A busy Wednesday for the markets as we have earnings reports from some of the biggest companies and the Fed holds its first policy meeting of 2021. The subject garnering the greatest media coverage though is the massive short squeeze rallies. The first question posed to Federal Chairman Jay Powell on the call was centered around the price action we have seen in Gamestop (GME) and how monetary policy is influencing this activity. It is not surprising that Mr. Powell chose to sidestep this question. He also was careful in addressing how the Fed would handle any roll back of its asset purchases. Markets are under selling pressure since the Fed directive hit the wires. With the Fed chasing a dovish monetary policy and all these manias catching fire, it is notable that your peer search activity is more interested in capital preservation
- Trivia Question- In the last 24 Fed Days, how many days has the S&P experienced a loss? (Answer below)
In fairness, markets were already under pressure ahead of the Fed news. A common theme we have seen this earnings season has been a sell-the-news reaction to earnings season. Microsoft (MSFT) and J.P. Morgan (JPM) would be prime examples as both posted envious earnings reports, yet, were not rewarded by market participants. It is an interesting backdrop that is being glossed over because of the short squeeze coverage. While the pundits watched the GME-mania it would appear that some market participants are stepping to the sidelines.
So what are your peers focusing on in this environment? The Wednesday Advisors in Focus is a review of surge data from peers. We define surge as an uptick in searches for Monday and Tuesday compared to the prior week. We were surprised to see that high short-interest names were not in focus. There were a number of penny stocks, so there was still a search for yield among peers. But in the ETF space, there was a more defensive nature to the research. This builds off our Monday newsletter where we discussed the uptick in inverse ETF searches. Let us take a look at the ETFs seeing the most interest.
TrackStarIQ Data
Here are some highlights of research surges* this week –
| RANK | TOP ETFS – BY ALL FAs (Surge Traffic) This Week | Ticker | TOP STOCKS- BY ALL FAs (Surge Traffic) This Week | Ticker | TOP INDUSTRIES BY ALL FAs (Surge Traffic) This Week | TOP ETF CATEGORIES BY ALL FAs (Surge Traffic) This Week |
|---|---|---|---|---|---|---|
| 1 | John Hancock Multifactor Small Cap ETF | JHSC | Reviv3 Procare Co. | RVIV | Management services | Consumer Staples Equities |
| 2 | JPMorgan Ultra-Short Income ETF | JPST | Koss Cp | KOSS | Services-Personal Services | Total Bond Market |
| 3 | Vesper U.S. Large Cap Short-Term Reversal Strategy ETF | UTRN | USA Equities Corp. | USAQ | Agricultural Services | Financials Equities |
| 4 | SPDR Barclays Capital Convertible Bond ETF | CWB | Patten Energy Solutions Group, Inc. | PTTN | Groceries, general line | Commodities |
| 5 | Direxion Daily Homebuilders & Supplies Bull 3X Shares | NAIL | Helios and Matheson Analytics Inc. | HMNY | Services-Advertising | Corporate Bonds |
| 6 | iShares Select Dividend ETF | DVY | Touchpoint Group Holdings, Inc. | TGHI | Detective and armored car service | Oil & Gas |
| 7 | Vanguard Utilities ETF | VPU | Black Dragon Resource Companies, Inc. | BDGR | Radiotelephone Communication | Precious Metals |
| 8 | iShares MSCI All Country Asia ex-Japan ETF | AAXJ | Pressure BioSciences, Inc. | PBIO | Services-Miscellaneous Amusement & Recreation | Emerging Markets Bonds |
| 9 | Invesco DB Agriculture Fund | DBA | Diversified Healthcare Trust | DHC | Mortgage Finance | Volatility |
| 10 | AdvisorShares Pure Cannabis ETF | YOLO | CBD Life Sciences Inc. | CBDL | Fabricated Rubber Products, NEC | Government Bonds |
| 11 | iShares Robotics and Artificial Intelligence ETF | IRBO | GTX Corp. | GTXO | Book publishing | National Munis |
| 12 | First Trust International IPO ETF | FPXI | Cang Bao Tian Xia International Art Trade Center Inc. | TXCB | Agricultural Chemicals | Global Equities |
| 13 | Vanguard Total Stock Market ETF | VTI | Harrison, Vickers & Waterman, Inc. | HVCW | Heavy construction, misc | Emerging Markets Equities |
| 14 | First Trust NASDAQ Clean Edge Green Energy Index Fund | QCLN | Continental Resources | CLR | Life insurance | Metals |
| 15 | Global X NASDAQ 100 Covered Call ETF | QYLD | Viper Networks, Inc. | VPER | Confectioners | Latin America Equities |
| 16 | Vanguard Intermediate-Term Corporate Bond ETF | VCIT | Landmark Bancorp, Inc. | LDKB | Cutlery, Handtools & General Hardware | Leveraged Commodities |
| 17 | Alerian MLP ETF | AMLP | Vertex Energy | VTNR | Furnishings | Japan Equities |
| 18 | iShares J.P. Morgan USD Emerging Markets Bond ETF | EMB | Natl Beverage Cp | FIZZ | Commercial Printing | MLPs |
| 19 | ALPS Clean Energy ETF | ACES | Pitney Bowes Inc | PBI | Information retrieval | Volatility Hedged Equity |
| 20 | AdvisorShares Ranger Equity Bear ETF | HDGE | Kiwa Bio-Tech Products Group Corp. | KWBT | Retail-Food Stores | Consumer Discretionary Equities |
- J.P. Morgan Ultra-short Income (JPST); #2 Top ETF by All FAs- This is an actively managed fund that aims to maximize income and preserve capital using U.S. dollar-denominated debt. Preservation of capital is the key term as this highlights the defensive nature. A quick glance at the chart shows how steady this ETF is in terms of performance. The Expense Ratio is 0.18% which is very low for an actively-managed fund. The fund has $15.86 bln in AUM and has an Average Daily $ Volume of $148 mln so there is liquidity despite the lack of volatility. FAs looking to head to the sidelines during this wild ride will find some comfort in this stable fund. Of note, 18% of the ETF is allocated to the U.S. Dollar which is seeing some safe haven buying.
- SPDR Barclays Convertible Bond (CWB); #4 Top ETFs by All FAs – One form of capital preservation- that also allows participants to partake in stock rallies- is to move up the corporate structure ladder from common shares to convertible. The CWB provides that direction as the fund holds select convertible securities- bonds and preferred stock- with a minimum outstanding issue of $250 million.This ETF has an Expense Ratio of 0.40% which is twice that of peer ICVT, the iShares peer that has a 0.20% ratio. AUM is $7.13 bln compared to $1.46 bln for the ICVT and Average Daily $ Volume is $70 mln compared to $21 mln. FAs are paying up for liquidity which may make sense in this market. The CWB did get chopped below its 50-sma in today’s action but is still well above trend line support.
- iShares Select Dividend (DVY); #6 Top ETF by All FAs- If FAs are looking to steer clear of volatility, then finding stocks with steadier names that pay a solid dividend certainly fits the bill. The DVY seeks exposure to the U.S. high-dividend space that skews toward smaller firms that pay consistent dividends. The fund has a strong criteria that takes into consideration a five-year dividend growth, payout ratio and payment history criteria. Stocks that make the fund are weighted by their dividend. This allows the fund to pay a healthy 3.51% distribution yield against a manageable 0.40% Expense Ratio. Top holdings include Viacom, Prudential, Altria, International Paper and Wells Fargo. The DVY is challenging resistance at the $100-psyche level today.
Trivia Answer- The S&P has been down 20 of the last 24 Fed Days. Powell has seen gains on 39% of his Fed meetings compared to 60% for his predecessors. It would appear the Fed has either gotten better at telegraphing moves or QE no longer holds the same excitement.