It can be difficult to get the motor started on a Monday, especially when the weather starts to turn unpredictably tempestuous. Just ask anyone you know in Colorado that witnessed a snowstorm mere hours after wildfires. It’s not always that turbulence in the climate aligns to turbulence in the markets, but it appears for this past week (and upcoming one) that may be the case. A prevalent sell-off is greeting market participants ahead of the busiest week of earnings, an uptick in Covid case and of course, an election next week. Last week, we covered the research patterns of Advisors that suggested a reduction in risk while finding a premium in liquidity. Therefore, this early buyers strike should not come as a surprise to readers of this newsletter.
Research trends from last week continued to highlight risk aversion in markets, particularly here in the United States. Gold remained a key search item for Financial Advisors and clients. The Van Eck Gold Miners ETF (GDX) was a top search for both FAs with over $1 bln in AUM (#3) and all FAs (#4). The Spider Gold Trust ETF (GLD) also found itself the subject of heavy search traffic as it registered at #16 in both polls. Couple in other risk averse ETFs like the Dollar Bull (UUP), the ProShare Ultra Short QQQ (SQQQ), and the Vanguard Dividend Appreciation ETF (VIG) and we see the picture of a market proceeding with caution.
TrackStarIQ Data
TOP ETFS – BY ALL FAs (Total Traffic) Previous Week
TOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Previous Week
TOP INDUSTRIES BY ALL FAs (Total Traffic) Previous Week
| RANK | INDUSTRY |
|---|---|
| 1 | Biotechnology |
| 5 | Internet Content & Information |
| 10 | Oil & Gas E&P |
TOP ETF CATEGORIES BY ALL FAs (Total Traffic) Previous Week
| RANK | CATEGORY |
|---|---|
| 1 | Large Cap Growth Equities |
| 9 | Leveraged Volatility |
| 11 | Volatility |
There were two areas under scrutiny that caught our interest. The first was the heavy search activity in the iShares Trust MSCI Emerging Market (EEM) which was the 9th most searched ETF by All FAs and the fourth hottest for FAs with over $1 bln in assets.This is an ETF that is dominated by Asia Pacific internet players (making up ~75% of the ETF, China is 41%). This displayed interest search, in addition to that of UUP and gold, could convey worries around the U.S. markets (stimulus, elections, tech valuations/regulation). The second area of interest was the rise in searches around the banks with the Spider Select Financials ETF (XLF) and the Spider Regional Bank ETF (KRE) both being prominent fields of research in the FA managing over $1 Billion in Assets category. A rise in interest rates, which has a 0.78 correlation with the XLF over the past two weeks, has led to interest in the sector.
The two suggest a contrasting style as we see searches overseas and in the financial bloodline of the United States. It does provide some insight into the market psyche though as it shows us that FAs are stepping back from the buy button, but continue to shop for value plays to add once we begin to see some stability and clarity restored.
| Top ETFs Researched by Financial Advisors – Total Traffic | Ticker | Top ETFs Researched by FAs w/ AUM>$1B – Total Traffic | Ticker | Top Industries Researched by Financial Advisors – Total Traffic | Top ETF Categories Researched by Financial Advisors – Total Traffic |
|---|---|---|---|---|---|
| SPDR S&P 500 ETF | SPY | SPDR S&P 500 ETF | SPY | Biotechnology | Large Cap Growth Equities |
| Invesco QQQ | QQQ | Invesco QQQ | QQQ | Software – Application | Leveraged Equities |
| SPDR Portfolio S&P 500 ETF | SPYG | VanEck Vectors Gold Miners ETF | GDX | Auto Manufacturers | Precious Metals |
| VanEck Vectors Gold Miners ETF | GDX | iShares MSCI Emerging Markets ETF | EEM | Credit Services | Technology Equities |
| iShares Russell 2000 ETF | IWM | iShares Russell 2000 ETF | IWM | Internet Content & Information | Alternative Energy Equities |
| ProShares UltraPro Short QQQ | SQQQ | SPDR Portfolio S&P 500 ETF | SPYG | Diagnostics & Research | All Cap Equities |
| Invesco Solar ETF | TAN | iShares Core S&P Mid-Cap ETF | IJH | Internet Retail | Materials |
| Direxion Daily Gold Miners Bull 2X Shares | NUGT | Financial Select Sector SPDR Fund | XLF | Conglomerates | Leveraged Volatility |
| iShares MSCI Emerging Markets ETF | EEM | Invesco DB US Dollar Index Bullish Fund | UUP | Aerospace & Defense | Health & Biotech Equities |
| ARK Innovation ETF | ARKK | SPDR S&P Regional Banking ETF | KRE | Oil & Gas E&P | Small Cap Growth Equities |
| iShares Silver Trust | SLV | ARK Innovation ETF | ARKK | Semiconductors | Volatility |
| Financial Select Sector SPDR Fund | XLF | ARK Genomic Revolution ETF | ARKG | Consumer Electronics | Energy Equities |
| ARK Genomic Revolution ETF | ARKG | Invesco Solar ETF | TAN | Specialty Industrial Machinery | Leveraged Commodities |
| SPDR Dow Jones Industrial Average ETF | DIA | Global X Cloud Computing ETF | CLOU | Specialty Retail | Consumer Discretionary Equities |
| Vanguard Dividend Appreciation ETF | VIG | UltraShort Barclays 20+ Year Treasury | TBT | Drug Manufacturers – Specialty & Generic | Government Bonds |
| SPDR Gold Trust | GLD | SPDR Gold Trust | GLD | Software – Infrastructure | Financials Equities |
| SPDR S&P Regional Banking ETF | KRE | Vanguard Healthcare ETF | VHT | Medical Devices | Asia Pacific Equities |
| ProShares Ultra Silver | AGQ | ARK Fintech Innovation ETF | ARKF | Entertainment | Industrials Equities |
| Credit Suisse X-Links Crude Oil Shares Covered Call ETN | USOI | ProShares Ultra VIX Short-Term Futures | UVXY | Solar | Large Cap Blend Equities |
| ARK Web x.0 ETF | ARKW | ETFMG Alternative Harvest ETF | MJ | Scientific & Technical Instruments | Oil & Gas |