The Sequel: Market Resilience Defies October Tradition of Volatility

Monday, October 28, 2019 - US investors breathed a sigh of relief as we appear to have made it through the month without any significant bruises. Despite all the worrisome news headlines, US Equity and Global Markets climbed last week. The broad market as measured by the S&P 500 closed the week very close to its all-time high of 3,022.55. The NASDAQ 100, the proxy for the QQQ, hit new highs last week.  November and December are typically positive months for US Equity Markets and we appear to be heading that way. Traders should be aware that Google reports earnings on Monday to be followed by Facebook and Apple on Wednesday. These FAANG Stocks are critical to assess the direction of the leading indexes as they comprise a significant weighting in the benchmarks.

Foreign Markets like the German DAX and MSCI Emerging Markets Index sprang to life as well. All of this begs the question of whether recession fears are receding and are we at a new cycle of global growth?  The UK caught a break with an extension to negotiate their exit with the EU. Investors are betting on higher equity values with their money and we agree with them.

A number of themes caught our eye this week which we want to point out:

First, we sense that interest rates around the globe are bottoming and are set to reverse their course upward – but slowly. The governor of the Swedish Central Bank, the Riksbank, indicated that it is prepared to increase rates soon as negative rates induce negative economic outcomes and encourage risky behavior by investors seeking out higher yields. With Christine Legarde taking over the European Central Bank, we expect a push in Europe toward big spend fiscal policy. Keep in mind, given such low rates, a slight upward move can create significant dislocations in not just fixed income markets, but real estate, credit funds and other levered investments.

Looking around the world, we sense there is a general move by the G7 to reflate using fiscal policy given that monetary policy has reached its limits to support the real economy. Indeed with the masses increasingly protesting around the world (Argentina left populist wing, Chile, Hong Kong, JFK Airport workers, technology freelancers, various public teacher unions and the recently ended auto workers union to name a few) we expect politicians to take note and pursue fiscal policies to keep the “barbarians” at bay.

We also point out that this week, DAVOS in the Desert begins in Saudi Arabia. Of note is the session themes to see what is on the mind of the global elite – a number of disruptive technologies as well as Space which will have effects on global economies and labor markets.

All of this creates opportunities for traders and active investors who can use ETFs to take advantage of real-time market volatility – both up and down!  To take advantage of this, we suggest looking at our ETFG Weekly Select List.

We suggest keeping a mindful eye on tools like our Select List and Risk and Reward Ratings that can be used to evaluate the vast set of opportunities in the ETF marketplace. Today’s market realities require a new approach to macro investing, one in which individual investors now have access to tools via ETPs to customize risk and return profiles in their portfolios. Use our Scanner to find those funds.

Thank you for reading the ETF Global Perspectives!

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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.

Market’s Resilience Defies October’s Tradition of Volatility

Monday, October 21, 2019 - October is a dangerous month for investors in the equity markets.  Nevertheless, despite all the headlines concerning the ongoing trade war, a hard Brexit landing, new military confrontations in Syria, negative interest rates, global recession concerns, earnings reports, a cooling job market and economy, disorderly politics in Hong Kong, a slowing Chinese economy, US stocks shrugged off these worries and continued to climb. Indeed, the market’s resilience is most impressive.

The broad market, as measured by the S&P 500, closed last week very close to its all-time high of 3,025.86. Stocks seesawed and ended the week up with the large cap weighted S&P 500 closing at 2,986.20 and the broader NASDAQ Composite closing at 8,089.54 for a weekly gain of .54% and .40% respectively. These indexes are up YTD 19.12% and 21.92% respectively. Gold prices remained strong closing at $1,490 per troy oz and the US 10 Year Note was virtually unchanged to yield 1.747. We expect market volatility to continue for the foreseeable future, especially given October’s history. Astute investors will need to be on guard to see if the expected interest rate cut by the Federal Reserve happens on October 30^th.

A number of themes caught our eye this week which we want to point out. First, today’s article from our friends at DataTrek, Nick Colas and Jessica Rabe suggest that we might be in the midst of the “Great Earnings Reset of 2019.” They observe that S&P 500 earnings are essentially stuck at zero and this is preventing markets from making new highs. For a sustainable rally, they postulate that we need a positive resolution to the US-China Trade War. We encourage you to look at their report on Linked-In.

On a bright note for those who follow contrarian indicators, last week’s cover story in Barron’s  was on “Upside Down” Interest Rates i.e., the growing number of negatively yielding bonds around the globe. Media attention like this usually foretells the peak of the investment theme which leads us to think that interest rates may be on the verge of bottoming and starting an upward move. We also note that looking around the world, we sense there is a general move by the G7 to reflate using fiscal policy given that monetary policy has reached its limits to support the real economy. Last week’s better than expected earnings reports from JP Morgan and Citibank also indicated that the US economy might not be headed for recession.

Keep in mind, given such low rates, a slight upward move can create significant dislocations in not just fixed income markets, but real estate and other levered investments.  Investors in hedge funds should take note. The US Dollar Index fell last week by 1.2% - a significant drop.  Looking at the charts, the dollar index peaked in 2017 and has hovered in that area since.  A weakened dollar would be a boost to Emerging Markets Debt and US Cyclicals which derive approximately 40% of their revenues from overseas.

Lastly, most disturbing was last week’s report by the IMF which warned that the global bond bubble has put the global financial system at risk as fixed income funds as vulnerable to liquidity shocks. This is primarily due to holdings of illiquid high yield investments which cannot be liquidated to meet shareholder redemptions. The canary in the coal mine indicator is the problem involving the liquidation of the Neil Woodford funds in Europe. The report provides ample scares just in time for Halloween.

This creates opportunities for traders and active investors who can use ETFs to take advantage of real-time market volatility - both up and down!  To take advantage of this, we suggest looking at our ETFG Weekly Select List.

The ETFG Weekly Select List highlights the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.  We highlight a couple of ETFs that attracted our attention for investors given our views.  In the Consumer Staples KXI is our top pick. JHMU is our top ranked in the Utility Sector.

We suggest keeping a mindful eye on tools like our Select List and Risk and Reward Ratings that can be used to evaluate the vast set of opportunities in the ETF marketplace. Today’s market realities require a new approach to macro investing, one in which individual investors now have access to tools via ETPs to customize risk and return profiles in their portfolios. Use our Scanner to find those funds.

Thanks for reading ETF Global Perspectives!

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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

Last Call - Fall 2019 Employing U.S. Vets Conference – October 25th

Saturday, October 19, 2019 - Reminder - our friends at The Expert Series are producing another incredible conference within the ESG space this upcoming week - please see below for the event details........

We are proud to invite you and your colleagues within the ESG and Diversity and Inclusion communities to the Employing U.S. Vets Conference on Friday, October 25^th at the New York Athletic Club. The event – co-hosted by VETS Indexes and Military Times – will include discussions of best practices related to veteran employment, recognition of companies going above and beyond for Vets and their families and lots of opportunities to network.

Please see here for a list of those companies already registered to attend - https://employingusvets.com/

Sign-up now to join panelists, speakers & attendees from these corporations, government agencies, non-profits, foundations, academia and more! Agenda, registration and sponsorship opportunities may be found at https://employingusvets.com/agenda/

More than ever, current members and Veterans of our military are transitioning from the military and seeking civilian careers. There are about 27 million people in the military-connected community, including active duty personnel, reservists, military families and veterans.  This vast talent pool represents significant opportunities for organizations looking to hire qualified and hard-working employees and has become an integral segment of the Human Capital portion of the Social pillar within Environmental, Social & Governance (ESG). But to take advantage, companies need to know their stuff.

This one-day event features dynamic speakers and panel discussions with nationally recognized employers distinguished for strong track records in veterans’ employment.

We look forward to seeing you on Friday, October 25th for what is sure to be an excellent event!

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_______________________________________________________

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.

ALTSO's 16th Annual Rocktoberfest New York - Thursday, October 24th

Friday, October 18, 2019 – ETF Global is a proud supporter of ALTSO's 16th Annual Rocktoberfest New York. Rock with us on Thursday, October 24^th, at the Hard Rock Cafe Times Square to help bring free orthopedic care to CoolKids around the globe.

More than 1,200 professionals from the alternative investment and related financial service industries will unite for a night of rock & roll and acoustic music to benefit ALTSO's mission and the more than 18,000 CoolKids treated to date.

Thanks for reading ETF Global Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick

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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

ETF Investor Perceptions Survey 1

Wednesday, October 16, 2019 – Many clients, who have become active ETF investors and ETF Issuers, have asked for greater insights into how the Street perceives ETFs, as well as, some of the dynamics unfolding within the ETF landscape.

Therefore, in conjunction with our friends at DataTrek Research, we are launching a series of very brief, monthly surveys to garner insight and color surrounding these topics of interest.  Below please find a link that will be open through Sunday, October 20^th to a short (estimated 5 minutes to complete) series of questions on ETFs. Thank you in advance for participating!

https://www.surveymonkey.com/r/55WRXVS

Thanks for reading ETF Global Perspectives!

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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

Happy Columbus Day

Monday, October 14, 2019 – Happy Columbus Day to all and it was a strong week for the major US Indices as talks of a trade deal between the United States and China seemed to take a turn for the better.

For the week, the Dow Jones Industrial Average gained 243 points, or 0.9% closing at 26,816. The S&P 500 gained about 0.6% to 2970 and the Nasdaq Composite also finished up, gaining 0.9% to close the week at 8,057. The news that helped was an act of good faith between the two most powerful nations in the world. China agreed to buy more goods from the United States and the US decided it would not enact any further tariffs, as originally stated.

In ETFs, we saw inflows into some of the largest products on the market place. SPY, the SPDRS S&P 500 ETF, gained over $1.5B in assets for the week. That was followed by IWM, the iShares Russell 2000 ETF, which gained over $830M in assets. In outflows, we saw investors pull money out of sector-based ETFs. IYR, iShares US Real Estate ETF, lost over $266M in the last week. That was followed by JXI, the iShares Global Utilities ETF, which lost over $177M, or about half of its net assets, all according to our ETFG Fund Flow Summary.

In the ETFG Quant Movers, we an assortment of products ass the most percent to their overall scores. The VictoryShares US Discovery Enhanced Volatility WTD ETF, CSF, gained the most percent to its overall score with a roughly 35% increase. That was followed by the Fidelity International Value Factor ETF, FIVA, and the First Trust Switzerland AlphaDEX Fund, FSZ, which added 23.67% and 23.25% to their overall Quant scores respectively.

On the loser’s side, we saw market cap focused ETFs drop their overall scores. This was led by the iShares Micro-Cap ETF, IWC, which lost 18.60% to its overall score. That was followed by the Vanguard S&P Mid-Cap 400 Growth ETF, IVOG and the Vanguard Small-Cap Growth ETF, VBK, which lost 15.47% and 13.91% to their overall scores respectively.

Because of this sector’s success, we’d like to highlight some substantial movement in the Consumer Discretionary portion of this week’s Select List to last week’s. The SPDR S&P Retail ETF, XRT, and the ProShares Decline of the Retail Store ETF, EMTY, held strong in the first and second positions respectively. They were followed by the VanEck Vectors Gaming ETF, BJK, which knocked the iShares Evolved U.S. Media and Entertainment ETF, IEME totally out of the top 5. IBUY, the Amplify Online Retail ETF and the First Trust Consumer Discretionary AlphaDEX Fund, FXD, were added to the 4^th and 5^th positions of the list. They knocked out the Invesco Dynamic Retail ETF, PMR and the SPDR S&P Homebuilders ETF, XHB.

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_______________________________________________________

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

4Q Rebalance - ETF Global Dynamic Model Portfolios

Tuesday, October 8, 2019 - At first glance, it looks like the bulls are back in charge of their own destiny.  The tug of war between the Federal Reserve and the President was seemingly resolved in the 3^rd quarter by the Fed cutting rates for the first time in over a decade as a weakening economy undercut its argument for a stable rate policy. Bullish investors were quick to celebrate by pushing the S&P 500 back above the 3,000 mark before the realization hit that the Fed lowering rates wasn’t an early Christmas gift after all.  The Fed felt compelled to lower rates because the economic outlook demanded it, a fact which left investors even more unsettled. The most widely tracked index, the S&P 500, ended up slightly over 1% for the quarter.

The obvious answer of course was if at first you don’t succeed, try, try again. With the Fed showing no signs of relenting, the markets remain deeply unsettled as we entered the final quarter of 2019. The tug of war between the Fed and the markets won’t be resolved anytime soon if ever, but the ETFG Dynamic Model Portfolios wait for no one with all 4 of the base portfolios and the 8 “tilts” being updated on October 1^st with major changes happening in all three sleeves of the portfolio. Investors may still be debating whether this market still has room to run but our Quant Model has come down firmly on the side of better safe than sorry as value takes precedence over growth throughout our model portfolios.

First is the domestic allocation, where the iShares Russell Midcap ETF (IWR) and the WisdomTree U.S. SmallCap Dividend Fund (DES) are removed to be replaced by the SPDR S&P 400 Mid Cap Value ETF (MDYV) and the SPDR S&P 400 Mid Cap Growth ETF (MDYG) which takes the lowest spot in the domestic sleeve. Staying in the portfolio for the final quarter are the SPDR S&P 600 Small Cap Value ETF (SLYV) and the SPDR Portfolio S&P 500 Growth ETF (SPYG.)

Blending that combination of growth and value funds might sound like the best way to a perfectly “core” portfolio but under the hood you’ll find a very different situation. MYYV and SLYV are the two top selections, ranked by their overall ETFG Quant Score, which puts them into the driver seat with many of the “tilts” in the conservative, moderate and balanced strategies having a clear bias towards both value and mid-cap stocks. Investors shouldn’t fear this means a rotation in utilities or REITS as both funds are underweighted in those categories while overweighting technology and industrial names.

Our ETFG Quant model also has made significant changes to the international allocation with the replacement of the Schwab Fundamental International Large Company Index (FNDF) and its small cap equivalent, FNDC with two new funds with a distinctly European focus. Joining the model for the 4^th quarter are the iShares Edge MSCI Min Vol Europe ETF (EUMV) and ProShares MSCI Europe Dividend Growers ETF (EUDV) as the Quant Model continues to favor more value-oriented products. Like most minimum volatility funds, EUMV has larger allocations to defensive sectors while heavily concentrated EUDV (with just 34 holdings) focuses on companies that have consistently grown their dividends over a ten-year period.

The emerging market allocation also saw significant turnover this quarter as the iShares Edge MSCI Multifactor Emerging Markets ETF (EMGF) was replaced by the FlexShares Morningstar® Emerging Markets Factor Tilt Index Fund (TLTE) while the First Trust Chindia Fund (FNI) remains for another quarter.  EMGF was a strong performer but TLTE’s stronger fundamental score pushed it into the model for the 4^th quarter. How does it differ from EMGF? They have similar weightings to the same markets but EMGF had more of a focus on momentum and TLTE has a preference for value names along with a slightly higher tilt towards smaller stocks.

To learn more about our ETFG model portfolio strategy, please email us at sales@etfg.com or call us at (212) 223-ETFG (3834).

Thanks for reading ETF Global Perspectives!

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_______________________________________________________

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.

Mixed Week

Monday, October 7, 2019 - It was a mixed week for major US Indices this week as thoughts of a recession continue to loom for investors. For the week, the Dow Jones Industrial Average lost 246 points, or 0.9% closing at 26,573. The S&P 500 fell 0.3% to 2,952 while the Nasdaq Composite finished up, gaining 0.5% to close the week at 7,982. This all riding on the back of a possible decrease in interest rates by the Federal Reserve later in October.

In ETFs, we saw inflows into some of the largest products in the marketplace. SPY, the SPDRS S&P 500 ETF, gained about $9.49B in assets for the first week of October. That was followed by VTI, the Vanguard total stock market ETF, which gained about $2.58B in assets, surpassing the $100B mark in AUM. In outflows, we saw investors pull money out of fixed income ETFs. SHV, iShares Short Treasury Bond ETF, lost over $2.8B in the last week. That was followed by BSV, Vanguard short term bond ETF, which lost over $1.08B, all according to our ETFG Fund Flow Summary.

In the ETFG Quant Movers, we saw international based ETFs gain the most points to their overall scores. The Franklin FTSE Mexico ETF, FLMX, and the Invesco DWA Emerging Markets Momentum ETF, PIE, added 18.96% and 17.84% to their overall Quant scores respectively.

On the loser’s side, we saw factor based ETFs drop points in their overall scores. The JPMorgan Event Driven ETF, JPED and the WisdomTree International Multifactor Fund DWMF lost 15.99% and 14.59% to their overall scores respectively.

Because of this strategy’s success, we’d like to highlight some substantial movement in the Broad Equity portion of this week’s Select List to last. The AdvisorShares Dorsey Wright ADR ETF, AADR, moved up three spots to take the first overall position on the list. This knocked the iShares MSCI Turkey ETF, TUR out of first place and into 3^rd. EWY, the iShares MSCI South Korea ETF, held steady in 2^nd place this week.  A new addition to the list this week was EWW, The iShares MSCI Mexico ETF which is now in 4^th place. It knocked off FNI, the First Trust Chindia ETF. Rounding out the top five was the iShares MSCI Chile ETF, ECH, to complete the strong category for BlackRock Funds.

We will see how the markets will continue to react to recession fears and the occasional tweets from President Trump regarding trade, foreign relations, etc.

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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