Tensions Home and Abroad

Monday, June 17, 2019 - Amid conflicting economic signals and geopolitical flareups, U.S. stocks managed to inch higher for the week and continue their strong start to June. Stocks began the week on a positive note, as the U.S. and Mexico were able to stave off an escalating conflict over immigration and some high-profile M&A tie-ups between Salesforce and Tableau and UTC and Raytheon lifted investor sentiment. However, this burst of optimism ebbed as the week came to a close following a mixed bag of economic data and sharpening geopolitical tensions in the Middle East.

Positive consumer spending in May was counterbalanced by a muted CPI reading and record-low inflation expectations. Broadcom's downward revenue forecast revision and dim full-year outlook due to intensifying global trade tensions further depressed the mood in the markets. Lastly, the attack of two oil tankers in the Gulf of Oman, purportedly by Iran, sharply unsettled global energy markets and raised the specter of U.S.-Iranian military conflict. Despite the worrisome turn at the end of the week, the DJIA, S&P 500, and Nasdaq were able to register gains of 0.4%, 0.5%, and 0.7% respectively for the week.

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

ETFG Quant Winners: This week’s biggest winner was the Validea Market Legends ETF (VALX) rising 7.82 to boost its overall Quant Score to 51.91. Following VALX in the top 5 were Eaton Vance Stock NextShares (EVSTC), USAA MSCI USA Small Cap Value Momentum Blend Index ETF (USVM), Brandes Value Nextshares (BVNSC), and Aptus Fortified Value ETF (FTVA).

ETFG Quant Losers: Franklin FTSE Australia ETF (FLAU) suffered the biggest overall decline this week, falling 9.58 points to bring its overall Quant Score to 45.52. ProShares Decline of the Retail Store ETF (EMTY), Franklin FTSE Japan Hedged ETF (FLJH), Franklin FTSE Hong Kong ETF (FLHK), and Kraneshares MSCI All China Healthcare Index ETF (KURE) rounded out the rest of the top 5 biggest Quant losers for the week.

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

Given its heightened volatility this week, we'd like to focus on the weekly changes amongst ETFs in the energy sector. While the energy sector suffered a major shock this week, our top 5 rated energy ETFs were unchanged from last week. On the surface, this may come as a surprise. However, a look under the hood of these funds and review of their investment objectives reveals why our top was unaffected. Our top 5 energy sector ETFs consists entirely of funds that focus on energy services and infrastructure, making them less sensitive to funds tied directly to oil prices. Leading our top 5 is the VanEck Vectors Oil Service ETF (OIH). J.P. Morgan Alerian MLP Index ETN (AMJ), Invesco DWA Energy Momentum ETF (PXI), First Trust North American Energy Infrastructure Fund (EMLP), and Invesco Dynamic Oil & Gas Services ETF (PXJ) close out the rest of our top 5 energy ETFs. For energy-focused investors, this may be a dynamic to monitor going forward as the sector appears poised for continued disruptions.

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