Monday, November 11, 2019

Financials Lead a 5th Straight Week of Gains

Monday, November 11, 2019 – Happy Veterans Day to all!  Stocks extended their recent gains last week, finishing higher for the fifth consecutive week. In fact, the Dow Jones Industrial Average joined the S&P 500 and Nasdaq Composite Indexes in setting all-time highs. Recent signs of progress on trade negotiations, along with better-than-expected corporate earnings were the cause of positive investor sentiment. In addition, a sharp increase in longer-term bond yields and third-quarter corporate earnings also drove markets. The third-quarter earnings season is near its end with roughly 90% of S&P 500 companies having reported results.

Financial stocks outperformed as increasing interest rates favored banks’ lending operations. Rising long term bond yields weighed heavily on real estate and utilities shares mostly due to their respective dividend yields became less appealing. As it relates to ETFs, the U.S. listed ETP saw a weekly inflow of approximately $12 billion in assets. The equity market received the lion share of inflow as Invesco QQQ Trust (QQQ), SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO) saw a net inflow of approximately $1.6 billion, $1.2 billion and $975 million respectively. For a granular break down of net flows, investors can utilize ETF Global Fund Flow Summary.

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 ETFG Quant Total Score were Reality Shares Nasdaq NexGen Economy ETF (BLCN), WBI Power Factor High Dividend ETF (WBIY), Vident International Equity Fund (VIDI), Invesco RAFI Strategic Developed ex-US ETF (ISDX) and SPDR S&P Telecom ETF (XTL). Each ETP added approximately 7 points to their overall ETFG Quant score.

ETFG Quant Losers: Honorable mentions in the loser category were Invesco Dynamic Large Cap Value ETF (PWV), SPDR S&P Health Care Services ETF (XHS), WisdomTree Europe Hedged Equity Fund (HEDJ), FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE) and First Trust International Equity Opportunities ETF (FPXI). The causes can be traced to behavioral factors dipping slightly impacting the respective ETFG Total Quant scores by approximately 4 points each.

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 the top ETFs within the financial sector in this week’s Select List. SPDR S&P Insurance ETF (KIE) held onto the 1st place position followed by Davis Select Financial ETF (DFNL) in 2nd, iShares Evolved U.S. Financials ETF (IEFN) in 3rd and John Hancock Multifactor Financials ETF (JHMF) in 4th place. All preceding the newcomer to the list, Invesco KBW High Dividend Yield Financial ETF (KBWD) came in 5th.

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