hits losing 2.05%, 2.09% and 1.87% respectively. Economic indicators released, saw the March Jobs Report reflect that 103,000 jobs were created in March, which was lower than expected for the month. The unemployment rate remained at 4.1%, Wage growth ticked up to 2.7%.

ETFG Equity Exposure Report - We now enter the beginning of first-quarter earnings season. Large financial services firms such as J.P. Morgan Chase and Blackrock will begin reporting their results this week. Using the ETF Global Equity Exposure Report, we can see what ETFs have the most exposure to these stocks. Some of the biggest holders of Blackrock (BLK) are TETF, ETF Industry Exposure & Financial Services ETF, which has 6.25% exposure and WBIG, WBI Large Cap Tactical Yield Shares, which has 3.9% exposure.

ETFG Quant Movers - This week in the Biggest gainers section of the ETFG Quant model we had  GNRX, VanEck Vectors Generic Drugs ETF, which gained 22.41%, FCA, First Trust China AlphaDEX Fund, which gained 22.08% HFXE, and IQ 50 Percent Hedged FTSE Europe ETF, which gained 21.50%. On the flip side, we had REMX, VanEck Vectors Rare Earth/Strategic Metals ETF,  lose 17.23%, SPLV, PowerShares S&P 500 Low Volatility Portfolio, lose 16.78% and  ORG, The Organics ETF  lose 14.90%.

ETFG Weekly Select List - On the ETFG Select list, we had 2 funds that went from being unranked last week to being the number one fund in their respective category this week. UTLF, iShares Edge MSCI Multifactor Utilities ETF, in the Utilities category and PPH, VanEck Vectors Pharmaceutical ETF, in the global category.

Thank you for reading ETF Global Perspectives!

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

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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.

2Q Rebalance - ETFG Dynamic Model Portfolios

Wednesday, April 4, 2018 - At the start of 1Q 2018, we wrote that investors came into the new year hoping for an instant replay of 2017, where the predominant fear was of being left behind as markets soared to new heights. Now fast forward to the start of 2Q 2018 and investor anxiety is indeed high but missing out on more gains isn’t what keeps investors awake at night as global markets continue to shudder. A positive close for last week surely has some bullish strategists pointing out that the S&P 500 was down only about 1% for the first quarter in its first quarterly loss since 2015, but that’s small comfort as the market continues to hug its 200-day moving average and where even high-flying tech stocks are falling back to earth.

Combining the start of a new quarter with the Easter and Passover holidays is seemingly so fortuitous even the Quants can’t overlook it. While some traders no doubt spent the long holiday weekend studying their charts and hoping for a better tomorrow,  the start of a new quarter means that it’s time to update the ETFG Dynamic Model Portfolios – the 4 “Base” portfolios and the 8 “Tilts” rebalanced on Monday. It’s no surprise that there were major changes, but it leaves us wondering if there are more tough times are ahead.

Three funds are leaving the domestic equity sleeve of the ETFG Dynamic Model Portfolios for the second quarter in a row, significantly shifting its underlying makeup. Leaving the portfolio are the SPDR Portfolio Small Cap ETF (SPSM), JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) and iShares Edge MSCI Multifactor USA ETF (LRGF) while the Direxion NASDAQ 100 Equal Weighted Fund (QQQE) remains in the line-up. Taking their places are the SPDR Portfolio S&P 500 Growth ETF (SPYG), SPDR Portfolio S&P 500 Value ETF (SPYV) and WisdomTree U.S. MidCap Dividend Fund (DON).

Replacing three funds that were only added in the first quarter might seem like a radical move, but there’s no denying that the markets have undergone a seismic shift in both sector and size leadership despite the S&P’s minor loss for the quarter. Our ETFG Quant model had us well positioned for higher volatility in the first quarter, shifting out of value names to more core positions while retaining a small/mid cap focus. We’re seeing another shift here at the start of the second quarter as the addition of SPYG and SPYV, whose ETFG Quant scores have been driven by a combination of momentum, high short interest and cheap fundamentals (relatively), gives the equity allocation a very different outlook. The broad sector make-up is largely unchanged but the portfolio now has a clear large cap focus at the expense of small-cap names which have almost entirely been eliminated from the allocation.

On the international side, the changes to the model’s international exposure were seemingly more modest at first glance with only two fund changes, the replacement of the PowerShares FTSE International Low Beta Equal Weight Fund (IDLB) with the iShares Core MSCI Pacific ETF (IPAC) while the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) is replaced by iShares MSCI Emerging Markets ETF (EEM). Replacing IDLB with a more traditional index replicator is only part of the story since with the iShares MSCI Singapore Capped ETF (EWS) and iShares MSCI South Korea Capped (EWY) remain for another quarter, the international portion of the portion is very decidedly oriented towards Asia.

Despite the headlines focusing on a potential trade war with China, or any other nation we have a trade deficit with, numerous Asian equity funds have steadily outperformed their European alternatives over the last quarters as heightened volatility offers traders the opportunity to shine.  Australian and Japanese funds seem to be the favorite proxies for respective “risk-on” and “risk-off” plays but news reports that South Korea will be spared any tariffs have helped lift EWY, although perhaps the hope of avoiding a nuclear conflict is also a factor. Doesn’t that sound more like something we’d get excited about in 1962, not 2018?

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

To learn more about our ETFG model portfolio strategy, please email us at sales@etfg.com or call us at (212) 223-ETFG (3834).

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.

Relief Rally for the Holidays

Monday, April 2, 2018 - Headline news out of Washington continued to drive stocks last week as investors digest concerns about rising interest rates, trade wars with China and most unwelcoming, the regulation of High Tech firms. Not even Amazon could escape this week when the POTUS made some negative observations about the huge retail giant which took investors by surprise.

Investors breathed a sigh of relief as key US indexes rose for the shortened, pre-holiday weekend last week with the S&P 500 and the NASDAQ Composite rising to 2,640.87 and 7,063.44 respectively for a weekly gain of 2.03% and 1.01%. The indexes recovered as Tech stocks rebounded along with Financials. Most investors preferred to forget this quarter despite its strong momentum early on as it finished down some 1% depending upon your benchmark.

Michael O’Rourke, Chief Market Strategist at Jones Trading summed the mood up perfectly, “We are in a structurally different environment” since the market’s high. We take that to mean a change in leadership and continued volatility will affect the markets.

That’s good news for traders, but index investors in market cap weighted funds which favor momentum stocks should heed note. ETF traders should dig out those prospectuses to see just how their index is constructed. Choppy markets tend to favor active strategies over traditional market cap weighted indexes, so keep those prospectuses nearby and be prepared for sector and market cap rotations.

If indeed we are in a Bull Market correction, investors should be prepared to buy on any pullbacks but keep a cautious eye on interest rates. With the return of normal volatility to the markets, we cannot emphasize strongly enough that some stocks and bonds may lack the liquidity that used exist some 10 years ago due to changes in market structure. ETF investors should be mindful that in periods of high volatility, some thematic, fixed income and strategy ETFs could suddenly see widened spreads or any bids at all, particularly in the smaller funds – check the ETF Liquidity portion of the ETFG Red Diamond Risk Rating. Hence, investors should keep reserves and be prepared to take advantage of such opportunities.

In these times, Investors should use our ETF Exposure Report to see just what their exposure to momentum stocks is (i.e., the favored high tech names) across their ETF portfolio. One should be especially concerned if you find yourself overly exposed to the sector weightings in say the S&P 500.

Additionally, tools like our Select List and Risk and Reward Ratings should be used 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.

Thank you for reading 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.