Markets are off to a shaky start as we enter a fresh week of trade. News over the weekend was dominated by the fallout from last week’s activity on Capitol Hill. The market does not appear to be caught up in the debate outside of what the fallout may be in terms of President-elect Joe Biden’s ability to consolidate power and how social media companies will be regulated. The former debate will drive interest on Thursday when the Biden Economic Team releases their plan to boost an economy impacted by COVID-19. It will also have an impact on inflation expectations which will remain a key story for markets as we receive the latest data on CPI, PPI and Export/Import Prices this week. The early rally in the dollar is another story we want to watch.
As for our newsletter, we are seeing a steady trend in searches by Financial Advisors. We have pivoted the commentary in our Monday newsletter to do a deeper dive into key themes to provide investment ideas for FAs to discuss with clients. Two areas that have been rising in interest are the Small Cap and Health & Biotech Equity spaces. Last week we saw the Russell outperform Large-cap indices as it rose +5.8%. Healthcare was also one of the strongest sectors as it increased +3.8% during the week. Here are some ETFs in those sectors that were garnering interest from your peers.
- Trivia Question- As we prepare for another earnings season, what are the year-over-year Q4 EPS and revenue consensus expectations for S&P 500 companies? (Answer below)
TrackStarIQ Data
| RANK | TOP ETFS – BY ALL FAs (Total Traffic) Last Week | Ticker | TOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Last Week | Ticker | ETF CATEGORIES SPOTLIGHT- SMALL CAP EQUITIES (Total Traffic) Last Month | ETF CATEGORIES SPOTLIGHT- HEALTH & BIOTECH EQUITIES (Total Traffic) Last Week |
|---|---|---|---|---|---|---|
| 1 | SPDR S&P 500 ETF | SPY | SPDR S&P 500 ETF | SPY | IWM | ARKG |
| 2 | Invesco QQQ | QQQ | VanEck Vectors Gold Miners ETF | GDX | IJH | XBI |
| 3 | ProShares Ultra VIX Short-Term Futures | UVXY | Invesco QQQ | QQQ | PBW | XLV |
| 4 | Direxion Daily S&P 500 Bull 3X Shares | SPXL | iShares Core U.S. Aggregate Bond ETF | AGG | SPSM | IBB |
| 5 | ARK Innovation ETF | ARKK | Alerian MLP ETF | AMLP | VBK | IHI |
| 6 | iShares Silver Trust | SLV | Financial Select Sector SPDR Fund | XLF | IJR | FBT |
| 7 | SPDR Gold Trust | GLD | Direxion Daily Semiconductor Bull 3x Shares | SOXL | MDY | FXH |
| 8 | VanEck Vectors Gold Miners ETF | GDX | SPDR S&P Regional Banking ETF | KRE | VBF | IHF |
| 9 | ARK Genomic Revolution ETF | ARKG | iShares Silver Trust | SLV | VB | PSCH |
| 10 | SPDR Dow Jones Industrial Average ETF | DIA | Invesco S&P SmallCap Low Volatility ETF | XSLV | VXF | VHT |
| 11 | VanEck Vectors Semiconductor ETF | SMH | iShares Global Clean Energy ETF | ICLN | JSMD | XPH |
| 12 | iPath Series B S&P 500 VIX Short-Term Futures ETN | VXX | iShares Russell 2000 ETF | IWM | JSML | PTH |
| 13 | Energy Select Sector SPDR Fund | XLE | iShares MSCI Emerging Markets ETF | EEM | PEJ | HTEC |
| 14 | Vanguard Consumer Discretionary ETF | VCR | Global X YieldCo & Renewable Energy Income ETF | YLCO | IJT | GNOM |
| 15 | iShares MSCI Emerging Markets ETF | EEM | ProShares Ultra VIX Short-Term Futures | UVXY | SLY | BBH |
| 16 | Invesco Solar ETF | TAN | iShares Core S&P Mid-Cap ETF | IJH | RFG | PJP |
| 17 | Invesco WilderHill Clean Energy ETF | PBW | Direxion Daily Junior Gold Miners Index Bull 2x Shares | JNUG | JKK | IDNA |
| 18 | ProShares UltraPro Short QQQ | SQQQ | SPDR S&P Oil & Gas Exploration & Production ETF | XOP | MFMS | |
| 19 | iShares Russell 2000 ETF | IWM | Utilities Select Sector SPDR Fund | XLU | ||
| 20 | iShares Gold Trust | IAU | SPDR S&P Metals & Mining ETF | XME |
- SPDR Portfolio S&P 600 Small Cap (SPSM)- With an Expense Ratio of 0.05%, this is one of the lower cost ETFs you can find. As the name suggests, the fund tracks the S&P Small Cap 600. The sector breakdown is reflective of the Russell as Financials make up 25% of the ETF followed by Industrials (17%) and Consumer Cyclicals (15%). With 608 names in the ETF, it is well-diversified with Cleveland Cliffs (CLF) being the heaviest weight stock at 0.76%. One-year Returns in the ETF are +18%. Average Daily Volume is 556K so there is liquidity here. The ETF is breaking out to all-time highs as Small-cap remains a popular early play in 2021.
- Vanguard Small-Cap Growth (VBK)- Another low expense ratio at 0.07%. This ETF puts an emphasis on growth names as a security needs to have fundamentals that highlight a 3-year historical growth in EPS, growth in sales per share, current investment-to-assets ratio and a return on assets threshold. The growth element is reflective of its sector breakdown with Technology being the heaviest weighted at 29% followed by Healthcare (23%) and Consumer Cyclicals (14%). It’s One-year return is 36% as growth names were key outperformers in 2020. The ETF has seen a parabolic move since breaking above its $200 psyche level in July, rallying 30% over the second half of 2020.
- iShares U.S. Medical Devices (IHI)- This is a niche sector fund that specifically targets domestic companies engaged in the medical device portion of the healthcare space. The fund certainly focuses on the re-opening trade as it is based around an uptick in elective procedures. The Expense Ratio runs at a respectable 0.44%. The ETF tracks 68 stocks with the heaviest weighting going to Abbott Labs (ABT, 13%), Thermo Fisher (TMO, 13%), Medtronic (MDT, 11%), and Danaher (DHR, 8%). The chart looks great as it has witnessed a steady climb to all-time highs here at $337. It has had a steady one-year return of 25%, slightly outpacing the S&P performance.
- First Trust Arca Biotechnology (FBT)- For those looking for a little more volatility, the First Trust Biotech ETF only has 30 names in its basket. It’s Expense Ratio is a little higher at 0.55% due to this more active approach. This basket also has a higher concentration of small- and mid-cap plays. Biotech and Medical Devices make up the lionshare of Sector focus at 42% with Bio Therapeutic Drug names second at 34%. It is an equally-weighted ETF with weightings running in the 3-4% range. Some top holdings include Ultragenyx Pharma (Rare), Sarepta Therapeutics (SRPT), United Therapeutics (UTHR). This has been a choppy chart given the make-up of the ETF. Its one-year return has lagged at 15%. The chart is preparing to test the all-time highs of $184 set back in July of 2020.
Trivia Answer- EPS is expected to decline -10.5% y/y while revenue is expected to increase +0.1% y/y.