Mystery $3.7 Billion Pushed Through BlackRock ETF
On Jan. 25 the iShares MSCI Kokusai exchange-traded fund (ticker TOK) brought in $3.7 billion, according to data compiled by Bloomberg. The ETF then continued trading like normal — with mostly zero flows — until the billions swiftly exited the fund over two separate trading days in February. The fund generally has very few inflows so the large move was extermely odd.
The fund strategy is to buy large and mid-cap companies around the globe, excluding Japan.
AXS Astoria Inflation Sensitive ETF (PPI)
The fund is an actively managed, broadly diversified ETF that seeks long-term capital appreciation in inflation-adjusted returns. The fund invests where the opportunities are: cyclical stocks (such as financials, energies, industrials and materials), commodities and TIPS.
ETF’s to consider with Interest Rates/Inflation on the Rise
Inflation is here and it is real, and with that we are getting a creep back to normalcy in terms of interest rates. As of 2/19 the 10 Year Note had climbed up to 1.92%, a move of 50 basis points in the past year. The long running rate on the 10 year is nearly 3%. With that in mind and the Fed set to raise the Fed Funds rate as much as 1% over the next year, a rising rate environment can cause big disruptions across various asset classes. How can you prepare your portfolio for this shift? Here are some options.
INVESCO DB COMMODITY INDEX TRACKING FUND (DBC)
For older investors an increase in inflation can erode a portfolio return. If inflation is 7% as we are seeing currently, a return of 10% on a portfolio will only net an overall return of 3%. With that in mind one might want to consider the DBC to hedge against that inflation. As of 2/18 the fund had already returned over 10% YTD and over a one year period the fund has returned over 40%.
SPDR SELECT SECTOR FUND – FINANCIAL (XLF)
The XLF is the largest financial sector exchange-traded fund with more than $45 billion in assets. Top holdings include Berkshire Hathaway Inc. (BRK.A, BRK.B), JP Morgan (JPM), Bank of America (BAC) and Wells Fargo (WFC). Financial firms are a good play in a rising interest rate environment as Banks increase the rates they charge for loans they write while many having borrowed funds at a lower rate in more friendly times. This creates a very attractive spread for the financial service firms. The one year return on the XLF is over 20%.
iShares TIPS Bond ETF (TIP) Treasury inflation-protected securities – or TIPS are an obvious play against inflation. TIPS value is benchmarked to the consumer price index. When the consumer price index rises – and interest rates as well, TIPS will also rise to adjust for that inflation.
AXS Astoria Inflation Sensitive ETF (PPI) The fund is an actively managed, broadly diversified ETF that seeks long-term capital appreciation in inflation-adjusted returns. The fund invests where the opportunities are: cyclical stocks (such as financials, energies, industrials and materials), commodities and TIPS. The fund has 50 holdings, Marathon Oil, Devon Energy are two of the larger positions currently. The fund is still in its infancy but has returned over 4% YTD.
Amplify Inflation Fighter ETF (IWIN) The fund is a mix of inflation-sensitive stocks and commodity futures contracts. The ETF has exposure to mining companies, land developers, homebuilders and real estate investment trusts as well as agriculture, gold and bitcoin.
SPDR SELECT SECTOR FUND – FINANCIAL (XLF)
The XLF is the largest financial sector exchange-traded fund with more than $45 billion in assets. Top holdings include Berkshire Hathaway Inc. (BRK.A, BRK.B), JP Morgan (JPM), Bank of America (BAC) and Wells Fargo (WFC). Financial firms are a good play in a rising interest rate environment as Banks increase the rates they charge for loans they write while many having borrowed funds at a lower rate in more friendly times. This creates a very attractive spread for the financial service firms. The one year return on the XLF is over 20%.
iShares TIPS Bond ETF (TIP) Treasury inflation-protected securities – or TIPS are an obvious play against inflation. TIPS value is benchmarked to the consumer price index. When the consumer price index rises – and interest rates as well, TIPS will also rise to adjust for that inflation.
AXS Astoria Inflation Sensitive ETF (PPI) The fund is an actively managed, broadly diversified ETF that seeks long-term capital appreciation in inflation-adjusted returns. The fund invests where the opportunities are: cyclical stocks (such as financials, energies, industrials and materials), commodities and TIPS. The fund has 50 holdings, Marathon Oil, Devon Energy are two of the larger positions currently. The fund is still in its infancy but has returned over 4% YTD.
Amplify Inflation Fighter ETF (IWIN) The fund is a mix of inflation-sensitive stocks and commodity futures contracts. The ETF has exposure to mining companies, land developers, homebuilders and real estate investment trusts as well as agriculture, gold and bitcoin. Valkyrie Hits $1 Billion in AUM
Valkyrie Investments announced that it had crossed $1 billion in assets under management. The company has three ETFs, Valkyrie Balance Sheet Opportunities ETF (VBB), Valkyrie Bitcoin Strategy ETF (BTF), and the Valkyrie Bitcoin Miners ETF (WGMI).
ARKK vs SARK
Ark Invest’s Cathie Wood said the ETF that bets against her funds is “ridiculous” in an interview on CNBC on Thursday. Wood responded to the launch of the Short Innovation (SARK) ETF, an ETF created by Tuttle Capital Management. “Tuttle Capital is shorting innovation and that seems to me, over time, that’s not going to be a business if you ask me. But they’re also not doing any research. They’re simply shorting innovation. If they were doing research and could point us to reasons why what we own is not going to participate in the new world order, then we might have a conversation about it. But the idea of shorting innovation is, in America, ridiculous I think,” Wood said
Worst Performing ETFs of the Week
SKYU ProShares Ultra Nasdaq Cloud Computing ETF -12.97%
BULZ MicroSectors Solactive FANG & Innovation 3X Leveraged ETN -10.62%
UTSL Direxion Daily Utilities Bull 3X Shares -10.48%
TECL Direxion Daily Technology Bull 3X Shares -10.11%
NAIL Direxion Daily Homebuilders & Supplies Bull 3X Shares -9.98%
Best Performing ETFs this week
UVXY ProShares Ultra VIX Short-Term Futures ETF 13.70%
VXX iPath Series B S&P 500 VIX Short-Term Futures ETN 9.73%
VIXY ProShares VIX Short-Term Futures ETF 9.46%
TECS Direxion Daily Technology Bear 3X Shares 9.29%
DRV Direxion Daily MSCI Real Estate Bear 3X Shares 8.50%
Simplify launches two ETFs
Simplify Asset Management announced the launch of two first-of-their-kind fixed income ETFs.
Simplify Aggregate Bond PLUS Credit Hedge ETF (AGGH)
Simplify High Yield PLUS Credit Hedge ETF (CDX)
“In volatile markets, during times of financial stress, credit spreads can often widen with little notice, having a seriously detrimental effect on the performance of an investor’s fixed income portfolio. Hedging against such credit risk can be complicated and expensive, two issues we’ve sought to solve with the launch of AGGH and CDX,” said Paul Kim, CEO & Co-Founder of Simplify. “Through these ETFs, investors now have an approach that allows them to build a core fixed income portfolio, capturing both the investment grade and high yield universes, while also incorporating sophisticated credit hedge overlays to help protect against sudden shifts in credit spreads.”
Stagflation ETF in the works
Persistent high inflation combined with high unemployment and stagnant demand in a country’s economy is Stagflation and there is an ETF in the works to match a trend that is happening in the economy. The Merk Stagflation ETF will be passively managed and track an index of stagflation-sensitive asset classes. If approved by regulators, the fund would hold 55%-85% U.S. Treasury Inflation-Protected Securities and between 5%-15% real estate, gold and oil.
Value ETF’s vs Growth ETF’s YTD
Growth ETFs YTD
Vanguard S&P 500 Growth ETF (VOOG) -12.53%
Vanguard Growth ETF (VUG) -13.49%
iShares Russell 1000 Growth ETF (IWF) -12.69%
Value ETFs YTD
Vanguard S&P 500 Value ETF (VOOV) -2.45%
Vanguard Mid-Cap Value ETF (VOE) -2.16%
iShares Russell 1000 Value ETF (IWD) -2.78