Monday, March 23, 2020

Bio Bear

Monday, March 23, 2020 – We hope that all is going as well as it can be during these difficult times and we extend our thoughts and prayers to all those countries, companies, families and individuals impacted by the Coronavirus.

Extreme volatility persisted this past week, with stock markets declining sharply as the number of COVID-19 (coronavirus) cases globally continued to rise. On Friday, the Dow Jones Industrial Average plunged 913 points (-4.6%) to 19,174, the S&P 500 Index fell 105 points (-4.3%) to 2,305 and the Nasdaq Composite declined 271 points (-3.8%) to 6,880. To add to the situation, trading activity spiked – 2.7 billion shares were traded on the NYSE and 5.2 billion shares on the NASDAQ – due to quadruple-witching or the expiration of options and futures contracts on stocks and indexes. For the week, the DJIA was down 17.3%, the S&P 500 decreased 14.5% and the Nasdaq Composite declined 12.6%.

The effects of social distancing will take a significant toll on the U.S. economy and hurt employment as major central banks and governments around the world announced measures to counter the effect. Travel restrictions remain in place, businesses shuttered and schools have extended distance learning programs, all while the New York Stock Exchange said it will temporarily close its iconic trading floor and move temporarily to electronic operations.

Though another historic week in stock price declines, ETFs remained resilient and saw a relatively modest outflow of around $19 billion in total assets for U.S. listed ETPs. In looking at individual flows, the SPDR S&P 500 ETF Trust (SPY) topped inflows list, with a total gain of around $8.25 billion. The iShares Core S&P 500 ETF (IVV) topped the outflow list with a decline of $4.2 billion in assets. Also on the top five inflow list was SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL), Invesco QQQ Trust (QQQ), iShares Short Treasury Bond ETF (SHV) and iShares 1-3 Year Treasury Bond ETF (SHY). In order these ETFs brought in $4.8 billion, $4.0 billion, $2.3 billion and $1.9 billion respectively in fresh assets. In weekly outflows, we saw iShares Core U.S. Aggregate Bond ETF (AGG) and iShares 20+ Year Treasury Bond ETF (TLT) drop over $3 billion each in redemptions.

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 their ETFG Quant Total Score were iPath S&P MLP ETN (IMLP), Innovator IBD ETF Leaders ETF (LDRS), Franklin FTSE Europe Hedged ETF (FLEH), Global X MSCI SuperDividend Emerging Markets ETF (SDEM) and AdvisorShares Vice ETF (ACT). Each ETP added around 10 points to their overall Quant.

ETFG Quant Losers: Honorable mentions in the loser category were ELEMENTS SPECTRUM ETN (EEH), First Trust Preferred Securities and Income ETF (FPE), Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), iShares MSCI Finland ETF (EFNL) and SPDR Solactive Germany ETF (ZDEU). The reasons for the drop in quant scores can be traced to mostly behavioral factors.

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 substantial losses, we’d like to highlight the top ETFs within the Energy sector in this week’s Select List. Energy Select Sector SPDR Fund (XLE) moved from the 4th position to claim 1st followed by Invesco DWA Energy Momentum ETF (PXI) which jumped from 5th to 2nd. First Trust Natural Gas ETF (FCG) stayed at 3rd followed by two newcomers to this week’s Select List, VanEck Vectors Oil Service ETF (OIH) in 4th and SPDR S&P Oil & Gas Equipment & Services ETF (XES) in 5th.

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