/Trillion Dollar Baby

Trillion Dollar Baby

Tuesday, August 7, 2018– After a week that saw Facebook (FB) set a new record for the biggest one day drop in Market Cap, the market needed a big win and much like J.J. Abrams, they decided to go back to the favorites with two of this bull market’s biggest winners. First, Apple (AAPL) managed to become the world’s first publicly traded company with market capitalization above $1 Trillion, then Tesla (TSLA) accomplished the truly unexpected, an actual apology from Elon Musk. And while Apple and Tesla made most of the headlines, our ETFG Quant data models were showing value-oriented funds beginning to find favor, signaling that the story of the bull markets comeback might be premature.

We’ve talked before about our ETF screening methodology that includes Behavioral factors like price momentum, short interest and implied volatility and we often look for common themes among the biggest weekly movers. What was noticeable to us at the end of last week was the list of funds which saw the biggest week-over-week change in their aggregate ETFG Behavioral score is lacking a substantial tech presence.
If there was one defining characteristic of the funds that made up our list of top movers last week, it’s that their combination of slow growth and financial stability puts them into the category of “anti-Teslas.” It has been a rough 18 months for value stocks but depending on the funds you use, last week was the third consecutive week that value outperformed growth although it has a long way to go before grabbing headlines with Vanguard Value (VTV) lagging 800 bps behind Vanguard Growth (VUG) YTD.
Not quite, as the presence of two Invesco funds, Invesco S&P 500 Low Volatility ETF (SPLV) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), helps to muddy the narrative. Drawing your investments from the same pool leads to cross holdings, including certain consumer staples names, but focusing on the easy answer can quickly lead you to the wrong conclusions. Both funds also have significantly higher allocations to other value sectors including utilities. Most investors would be quick to point out that these two Invesco Funds are just as beholden to their number one sector, Utilities, which have had a strong few weeks as long-term bond yields begin to stabilize. If you can’t get past how utilities are historically rate sensitive, consider the fact that earnings season is now almost complete and utilities stocks did relatively well in the 2Q.
ETF Global Liquidation Watch:
Investors should also note that DB Agricultural Long ETN (AGF), X-Trackers MSCI China A Inclusion Equity ETF (ASHX) and DB Base Metals Double short ETN (BOM) have popped up on our monthly report, ETF Global Liquidation Watch List – August 2018 with a declining (TTM) Trailing Twelve Months of -10.98%, -14.19% and -18.76% respectively.
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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.
ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

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This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

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