Trading Bumps

Monday, May 13, 2019 - Trade fears hampered sentiment throughout the week as the U.S. raised tariffs to 25% on $200 billion in imports from China. In turn, China vowed to retaliate indicating an escalation in rhetoric and raising the odds of a breakdown in trade negotiations. Volatility, as measured by the Cboe Volatility Index (VIX), spiked to its highest level since January signaling an increase of uncertainty among investors.

Nevertheless, a Friday afternoon rally shielded the major indexes from their worst declines since late December. The technology-heavy Nasdaq Composite Index performed worst dipping more than 3% for the week. The Russell 2000 TR Index stood out for being the only major benchmark to temporarily move into correction territory, down over 10% from its all-time highs approximately a year ago.

Looking at the various sectors in the S&P 500, information technology shares performed worst, dragged lower in part by a decline in Apple (AAPL). Industrials and Materials were also weak as investors worried about rising trade barriers. The typically defensive Consumer Staples sector held best. The trading week was also notable for Friday’s initial public offering (IPO) of Uber (UBER), which valued the ride-sharing company at around $75 billion. The amount raised by the offering, totaling approximately $8.1 billion, made it one of the 10 largest IPOs in history and the biggest since Chinese Internet giant Alibaba’s IPO debut in 2014.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings.

ETFG Quant Winners: The top five gainers in Quant Total Score in order were Principal International Multi-Factor Index ETF (PXUS), iShares U.S. Basic Materials ETF (IYM), Vanguard Dividend Appreciation ETF (VIG), ETRACS Alerian MLP Index ETN Series B (AMUB) and Cushing 30 MLP Index ETNs (PPLN). Evident behavioral factors were the primary drivers for the increased growth (over 10%) in each fund’s Total Quant Score.

ETFG Quant Losers: Honorable mentions in the loser category were Barclays Return on Disability ETN (RODI), Vanguard US Multifactor ETF (VFMF), Reality Shares DIVCON Dividend Guard ETF (GARD), IQ 50 Percent Hedged FTSE Japan ETF (HFXJ) and Global X MSCI China Consumer Discretionary ETF (CHIQ). The reasons for the ETFG Quant score drop were driven by behavioral and global factors.

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

We saw an interesting phenomena in the Strategy portion when comparing this week’s Select List to last week’s Select List – there was complete turnover in the Theme category. Pacer Military Times Best Employers ETF (VETS) snagged first place, proving that ESG factors, particularly in the S and G category, can perform well for investors in all market cycles. Global X Conscious Companies ETF (KRMA) claimed second followed by Legg Mason Global Infrastructure ETF (INFR), iShares MSCI USA ESG Select ETF (SUSA) and ARK Genomic Revolution Multi-Sector ETF (ARKG) in order from 3^rd to 5^th.

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