Monday, May 14, 2018

More Market Resilience.....

Monday, May 14, 2018 - The market is once again showing its resilience as last week major indices posted big gains. The Dow Jones Industrial Average, Nasdaq Composite and S&P 500 all posted over 2% gains as investors did not overreact to President Donald Trump pulling out of the Iran Nuclear Deal and may have seen April’s “weak” economic numbers as a good thing. All this happening while there is continued fall out stemming from the 2016 presidential election as Trump’s Lawyer Michael Cohen is the focal point of a federal investigation of possible campaign tampering.

A big story in ETFs this week was the way passive investors would react to the election in Malaysia as the small Asian country is bracing for a total shift in its politics after a surprise win by their former prime minister. The iShares MSCI Malaysia ETF (EWM) fell 4.5% this week and took a hit in redemptions as investors pulled out over $50M of their money from the fund.

Elsewhere in Fund Flows, our ETFG summary shows that on a nominal basis, the iShares 1-3 year Treasury Bond ETF (SHY) has pulled in the most money MTD with over $1.5B during the month of May. Coming in second is the largest Technology ETF, the PowerShares’ QQQ which pulled in more than $650M during the month of May. This in part attracted assets as Facebook made a comeback from its 2018 lows following the data privacy fallout and the fact that Apple was able to show continued growth in their first Quarter earnings report. Apple is the largest position in QQQ with a weight of over 12% in the fund that holds 104 positions.

In our ETFG Quant Movers, we saw winners and losers across the investment spectrum last week. The losers column included the Powershares Golden Dragon China Portfolio ETF (PBJ), the iShares Russell 1000 Growth ETF (IWF) and the Vanguard Small-Cap Growth ETF (VBK) saw the biggest declines to their reward scores losing 8.95, 8.00 and 7.41 respectively.

The winners column had names such as Deutsche X-Trackers MSCI EAFE Small Cap Hedged Equity ETF (DBES), ProShares S&P 500 Ex-Energy ETF (SPXE) and the iShares MSCI Poland Capped ETF (EPOL) had the biggest gains to their ETFG Reward scores adding 10.92, 10.86 and 9.89 to their overall scores respectively.

We will see if the markets can continue their Spring strength throughout the remainder of May. Though they are about 6 months away, it is hard for investors not to start thinking of the mid-term elections in the US as they can have huge implications if the Republican controlled House of Representatives can’t keep their majority seating.

We here at ETF Global would like to wish all the mothers out there a belated Happy Mother’s Day!

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