Monday, May 6, 2019

Mixed Bag of Tricks

Monday, May 6, 2019 - It was a busy week as there were plenty of corporate earnings and economic data to cause a stir – not to mention the latest Avengers film setting box-office records. However, the week ended with stock prices predominantly flat excluding small cap and international stocks which outperformed. Economic data were mixed. The U.S. economy added 263,000 jobs in April, which was higher than expected even though the Federal Reserve reiterated its patient approach in maintaining rates on Thursday. While the Fed’s narrative was neither bleak nor optimistic, stocks sold off initially, highlighting the growing risk surrounding investor expectations for rate cuts. While investors can remain comfortably in their seats, it might be worthwhile to prepare for the bull market's potential endgame.

Looking at this past week’s ETF weekly flows, we saw mixed sentiment with outflows in the bond markets. iShares TIPS Bond ETF (TIP) had redemptions of approximately $780 million in assets and iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) dropped $725 million in assets as well. It’s worthwhile to note that outflows of $670M, $600M and $565M in First Trust Health Care AlphaDEX Fund (FXH), Energy Select SPDR Fund (XLE) and iShares Russell 2000 (IWM) respectively.

Notable top asset gainers included SPDR S&P 500 Trust (SPY), First Trust Utilities AlphaDEX ETF (FXU) and Dow Jones Industrial Average Trust ETF (DIA). These funds saw a weekly inflow of $2.7 billion, $738 million and $475 million respectively. Both iShares Care S&P Small Cap ETF (IJR) and Vanguard Total Stock Market ETF (VTI) claimed 4th and 5th for the week both bringing in approximately $420 million in asset flows.

In the ETFG Quant Movers, there were significant moves in a variety of names covering both sector and geographic themes. Top percent gainers included iShares US Regional Banks ETF (IAT), Invesco S&P SmallCap Health Care ETF (PSCH) and iShares MSCI Argentina and Global Exposure ETF (AGT) with percent changes of 18.52%, 17.86% and 15.94% to their overall respective ETFG Quant score. Notable losers included Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI), Franklin FTSE Australia ETF (FLAU) and Invesco BuyBack Achievers ETF (PKW) dropping 16.74%, 16.04% and 14.09% respectively.

ETFG Weekly Select List – Each week we compile a list of the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Considering the strategy’s success in times of volatility, we’d like to highlight some substantial movement in the High Dividend Yield portion when comparing this week’s Select List to last. Fidelity High Dividend ETF (FDVV) moved up one spot to take the first overall position on the list knocking the Legg Mason Low Volatility High Dividend ETF (LVHD) down to 2nd. Vanguard International High Dividend Yield ETF (VYMI) also moved up from the 5th position to claim bronze (3rd) in this week’s list. Other notable funds in the High Dividend Yield category were FlexShares International Quality Dividend Dynamic Index Fund (IQDY) in 4th and SPDR Portfolio S&P 500 High Dividend ETF (SPYD) in 5th.

Lastly, a big thank you to all the speakers and attendees ho helped make the Spring 2019 ETP Forum such a big success! Mark your calendars – The Fall 2019 ETP Forum will be held on Thursday, November 21, 2019 at the New York Athletic Club.

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