Advisors in Focus- January 11, 2021

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

RANKTOP ETFS – BY ALL FAs (Total Traffic) Last WeekTickerTOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Last WeekTickerETF CATEGORIES SPOTLIGHT- SMALL CAP EQUITIES (Total Traffic) Last MonthETF CATEGORIES SPOTLIGHT- HEALTH & BIOTECH EQUITIES (Total Traffic) Last Week
1SPDR S&P 500 ETFSPYSPDR S&P 500 ETFSPYIWMARKG
2Invesco QQQQQQVanEck Vectors Gold Miners ETFGDXIJHXBI
3ProShares Ultra VIX Short-Term FuturesUVXYInvesco QQQQQQPBWXLV
4Direxion Daily S&P 500 Bull 3X SharesSPXLiShares Core U.S. Aggregate Bond ETFAGGSPSMIBB
5ARK Innovation ETFARKKAlerian MLP ETFAMLPVBKIHI
6iShares Silver TrustSLVFinancial Select Sector SPDR FundXLFIJRFBT
7SPDR Gold TrustGLDDirexion Daily Semiconductor Bull 3x SharesSOXLMDYFXH
8VanEck Vectors Gold Miners ETFGDXSPDR S&P Regional Banking ETFKREVBFIHF
9ARK Genomic Revolution ETFARKGiShares Silver TrustSLVVBPSCH
10SPDR Dow Jones Industrial Average ETFDIAInvesco S&P SmallCap Low Volatility ETFXSLVVXFVHT
11VanEck Vectors Semiconductor ETFSMHiShares Global Clean Energy ETFICLNJSMDXPH
12iPath Series B S&P 500 VIX Short-Term Futures ETNVXXiShares Russell 2000 ETFIWMJSMLPTH
13Energy Select Sector SPDR FundXLEiShares MSCI Emerging Markets ETFEEMPEJHTEC
14Vanguard Consumer Discretionary ETFVCRGlobal X YieldCo & Renewable Energy Income ETFYLCOIJTGNOM
15iShares MSCI Emerging Markets ETFEEMProShares Ultra VIX Short-Term FuturesUVXYSLYBBH
16Invesco Solar ETFTANiShares Core S&P Mid-Cap ETFIJHRFGPJP
17Invesco WilderHill Clean Energy ETFPBWDirexion Daily Junior Gold Miners Index Bull 2x SharesJNUGJKKIDNA
18ProShares UltraPro Short QQQSQQQSPDR S&P Oil & Gas Exploration & Production ETFXOPMFMS
19iShares Russell 2000 ETFIWMUtilities Select Sector SPDR FundXLU
20iShares Gold TrustIAUSPDR S&P Metals & Mining ETFXME
  • 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.

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