Monday, October 19, 2020

Market Resilience

Monday, October 19, 2020 – The stock market oscillated between positive and negative territory this past week as the large-cap benchmarks narrowly squeezed out a third consecutive week of gains. Investors seemed encouraged from a positive U.S. retail sales report that showed consumer spending rose in September despite the lack of renewed aid from Washington. Also, several of the major U.S. banks that kicked off the quarterly earnings season reported strong third-quarter results, boosted by trading and investment banking revenue. Within the S&P 500 Index, industrials and utilities outperformed, while financials recorded minor losses overall. The real estate sector was also weak.

In looking at ETF flows, the Invesco QQQ Trust (QQQ) topped the list, with a total gain of approximately $5.2 billion. The technology heavy fund was a major contributor this week, powering U.S.-listed ETF inflows to $18.5 billion. Also on the top five inflow list was First Trust Capital Strength ETF (FTCS), Vanguard Total Stock Market ETF (VTI), iShares MBS ETF (MBB) and Vanguard Total International Stock ETF (VXUS). In order these ETFs brought in $1.6 billion, $1.4 billion, $1.2 billion and $1.1 billion respectively in net creations. In weekly outflows, we saw iShares MSCI EAFE ETF (EFA) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK) drop over $1 billion and $600 million respectively 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 highlight the top ETFs within the Industrials sector in this week’s Select List. SPDR S&P Transportation ETF (XTN) held on to the 1st position while First Trust RBA American Industrial Renaissance ETF (AIRR) moved from the 4th position to claim 2nd this week.

Those two funds were followed by 3 newcomers which are in order, Invesco Dynamic Building & Construction ETF (PXB), iShares Transportation Average ETF (IYT) and First Trust Industrials/Producer Durables AlphaDEX Fund (FXR).

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