Tuesday, September 8, 2020

A Pause for Labor Day

Tuesday, September 8, 2020 - With the summer months coming to an end, investors seemed to have taken a vacation from some of the hottest performing sectors during this year. Namely, technology stocks which saw incredible outflows this week as investors cleaned up on some of the gains they made throughout the year.

For the week, the Dow Jones Industrial Average lost roughly 415 points closing at 28,133. The S&P 500 lost 78 points to 3,426 while the Nasdaq Composite lost roughly 408 points, or 3.4%, to close at 11,313. For the Nasdaq, that was about half of the gains they index took in over August.

In ETFs, we saw outflows from some of the large fixed income ETFs. TLT, the iShares 20+ Year Treasury Bond ETF, lost over $700M in assets during this week. That was followed by HYG, the iShares iBoxx $ High Yield Corporate Bond ETF, which shed about $620M in assets. In inflows, we saw investors move their assets, interestingly, into one of the largest Tech Short funds in the ETF Marketplace. TQQQ, the ProShares UltraPro QQQ, which is a tripled levered short Nasdaq-100 ETF, gained over $850M in AUM. That is a roughly 10% gain in AUM for the short-term tactical fund. This all according to our ETFG Fund Flow Summary.

ETFG Weekly Select List: The five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Because of this strategy’s success, we’d like to highlight some substantial movement in the Basic Materials portion of this week’s Select List to last. The First Trust Materials AlphaDEX Fund, FXZ, jumped all the way up from last place to first place week over week. Following that was a newcomer, RTM, the Invesco S&P 500 Equal Weight Materials ETF, which pushed PSCM, the Invesco S&P SmallCap Materials ETF into the 3rd overall position. Rounding out the list this week was XME, the SPDR S&P Metals & Mining ETF and XLB, the Materials Select Sector SPDR Fund, which finished 4th and 5th on the list respectively.

As we continue through the month of September, one major dynamic to watch in the ETF Landscape will be the rebalance coming up on the 3rd Friday of the month. Major indices, including the S&P and several of Russell’s indexes, will be revamping their holdings’ weights which can cause some further volatility in the marketplace. Be sure to look out for some of our research on this topic in the coming days.

Thanks for reading ETF Global Perspectives and we hope you all had a wonderful Labor Day!

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