Monday, October 14, 2019

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 4th and 5th 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

Tuesday, October 8, 2019

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 3rd 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 1st 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 4th 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 4th 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.

Monday, October 7, 2019

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 3rd. EWY, the iShares MSCI South Korea ETF, held steady in 2nd place this week.  A new addition to the list this week was EWW, The iShares MSCI Mexico ETF which is now in 4th 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.

Thanks for reading ETF Global Perspectives!

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

_______________________________________________________
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