Monday, October 26, 2020

Momentum Shift

Monday, October 26, 2020 – Unsurprisingly after three consecutive weekly advances, stocks declined modestly last week and the major benchmarks ended mixed. The S&P 500 declined 0.5% while the Nasdaq Composite fell 1.1% and the Dow Jones Industrial Average fell 1.0%. The Russell 2000 and the S&P Mid Cap 400 finished in positive territory with a gain of 0.4% and 0.6% respectively. Looking at the S&P 500 sectors, the technology (-2.2%) sector fared the worst, while the communication services (+2.1%) sector fared the best. The financial (+1.0%), utilities (+1.2%) and energy (+0.5%) sectors also closed higher as the 10-yr yield rose to 0.84%.

Turning to ETFs, total assets in U.S. listed ETPs grew modestly and saw a net inflow of $6.7 billion which was split even among the equity and fixed income asset classes. SPDR S&P 500 ETF Trust (SPY) topped the list, with a total gain of around $3.8 billion and Vanguard Total Stock Market ETF (VTI) saw a net inflow of approximately $1.5 billion. They were followed in order by JPMorgan BetaBuilders U.S. Mid Cap Equity ETF (BBMC), Vanguard Total International Stock ETF (VXUS) and iShares ESG MSCI EM ETF (ESGE). These ETFs brought in approximately $1 billion, $851 million and $555 million respectively in net creations. In weekly outflows, we saw Invesco QQQ Trust (QQQ) drop over $2 billion, despite a strong showing last week and First Trust Capital Strength ETF (FTCS) had $1.5 billion in net 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 WisdomTree China ex-State-Owned Enterprises Fund (CXSE), iShares S&P 500 Growth ETF (IVW), Invesco DWA Tactical Sector Rotation ETF (DWTR), CSOP MSCI China A International Hedged ETF (CNHX), and Reality Shares DIVCON Dividend Defender ETF (DFND). Each ETP added between 21 and 12 points to their overall score mostly due to fundamental factors.

ETFG Quant Losers: Honorable mentions in the loser category were Loncar Cancer Immunotherapy ETF (CNCR), FI Enhanced Global High Yield Exchange Traded Notes (FIEG), Principal Healthcare Innovators Index ETF (BTEC), Insightshares Patriotic Employers ETF (HONR) and Large Cap Growth Index-Linked Exchange Traded Notes due 2028 (FRLG). The reasons for the drop in quant scores can also be traced to mostly fundamental 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 Technology sector in order to help readers diligence potential opportunities. ALPS Disruptive Technologies ETF (DTEC) moved one spot to claim the 1st position.

Newcomers to the ETFG Weekly Select List this week claimed 2nd, 3rd and 4th which included in order First Trust Nasdaq Smartphone Index Fund (FONE), ETFMG Prime Mobile Payments ETF (IPAY) and SPDR S&P Internet ETF (XWEB). SPDR S&P Technology Hardware ETF (XTH) maintained a 5th place position this week.

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