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What just happened?
Raise your hand if you had “worldwide pandemic” on your 2020 bingo card.
Raise your hand if you had “violent occupation at the nation’s capitol” on your 2021 bingo card.
Raise your hand if you have no idea what a bingo card even looks like, anyway.
Here at ETF Wrap, we can’t make the bad news go away, but we can help you, perhaps with a bit of humor, focus on the work that still needs to be done: allocating capital, making sense of market shifts and preparing for the financial future.
Over the past week, some of the trends that we’ve been awaiting for months seemed to finally blossom. As results from the Georgia run-off elections were announced, the Blue Wave that had been teased in November was confirmed.
The ETF winners? Marijuana and clean-energy funds, among others. Earlier in the week, funds that make out in a reflationary environment — including commodities and outright inflation hedges — rallied. And an ETF that tracks freight futures focused on dry bulk shipping BDRY, +8.09%, a vehicle for the global commodity market, was one of the biggest asset gainers of the past week (as noted in the flows section at the bottom of this newsletter.)
Thanks for reading, as always.
Exchange-traded sundries
- Investing in social justice — that is, taking a more direct approach than some of the big asset managers’ ESG-branded offerings — is gaining in popularity. In December, Adasina Social Capital launched the Adasina Social Justice All Cap Global ETF JSTC, +0.40%. MarketWatch profiled Adasina co-founder Rachel Robasciotti in August.
- Asset Manager VanEck has once again filed an application with the SEC for a Bitcoin ETF. Here’s an earlier conversation with an ETF industry participant about Bitcoin funds, and here’s an even earlier profile of Jan van Eck.
Is there an ETF for that?
Re-opening? Work from home? How about an ETF that straddles both worlds?
Scott McKenna, marketing director for ETFLogic, has a unique suggestion: a fund that might serve as a “bridge” between the virus and the post-vaccine worlds, in his words.
McKenna has been watching the iShares U.S. Medical Devices ETF IHI, +1.11% for some time. He likes its concentrated exposure to medical companies that stand to benefit from ongoing COVID-19 testing, as well as from the nascent vaccine rollout.
Companies that fit in both buckets include Abbott Laboratories ABT, +0.40%, Thermo Fisher Scientific Inc., TMO, +3.48% Medtronic MDT, +0.01% and Danaher Corp. DHR, +2.36%. Together, those stocks, the fund’s top four holdings, make up about 45% of its portfolio.
“Your average investor isn’t going to know a lot about the scientific industry, and a lot of biotech companies are pretty volatile so an ETF can help diversify that,” McKenna told MarketWatch. “IHI would be a great pick because it’s going to give you exposure to those stocks.”
Many of the companies in the IHI portfolio are already involved with deploying flu vaccines, so it’s a natural pivot for them to start to contribute to the coronavirus efforts, McKenna noted. “I think they’re positioned to do really well without investors needing to be so speculative.”
One other way to play the vaccine distribution might be to look for ETFs with concentrated exposure to pharmacy stocks like CVS Health CVS, +2.13% and Walgreens Boots Alliance Inc. WBA, +6.93%, he said.
IHI carries a 0.42% expense ratio, according to fund documents. It’s gained about 24.5% over the past 12 months, putting its performance about halfway between that of the S&P 500 and the Nasdaq Composite.
Hindsight is 2020
CFRA this week published a look back at 2020’s ETF flows. The ‘Big Three’ stayed big but were joined by Cathie Wood’s ARK fund family — no surprise to anyone who reads ETF Wrap.
| Asset Manager | Net inflows, billions | Market share of flows |
| Vanguard | $200 | 40% |
| BlackRock | $122 | 24% |
| State Street Global Advisors | $36 | 7.1% |
| ARK Invest | $21 | 4.1% |
| Invesco | $21 | 4.1% |
| Source: CFRA | ||
Visual of the week
Weekly rap
| Top 5 gainers of the past week | |
| Global X Cannabis ETF POTX, +5.42% | 16% |
| Cannabis ETF THCX, +5.22% | 15.6% |
| Invesco S&P SmallCap Energy ETF PSCE, +1.78% | 14.2% |
| SPDR S&P Oil & Gas Equipment & Services ETF XES, +0.04% | 13.8% |
| Breakwave Dry Bulk Shipping ETF BDRY, +8.09% | 13.6% |
| Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products | |
| Top 5 losers of the past week | |
| TrueShares Technology, AI & Deep Learning ETF LRNZ, +3.91% | -5.2% |
| Simplify Volt Cloud and Cybersecurity Disruption ETF VCLO, +4.36% | -4.9% |
| WisdomTree Cloud Computing Fund WCLD, +3.27% | -4.7% |
| Global X Cloud Computing ETF CLOU, +2.21% | -4.6% |
| First Trust Brazil AlphaDEX Fund FBZ, -2.55% | -4.5% |
| Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products | |
| Top 5 biggest inflows of the past week | |
| iShares Russell 2000 ETFIWM | $1.11 billion |
| SPDR Gold Shares GLD, -0.30% | $1.03 billion |
| Vanguard Total Stock Market ETF VTI, +1.44% | $923 million |
| Invesco Russell 1000 Dynamic Multifactor ETF OMFL, +0.77% | $824 million |
| Vanguard FTSE Emerging Markets ETF VWO, +0.31% | $703 million |
| Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products | |
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