Monday, March 30, 2020

Rebound Amid Turmoil

Monday, March 30, 2020 – Last week was another crazy week on Wall Street as stocks bounced all around and recorded their best week in 11 years posting back-to-back gains for the first time in over a month. The Federal Reserve announced a widespread asset purchasing program, including credit based ETFs and other measures to support the flow of credit to employers, consumers and businesses. Additionally, President Trump and Congress reached a deal on an unprecedented $2 trillion stimulus package to offset the fallout from the coronavirus outbreak.

On Tuesday, the Dow Jones Industrial Average had its best day since 1933 and the S&P 500 Index experienced its largest daily rally since October 2008. Looking at the numbers for the week, the DJIA surged 12.8%, the S&P 500 rallied 10.3% and the Nasdaq Composite gained 9.1%. Even beaten-down energy shares outperformed due to U.S. officials putting pressure on Saudi Arabia to end its price war with Russia. Airline shares also bounced back midweek on the arrival of a $60 billion bailout package as part of the stimulus bill and a rebound in Boeing boosted the Industrial sector. Utilities shares were also strong while communication services shares lagged.

Though another historic week in terms of stock market volatility, ETF fund flows saw modest changes considering all the news. The one exception, however, was iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) which saw over $5 billion in new assets as the Federal Reserve began purchasing investment-grade corporate bond ETFs to help stabilize the credit markets. Also on the top five inflow list was Invesco QQQ Trust (QQQ), SPDR Gold Trust (GLD,) SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) and Vanguard S&P 500 ETF (VOO). Invesco QQQ Trust (QQQ) saw a $2.5 billion inflow while the remaining ETFs each brought in approximately $1.5 billion respectively. For outflows, the iShares Core S&P 500 ETF (IVV), the iShares Core U.S. Aggregate Bond ETF (AGG) and the PIMCO Enhanced Short Maturity Active ETF (MINT) topped the list for the week, losing $3.5 billion, $2.5 billion and $1.2 billion respectively.

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 Score were iPath S&P MLP ETN (IMLP), Innovator IBD ETF Leaders ETF (LDRS), Franklin FTSE Europe Hedged ETF (FLEH), Global X SuperIncome Preferred ETF (SPFF), and VictoryShares Developed Enhanced Volatility Wtd ETF (CIZ). Each ETP added anywhere from 41.42% to 20.98% to their overall ETFG Quant Score.

ETFG Quant Losers: Honorable mentions in the loser category were First Trust Preferred Securities and Income ETF (FPE), Invesco S&P 500 Top 50 ETF (XLG), Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), ELEMENTS SPECTRUM ETN (EEH) and First Trust Switzerland AlphaDEX Fund (FSZ). Each ETF lost around 25% in Quant Total Score and the reasons for the drop 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 bounce back from extreme lows, we would like to highlight the top ETFs within the Energy sector in this week’s Select List. SPDR S&P Transportation ETF (XTN) held on the 1st place while U.S. Global Jets ETF (JETS) and Fidelity MSCI Industrials Index ETF (FIDU) who are new to the list for the week claimed 2nd and 3rd respectively. Invesco S&P SmallCap Industrials ETF (PSCI) moved from 2nd to claim 4th and Invesco Dynamic Building & Construction ETF (PKB) jumped down one position to the 5th spot.

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