Sector Update - Nov

Each month we update the collective performance of the 750+ equity ETFs as segmented by their respective market sector.   Obtaining a quick view of how the various equity sectors have performed in the most recent month is very easy by simply checking the ETFG Heatmap 

By going to the ETFG Heatmap, you can easily see both the performance and the Quant information for all 10 equity sectors.  We calculate the trailing 1 month return each day, aggregate them into various buckets by their respective Asset Class, Region and Sector.  As with most heatmaps, you can quickly see the relative difference between sectors by color and shade.  The key for the ETFG Heatmap is located at the bottom of the page

Let’s look at the performance of some of the sectors for the most recent one month period.  Most striking is the simple fact that all sectors were in positive territory for the most recent month – a fairly rare occurrence. 

The Consumer Staples sector led the pack with a 6.59% trailing one month return, followed by the Industrials sector with a 5.93% return and Telecommunications close behind at 5.44% for the most recent one month period.

The worst but hardly poor performing sector over this most recent one month period was Health Care with a 1.47% trailing one month return.  Close to Healthcare are Basic materials with a 1.61% return and Natural Resources with a 2.32% return

As an aside, the Utilities group continued its roller coaster year by returning to its well performing ways and delivering 4.58% in the most recent month.  You may recall that Utilities were the leading performer up until the summer and then spent the summer in the tank.  

In looking forward for these sectors, currently, the ETF Global® Quant model favors Utilities as a sector followed by Financials and Energy.  Tomorrow, we will take a look at Sector performance and ranking by Geographic Region.

Thank you for reading ETFG Daily Perspectives.

ETFG Quant's Vote

Yesterday was the day to vote here in the United States.  People entered into voting booths to select the candidate who they felt will lead the way in the future.

ETFG Quant^sm votes every day on the product that it thinks holds the best prospects for the future and tells the world every morning.  So where did most of the votes go? Taking a snapshot of the top 10 or so funds this morning shows two clear favorites.  All but one fund in the 12 are focused on either the Energy Sector or the Emerging Markets.

Both groups will do very well if global growth continues or accelerates, but is that the message that Quant is giving?  Looking a little deeper into the scores, another trend appears.  The Energy based products have high behavioral scores compared to their fundamental scores, while the Emerging focused products are reversed.  Their fundamental scores are higher than their behavioral scores.

So is the ETFG Quant^sm model voting for growth or is it pulling for the underdogs and seeing a reversion to the mean?

Thank you for reading the ETFG Daily Perspectives

Election Day

Today is Election Day, so get out there and cast your ballots and we hope that your candidates of choice perform well in today’s elections.

On the ETF front, we continue our focus this week on individual funds that may present unique opportunities.  Often, we hear requests for ETFs that may reflect those funds that are “on their way” rather than those funds that may have already arrived.

One way to identify types of ETFs like these is to overlap the ETFG Quant Score with the recent Quant Movers.  For example, FXO, the First Trust Financials Alpha Dex ETF, is an ETF currently ranked 320 out of the 723 (44^th percentile) equity ETFs scored.  What may be more telling though is its dramatic improvement in its overall rating over the last month which has landed it in the Top 10 Quant Movers for both Absolute and Percentage Gainers.

Biggest Quant Movers - Absolute Change - 1 Month
Ticker	Name	Value	Change
KNOW	Direxion All Cap Insider Sentiment Shrs ETF	55.18	18.10
MLPY	Morgan Stanley Cushing® MLP High Income Index ETN	57.83	14.86
URA	Global X Uranium ETF	51.55	13.68
INDA	iShares MSCI India Index ETF	48.54	13.29
FXO	First Trust Financials AlphaDEX ETF	56.01	12.24
ITOT	iShares Core S&P Total U.S. Stock Market ETF	46.50	10.19
CHIE	Global X China Energy ETF	62.24	9.90
FGM	First Trust Germany AlphaDEX ETF	56.22	9.60
TOK	iShares MSCI Kokusai ETF	57.25	9.57

Biggest Quant Movers - Percentage Change - 1 Month
Ticker	Name	Value	Change
KNOW	Direxion All Cap Insider Sentiment Shrs ETF	55.18	48.82%
INDA	iShares MSCI India Index ETF	48.54	37.70%
URA	Global X Uranium ETF	51.55	36.12%
MLPY	Morgan Stanley Cushing® MLP High Income Index ETN	57.83	34.58%
IFEU	iShares FTSE EPRA/NAREIT Europe Index Fund ETF	37.62	32.68%
ITOT	iShares Core S&P Total U.S. Stock Market ETF	46.50	28.07%
FXO	First Trust Financials AlphaDEX ETF	56.01	27.96%
IPFF	iShares S&P Intl Preferred Stock Index ETF	33.98	25.53%
QMN	IndexIQ Hedge Market Neutral ETF	46.02	22.58%

What is not shown in the two tables above is that what has been driving the lion share of this movement in the scoring of FXO has been its massive improvement in the Behavioral segment of the ETFG Quant Score.  This can be seen by looking at Quant Movers Monthly.  We encourage you to take a closer look at these trends that rest under the surface of the rankings and we will explore more of these down the road.

Thank you for reading ETFG Daily Perspectives.

FXI

Often we cover more general topics here and provide a fairly macro view of what our models are recognizing as trends, developments and opportunities within the world of ETFs.  We will focus more specifically on today’s highest ranked equity ETF, namely the iShares China Large Cap ETF (FXI), which received the highest Green Diamond Ranking available, a 10 out of 10, and a Red Diamond Risk Rating of just 5.30.

The best way to comprehensively review any ETFs is through the ETFG Tearsheet which contains up to 5 separate tabs of information:  Summary, Fund Statistics, Performance, Fund Flows and Product Info.  FXI has been in and out of our Top 10 Daily Rankings many times over recent months and is one of the funds we have pointed to as evidence that the ETFG Quant Model has recognized international opportunities and more specifically Asia and China.

FXI, with just over $5.5 Billion in AUM (Tearsheet Summary Tab) is obviously a large and recognized name within ETFs for exposure to China.  In addition, despite the nature of the Fund being China, the majority of its constituent exposure are within fairly recognizable Chinese names and this 60%+ is also contained in its Top 10 Holdings.

FXI Constituent Name	Weighting
China Mobile Ltd	9.32%
China Construction Bank Corp	8.99%
Industrial & Commercial Bank of China Ltd	8.01%
Tencent Holdings Ltd	7.30%
Bank of China Ltd	6.15%
PetroChina Co Ltd	4.15%
China Petroleum & Chemical Corp	4.11%
Ping An Insurance Group Co of China Ltd	4.08%
Agricultural Bank of China Ltd	4.08%
China Overseas Land & Investment Ltd	4.03%
Total	60.22%

The key to the opportunity for FXI may lie in its relative performance to its Peer Group.  In looking at the Performance Tab of its ETFG Tearsheet, we see that FXI has underperformed  its relative Peer Group in the very near term for the most recent 1 and 3 month periods.  More importantly, FXI has severely lagged its Peer Group for the most recent One Year interval and perhaps that is where the opportunity to catch its Peer Group lies.

Please take a more comprehensive look at this ETF within the Tabs of the ETFG Tearsheet and thank you for reading ETFG Daily Perspectives.

November ETFG Liquidation Watch List

Today is the 1^st of November and therefore marks the release of the ETF Global ETP Liquidation Watch List.  The ETFG Liquidation Watch List is not meant to predict that each month’s listings are those ETPs on the brink of closing.  Rather, the list is intended to assist investors and financial professionals to simply be aware that these funds contain all three characteristics which we think would reasonably bring them under the scrutiny of their respective issuer.

These three criteria are simple and very straightforward:

·         Assets Under Management – ETP currently has AUM of less than $5M

·         Age – ETP has been in existence more than 2 years

·         Performance – ETP has negative trailing twelve month performance

Combined, these parameters identify those ETPs that have had enough time (2 years) to gather meaningful assets ($5M) in order to become profitable but have not done so and additionally have had losing performance for the last twelve month period.

November Highlights: On the November List there are 80 ETPs which is significantly more than the 61 that were on the October List.  Interestingly, out of the approximately 1,500 ETPs in the universe, there were 200 that had less than $5M in assets under management, 465 that had negative performance for the trailing twelve month period and 1,195 that were eligible because they were issued more than two years ago. Please be sure to check the entire list as you are selecting ETPs for your and/or your clients’ portfolios.

Thank you for reading ETFG Daily Perspectives and please be sure to see our monthly commentary on this topic at www.wealthmanagement.com

Treat and Trick

Happy Halloween!

What a wonderful treat for the fans and the city of Boston as the Boston Red Sox defeated the St. Louis Cardinals in 6 games to win their 3^rd World Series in the last 10 seasons – congratulations Boston Strong!

Back in our world of ETFs, we thought Halloween would be a good day to explore the Risk side of our ratings and in particular look at whether Levered and Inverse are often a “Trick” as it relates to Risk.  The majority of our subscribers, stick to the ETPs that do not employ leverage and are not Inverse.  As of today, here are the highest Risk Rated ETPs without leverage and not inverse in nature.  Just click on the Ticker for a comprehensive TearSheet:

Ticker	Name	Risk
CVOL	C-Tracks Linked to the CVOLT Index ETN	9.33
TAN	Guggenheim Solar ETF	8.93
KWT	Market Vectors Solar Energy ETF	8.83
EEH	ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum ETN	8.64
GLDX	Global X Gold Explorers ETF	8.47
EGPT	Market Vectors Egypt Index ETF	8.28
GGGG	Global X Pure Gold Miners ETF	7.93
SPGH	UBS ETRACS S&P 500 Gold Hedged Index ETN	7.85
GDXJ	Market Vectors Junior Gold Miners ETF	7.78
VIIX	VelocityShares Daily Long VIX Short-Term ETN	7.76

Now we certainly understand that there are those folks out there with an appetite for Leverage and Inverse who employ strategies that use them effectively.  Here are today’s ETPs with the highest Risk Scores inclusive of Levered and Inverse

Ticker	Name	Inverse	Levered	Risk
INDL	Direxion Daily India Bull 3x Shares ETF	-	Yes	10.00
LBJ	Direxion Daily Latin America Bull 3x Shares ETF	-	Yes	9.65
GASL	Direxion Daily Natural Gas Bull 3x Shares ETF	-	Yes	9.57
GINN	Direxion Daily China 3X Bull Shares ETF	-	Yes	9.54
USLV	VelocityShares 3x Long Silver ETN	-	Yes	9.53
UWTI	VelocityShares 3x Long Crude ETN	-	Yes	9.51
NUGT	Direxion Daily Gold Miners Bull 3x Shares ETF	-	Yes	9.50
DOIL	VelocityShares 3x Inver Brent Crude ETN	Yes	Yes	9.45
EDC	Direxion Daily Emerging Markets Bull 3X ETF	-	Yes	9.37

There is a ton more to discuss and explore within these dynamics outside of this post – all available at ETFG Scanner.  

We hope that everyone, including your little trick-or-treaters, have a safe and wonderful Halloween and thank you for reading ETFG Daily Perspectives.