Good Monday morning all! This is the second week in a row market participants sat down at their desks, or whatever setup their home office brings, to see a positive development on the vaccine front. Moderna (MRNA) just produced results for its Phase 3 trial that outshined the impressive Pfizer (PFE) results from last week. MRNA saw an efficacy of 94% in its data and the vaccine candidate will be more reliable to store and distribute. Given the recent rise in cases that have disrupted holiday plans, this news, while not changing the immediate future, is more than welcome. The key question for Financial Advisors is how have these recent vaccine developments impacted portfolio allocation? Let’s take a look at areas your peers researched last week.
- Trivia Question: What year did commercial jet service begin? Extra points for the airline and type of plane flown (Answer below).
Over the past couple of weeks, we have seen FAs exercising a little more caution, searching for steadier returns via income in the dividend and interest yield plays. Emerging markets have been another theme in search activity. However, last week we saw some value ‘Post Covid’ plays come into focus. Leading the way and debuting on the list at #8 on Top ETF searches by All FAs is the 3x bull Aerospace and Defense ETF (DFEN). This leveraged ETF seeks a return that is 300% of the Dow Jones U.S. Select Aerospace & Defense Index (DJSASDT) in a single day. The top holdings in the index are the usual suspects with Lockheed Martin (LMT, 18.6% weighting), Raytheon Technologies (RTX, 17.4%) and Boeing (BA, 9.3%) representing nearly 45% of this ETF.
| TOP ETFS – BY ALL FAs (Total Traffic) Previous Week | Ticker | TOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Previous Week | Ticker | TOP INDUSTRIES BY ALL FAs (Total Traffic) Previous Week | TOP ETF CATEGORIES BY ALL FAs (Total Traffic) Previous Week |
|---|---|---|---|---|---|
| SPDR S&P 500 ETF | SPY | VanEck Vectors Gold Miners ETF | GDX | Biotechnology | Large Cap Growth Equities |
| Invesco QQQ | QQQ | SPDR S&P 500 ETF | SPY | Drug Manufacturers – Specialty & Generic | Leveraged Equities |
| VanEck Vectors Gold Miners ETF | GDX | Invesco QQQ | QQQ | Auto Manufacturers | Technology Equities |
| ProShares UltraPro Short QQQ | SQQQ | Financial Select Sector SPDR Fund | XLF | Software – Application | Precious Metals |
| SPDR Dow Jones Industrial Average ETF | DIA | iShares Russell 2000 ETF | IWM | Drug Manufacturers – General | All Cap Equities |
| iShares Russell 2000 ETF | IWM | SPDR S&P Regional Banking ETF | KRE | Internet Retail | Materials |
| SPDR Gold Trust | GLD | iShares MSCI Emerging Markets ETF | EEM | Credit Services | Leveraged Volatility |
| Direxion Daily Aerospace & Defense Bull 3X Shares | DFEN | iShares Core S&P Mid-Cap ETF | IJH | Internet Content & Information | Alternative Energy Equities |
| ProShares Ultra Silver | AGQ | Invesco DB US Dollar Index Bullish Fund | UUP | Diagnostics & Research | Small Cap Growth Equities |
| ARK Innovation ETF | ARKK | Global X Lithium ETF | LIT | Semiconductors | Health & Biotech Equities |
| Energy Select Sector SPDR Fund | XLE | Global X Cloud Computing ETF | CLOU | Entertainment | Energy Equities |
| ProShares Ultra VIX Short-Term Futures | UVXY | iShares Silver Trust | SLV | Software – Infrastructure | Industrials Equities |
| iShares Silver Trust | SLV | Direxion Daily S&P Oil & Gas Exploration & Production Bull 2x Shares | GUSH | Aerospace & Defense | Financials Equities |
| Financial Select Sector SPDR Fund | XLF | Direxion Daily Gold Miners Bull 2X Shares | NUGT | Conglomerates | Asia Pacific Equities |
| iShares MSCI Emerging Markets ETF | EEM | ARK Innovation ETF | ARKK | Electrical Equipment & Parts | Small Cap Blend Equities |
| Technology Select Sector SPDR Fund | XLK | Global X FinTech Thematic ETF | FINX | Specialty Retail | Volatility |
| ProShares UltraPro QQQ | TQQQ | VanEck Vectors Oil Services ETF | OIH | Consumer Electronics | Large Cap Blend Equities |
| iPath Series B S&P 500 VIX Short-Term Futures ETN | VXX | SPDR Dow Jones Industrial Average ETF | DIA | Oil & Gas E&P | Government Bonds |
| Invesco Solar ETF | TAN | ARK Fintech Innovation ETF | ARKF | Specialty Industrial Machinery | China Equities |
| iShares Select Dividend ETF | DVY | Global X U.S. Preferred ETF | PFFD | Airlines | Oil & Gas |
Shares of DFEN have rallied approximately 64% in the month of November, pushing from $9 to the $15 area. There are a few issues with DFEN, most notably the high expense ratio which is 1.03%. There is also the usual time/decay that exists with these leveraged ETFs. FAs looking for steadier returns may want to look at the iShares U.S. Aerospace & Defense ETF (ITA) which offers a lower expense ratio at 0.40%. While it will not provide the same leverage, it tracks similar names with RTX, LMT, and BA representing 42% of the portfolio.
Other names of interest include:
- AGQ- Silver has been on the list the past couple of weeks. The AGQ is a 2x leveraged ETF for SLV. The ETF has been chopping sideways between $22-24. Given the research we would keep this name on the radar to see if it can break out of that channel.-
- XLE- This joined the FA research list last week and has moved up from #16 to #11. As FAs look for rotation trades the energy space has certainly been a key area. Strong economic data from China will provide a further boost to the troubled sector.
Trivia Answer- On May 2, 1952, the British Overseas Aircraft Corporation began the world’s first commercial jet service with the 44-seat Comet 1A, flying paying passengers from London to Johannesburg.