Advisors in Focus - November 4, 2020 - InvestingChannel

Advisors in Focus – November 4, 2020

Well, this is inconvenient. I think we speak on behalf of most of our fellow Americans when we say we were looking forward to waking up with a little more clarity. We hoped to turn the page on the elections and dive into new or returning policies. Instead, we are getting reminders of the 2000 election with just as much focus on the courts as the democratic voting process. We’re not going to postulate on who will win the election. Instead, we will discuss some of the potential outcomes and how they factor into areas seeing a surge of interest from your industry peers.

Two areas in particular caught our attention. One is directly influenced by the final make up of the political system. The other is a look back at earnings from last week and a possible review around previously anticipated capital gains tax increases.

TrackStarIQ Data

Here are some highlights of what has been surging this week –

TOP ETFS – BY ALL FAs (Total Traffic) Previous WeekTickerTOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Previous WeekTickerTOP INDUSTRIES BY ALL FAs (Total Traffic) Previous Week TOP ETF CATEGORIES BY ALL FAs (Total Traffic) Previous Week
SPDR S&P 500 ETFSPYSPDR S&P 500 ETFSPYBiotechnologyLarge Cap Growth Equities
Invesco QQQQQQiShares Russell 2000 ETFIWMInternet Content & InformationLeveraged Equities
ProShares Ultra VIX Short-Term FuturesUVXYVanEck Vectors Gold Miners ETFGDXSoftware – ApplicationTechnology Equities
ProShares UltraPro Short QQQSQQQInvesco QQQQQQAuto ManufacturersLeveraged Volatility
iPath Series B S&P 500 VIX Short-Term Futures ETNVXXProShares Ultra VIX Short-Term FuturesUVXYConsumer ElectronicsPrecious Metals
ProShares UltraPro QQQTQQQDirexion Daily Gold Miners Bull 2X SharesNUGTCredit ServicesAll Cap Equities
SPDR Dow Jones Industrial Average ETFDIASPDR Gold TrustGLDInternet RetailVolatility
SPDR Gold TrustGLDFinancial Select Sector SPDR FundXLFDiagnostics & ResearchAlternative Energy Equities
iShares Russell 2000 ETFIWMSPDR S&P Regional Banking ETFKRESoftware – InfrastructureHealth & Biotech Equities
iShares Silver TrustSLViShares MSCI Emerging Markets ETFEEMSemiconductorsMaterials
VanEck Vectors Gold Miners ETFGDXiShares Silver TrustSLVSpecialty RetailSmall Cap Growth Equities
ARK Innovation ETFARKKEnergy Select Sector SPDR FundXLEDrug Manufacturers – Specialty & GenericEnergy Equities
iPath S&P 500 Dynamic VIX ETNXVZGlobal X Lithium ETFLITMedical DevicesGovernment Bonds
Technology Select Sector SPDR FundXLKiShares Core S&P Mid-Cap ETFIJHEntertainmentOil & Gas
Energy Select Sector SPDR FundXLEHealth Care Select Sector SPDR FundXLVAerospace & DefenseLarge Cap Blend Equities
iShares Edge MSCI USA Momentum Factor ETFMTUMiShares Core MSCI International Developed Markets ETFIDEVUtilities – Regulated ElectricAsia Pacific Equities
iShares 20+ Year Treasury Bond ETFTLTInvesco Global Listed Private Equity ETFPSPConglomeratesConsumer Discretionary Equities
Invesco Solar ETFTANProShares Short 20+ Year TreasuryTLTOil & Gas E&PLeveraged Commodities
Direxion Daily Aerospace & Defense Bull 3X SharesDFENTechnology Select Sector SPDR FundXLKSpecialty Industrial MachineryChina Equities
SPDR S&P Biotech ETFXBIKraneShares CSI China Internet ETFKWEBScientific & Technical InstrumentsFinancials Equities

The Top ETF searches by Financial Advisors with AUM>$1B were funds that could be impacted by policy including the iShare Russell 2000 (IWM), the Financial Select SPDR Fund (XLF) and the SPDR S&P Regional Bank ETF (KRE). We saw yields rally into the election on a base case scenario of Joe Biden winning the White House and the Democrats taking the Senate. This would be the easiest path for passing a mammoth fiscal stimulus that would be viewed as reflationary. This fiscal spend would be most beneficial for domestics, thus providing a basis for the small-cap IWM interest. The rise in rates, and short-term easing of credit conditions, would benefit the financials (KRE and XLF). However, there is a little more uncertainty around stimulus as the GOP is the front runner, according to polls, for holding the Senate. 

The second item of interest is the focus of the entire Financial Advisor community on the FAANG and Cloud Computing space. We saw this interest reflected in the markets last night when there was a divergence between the Nasdaq and S&P right around 8:40pm ET. The Nasdaq was the clear market leader. A few schools of thoughts here: 1) that a GOP Senate could keep capital gains tax increases on the sidelines and 2) There Is No Alternative (TINA) as there are questions raised around potential fiscal stimulus and it reinflating the Value Sector. Whatever the case, a surge in the iShares Expanded Tech-Software ETF (IGV), MicroSectors FANG+ 3x Inverse ETF (FNGD), and Wisdom Tree Cloud Computing Fund (WCLD) dominated research areas for FAs.

The surge data provides some valuable information as it represents data for the first two days of November after a weak October and the last two days of trading ahead of the election. We’ll keep an eye out on results from the election and touch base on Friday. 

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