Christmas in the Red

Monday, December 24, 2018 – As families gather to celebrate the holidays, investors seem conflicted as to whether the glass is half full or half empty in regards to the markets. Looking back, we reminisce about headlines touting “all-time highs” and up until a few weeks ago, investors appeared confident. It would seem the Fed agrees with the notion of half full with last week's decision to raise short-term interest rates for a fourth time this year. The Federal Reserve tried to strike a balance between these steep market fluctuations and its optimistic assessment of a strong economy. Conversely, the market began this week with a trio of worries, including trade disruptions, geopolitical concerns and the compounding specter of further Fed rate hikes. Not to mention, the threat of a governmental shutdown drove an additional bout of volatility in Friday's trading.

All major benchmarks slid to their lowest levels in well over a year. The technology-heavy Nasdaq Composite Index (Fidelity NASDAQ Composite Index Tracking Stock (ONEQ)) fared worst and joined the small-cap Russell 2000 Index (iShares Russell 2000 ETF (IWM)) in bear market territory, down more than 20% from its all-time highs in August. The S&P MidCap 400 Index (SPDR S&P Midcap 400 ETF Trust (MDY)) also moved into bear market terrain on Friday morning. The pullback was especially dramatic in the energy sector as oil prices plunged to the lowest levels in over a year.

Speaking of volatility, the Cboe Volatility Index (VIX) saw major highs, levels last seen in February. As a matter of fact, a few of the volatility linked ETFs did quite well in 2018. Over the past year, the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXXB), VelocityShares VIX Short-Term ETN (VIIX) and iPath S&P 500 VIX Short-Term Futures ETN Class A (VXX) all surged over 50% year-to-date.

ETFG Weekly Quant Movers – In the ETFG Quant Movers, we saw some interesting movements with S&P linked funds. Honorable mentions in the “Weekly Gainers’ category, iShares Core S&P 500 ETF (IVV), iShares Micro-Cap ETF (IWC) and Vanguard S&P Small-Cap 600 ETF (VIOO) saw an increase of 28.27%, 25.61% and 22.17% to their overall Quant Score.

Weekly ETFG Quant losers included, Invesco S&P 500 Low Volatility ETF (SPLV), Hull Tactical US ETF (HTUS) and Inspire Small/Mid Cap Impact ETF (ISMD) all three funds saw a decrease of 22.31%, 21.75% and 21.45% respectively to their overall scores.

ETFG Weekly Select List - the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

As expected, we saw major turnover in both the Natural Resources and Financial categories of the Sector portion of the ETFG Weekly Select List. We would like to highlight these sectors due to the surprising correlation to last week’s analysis. In the Natural Resources portion, Invesco Global Agriculture ETF (PAGG) jumped from 5^th to 1^st while newcomers SPDR S&P North American Natural Resources ETF (NANR) and First Trust Indxx Global Agriculture ETF (FTAG). In Financials, after the Fed’s rate increase Invesco KBW Regional Banking ETF (KBWR) moved up two spots to claim 1^st place this week while SPDR S&P Insurance ETF (KIE) and Invesco KBW Bank ETF (KBWB) were awarded 2^nd and 3^rd place respectively.

Merry Christmas and thanks 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.