Trading on Flows

Monday, August 26, 2019 – Equity markets were on track to finish higher for the week until China unveiled a new round of retaliatory tariffs and President Trump vowed to respond, upsetting markets. This marked the fourth consecutive weekly loss as a late-week escalation in the U.S.-China trade dispute undermined optimism over retail sales and Federal Reserve policy. In this new episode of escalation in trade tensions, China announced that it will impose tariffs on $75 billion U.S. goods. At the annual central bank summit in Jackson Hole, Fed Chair Powell left the door open for another rate cut when the committee meets next month, acknowledging the risks to global and U.S. growth from trade uncertainty. While the Fed and trade disputes dominate the headlines, it should not be lost that economic and corporate data remain fairly positive.

Positive earnings and revenue reports from Target (TGT), Lowe’s (LOW), and Home Depot (HD) helped consumer discretionary shares outperform the broader market. In ETF related news, Fixed income ETFs continued to gather assets this week. Schwab U.S. TIPS ETF (SCHP) and Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) topped the flow charts each gaining over $500 million in AUM. Also benefiting from the economic fears and low yields was the SPDR Gold Trust (GLD).

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 US Equity Dividend Select ETF (RNDV), Global X MSCI Pakistan ETF (PAK), Vanguard FTSE Europe ETF (VGK), Barclays Return on Disability ETN (RODI) and SPDR S&P Kensho Future Security ETF (FITE).

ETFG Quant Losers: Honorable mentions in the loser category were ProShares Russell 2000 Dividend Growers ETF (SMDV), iShares MSCI Chile ETF (ECH), WisdomTree Japan Multifactor Fund (JAMF), First Trust Energy AlphaDEX Fund (FXN) and Main Sector Rotation ETF (SECT). The reasons for the drop-in quant score for these funds is obvious as behavioral scores and global factors came into play.

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

Considering the sector’s success, we’d like to highlight some substantial movement in the Consumer Discretionary portion when comparing this week’s Select List to last. Invesco Dynamic Retail ETF (PMR) held onto the 1^st place position while SPDR S&P Retail ETF (XRT) jumped from 4^th to 2^nd place. ProShares Decline of the Retail Store ETF (EMTY) claimed 3^rd followed by Columbia Emerging Markets Consumer ETF (ECON) and SPDR S&P Homebuilders ETF (XHB) respectively.

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