Views From The Hill

ETF Monthly Performance Survey: August-2016

etf-performance-surveySince August is essentially the last month for summer trading, it should come as no surprise that it is one of the dullest months for investors and traders due to seasonally lower volume liquidity. If you were away, you didn’t miss much, unless you had exposure to energy, financials or Asia, all of which distinguished themselves with some pretty strong performances that may yet prove to be unsustainable. (For more a more detailed and extensive coverage of ETFs, please refer to our premium research service, ETF LookOut Points.)

And now, shall we begin?


  • Equities: Riskier assets fared much better and most continued to outperform their peers. The Russell 2000 (IWM) easily outpaced its larger cap brethren in the US markets and may well be en route to achieving a long-awaited new all-time high.Monthly relative strength for the blue-chip indexes was weak to mediocre at best. The most notable standouts in August-2016 were China (FXI) and Japan (EWJ). The FXI has now delivered 4 straight months of positive performance and is trending upward over the intermediate-term. 
  • Bonds: The thirst for decent yields remains unquenched as investors continued to dive into the bubbling waters of High Yield Bond Funds (HYG), regardless of any impending rate hikes. Meanwhile, less riskier fixed income instruments have cautiously switched to neutral and appear to be patiently awaiting for a more decisive statement or move from the Fed. Given the strong performance of Long-Term Treasuries (TLT) over the last 12 months and year-to-date, one cannot fault investors for taking some profits off the table.
  • Currencies: The Japanese Yen (FXY) finally received the relief that the Bank of Japan has been unable to deliver. After encountering resistance near its June-2014 high, it finally appears to be correcting and presenting another cyclical opportunity for “the carry trade”. With respect to the US Dollar (UUP), as long as the Fed Reserve continues to vacillate on its monetary policy, so shall it in price action.
  • Commodities: Although Gold (GLD) pulled back from the rally it initiated in the beginning of this year, I would not so readily discount it as a competing asset. Look for consolidatioin instead. US Oil (USO) garnered this month’s honors as top performer in VFTH’s ETF universe, but failed to take out its previous month high and its technical and fundamental outlook both remain bearish. 
  • Real Estate: This asset class is another I have favored with an overweight rating in previous writings. Nothing has changed and its trends remain robustly bullish. The DJ Real Estate Index (IYR) and the Residential Real Estate Index (REZ) are both supported by competitive yields that are almost approaching 4%. The entire group is consolidating and experiencing minor profit taking. However, the lower relative strength readings for the month indicate a potential for more downside risk. If any of these three ETFs trade anywhere near their February-2016 lows, consider it a gift from the gods and buy.

 

 

RS 1 Mth Aug-31-2016 1 Mth Wtd Vol% Chg VFTH ETF Universe 1 Mth %Chg 12Mth %Chg YTD %Chg
Equities
36 183.94 -24% DJ-30 Industrials (DIA) -0.10% 10.59% 5.72%
59 217.38 -27% SP-500 (SPY) 0.12% 9.08% 6.63%
59 116.44 -28% Nasdaq-100 (QQQ) 1.05% 10.24% 4.09%
77 123.23 -25% Russell-2k (IWM) 1.78% 6.58% 9.42%
60 58.35 -37% EAFE (EFA) 0.53% -3.43% -0.63%
40 36.53 0% Emerging Mkts (EEM) 0.88% 8.14% 13.48%
58 48.61 -43% Europe FTSE (VGK) 0.68% -6.01% -2.55%
45 28.17 -5% Latin America 40 (ILF) 1.26% 14.05% 32.94%
53 33.52 -7% Brazil (EWZ) 0.84% 32.02% 62.09%
75 12.28 -23% Japan (EWJ) 1.82% -0.24% 1.32%
7 40.73 -11% Pacific Ex-Japan (EPP) -2.40% 5.41% 6.10%
69 37.05 -20% FTSE China 25 (FXI) 4.57% 1.90% 4.99%
8 36.24 22% VIX Short-Term Futures (VXX) -11.00% -64.94% -54.93%
Bonds / Fixed Income
72 139.87 -17% 20+ Yr Treasury (TLT) -1.19% 14.31% 16.00%
65 112.57 2% Aggregate Bond Fund (AGG) -0.40% 3.28% 4.22%
56 116.04 -15% Treasury Inflation Protection (TIP) -0.74% 3.90% 5.80%
76 123.89 7% Investop Corp Bond (LQD) -0.08% 7.40% 8.67%
85 86.7 -19% High Yield Corp Bond (HYG) 1.51% 0.39% 7.59%
Currencies
78 24.82 -10% US Dollar Bullish (UUP) 0.61% -1.12% -3.24%
32 108.65 -34% Euro Trust (FXE) -0.28% -0.99% 2.11%
0 93.35 -24% Japanese Yen Trust (FXY) -1.44% 16.82% 15.78%
Commodities
35 14.39 4% DB Commodity Index (DBC) 0.77% -6.07% 7.71%
2 124.78 -20% Gold (GLD) -3.26% 14.79% 22.98%
53 10.36 13% US Oil (USO) 6.15% -30.38% -5.82%
Real Estate
29 82.54 -11% DJ Real Estate (IYR) -3.35% 14.78% 9.94%
55 29.04 -32% DJ Home Construction (ITB) 0.31% 5.22% 7.16%
29 66.2 -35% Residential Real Estate Index (REZ) -3.57% 13.61% 4.33%
Major Equity Sectors
21 80.56 -28% Consumer Discretionary (XLY) -1.30% 6.62% 3.07%
20 54.38 -15% Consumer Staples (XLP) -0.59% 14.15% 7.70%
61 68.51 1% Energy (XLE) 1.68% 4.20% 13.58%
98 24.56 -30% Financials (XLF) 3.85% 3.94% 3.06%
8 72.76 -20% Healthcare (XLV) -3.24% 1.34% 1.01%
64 58.59 -29% Industrials (XLI) 0.95% 13.22% 10.53%
37 48.56 -25% Materials (XLB) -0.27% 11.38% 11.84%
83 117.89 -21% Technology / Info (VGT) 2.34% 14.26% 8.87%
21 32.21 -24% Telecom (IYZ) -6.56% 12.27% 11.88%
11 49.23 -5% Utilities (XLU) -5.54% 14.09% 13.75%

 

 

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