May 13, 2020
Investing has become a game of chicken in the eyes of some investors. Has COVID-19 become a buying opportunity? Have we seen the bottom, or is the worst yet to come? It’s hard to make any solid predictions in this unfamiliar territory – investment markets have experienced a health crisis rather than being undone by poor fundamentals, such as in the global financial crisis. The essentials, defensive assets and growth trends should be considered by advisers exploring the opportunities to tilt the satellite portion of their clients’ portfolios. Incorporating the essentials There are a number of areas which may benefit from the current situation – or if not benefit, then at least be largely able to continue normal operations. Companies in the consumer staples sector is an easy starting point. People need basic supplies to live and supermarkets like Coles and Woolworths continue to operate and have seen increased demand in these times. There are even pockets to consider in the consumer discretionary sector as people use lockdown to carry out home based activities or upgrade the technology they use to work from home. Infrastructure, such as railways, energy suppliers and telecommunications, is a sector that continues to operate in periods of volatility. These types of companies normally have monopolistic fee structures and have very high barriers to entry with predictable revenue streams. This means they aren’t expected to rise as much in good times but are less likely to be materially impacted in the bad times. In the current situation, telecommunications has benefitted from an increased dependence from a population working from home. An ETF like ETFS Global Core Infrastructure ETF (ASX code: CORE) can offer exposure to global infrastructure companies in a client portfolio. Defending against volatility Defensive assets like gold or silver can offer a buffer in volatile markets. Gold in particular has been used as a safe haven asset in the past for its low and at times negative correlation to other asset classes. You might choose to use an ETF like ETFS Physical Gold (ASX code: GOLD) or ETFS Physical Silver (ASX code: ETPMAG) in the core of a portfolio or as an additional satellite tilt. Growth trends The volatility of COVID-19 has reset markets, and the time might be favourable for some investors to access growth trends at more favourable valuations. Technology trends have particularly accelerated during COVID-19, with ecommerce and online entertainment experiencing spikes in use. ETFs such as ETFS Morningstar Global Technology ETF (ASX code: TECH) or ETFS FANG+ ETF (ASX code: FANG) offer access to the companies withinthis theme. Biotechnology may be a longer-term trend but it is also particularly topical at the moment in the hunt for vaccines and a cure for COVID-19. The ETFS S&P Biotech ETF (ASX code: CURE) accesses this trend and offers exposure to some of the key players currently working against the virus, including Gilead, Regeneron and Moderna. The growing Indian economy may also pose an opportunity for some investors (learn more here). It can be accessed through the ETFS Reliance India Nifty 50 ETF (ASX code: NDIA).
May 12, 2020
This week's highlights U.S. and Australian equity markets finished up last week. Oil rebounded and technology stocks bounced (OOO and ATEC) were the top performers for the week, returning 14.7% and 10.8% respectively. Biotechnology fund CURE also had a strong week up 8% and Global TECH was up 7.9%. European markets dipped along with emerging markets as debt levels came into question, with NDIA down 8%. While precious metal Palladium (ETPMPD) was down 7.7% for the week. Total flows into domestically domiciled ETFs were $286m, while outflows totalled $172m. iShares Composite Bond ETF (IAF) saw the biggest inflows for the week, followed by QUAL and defensive strategies GOLD and BBUS. iShares Core Cash (BILL) saw the week’s biggest outflows. Bearish domestic fund BBOZ was the most traded fund for the week, followed by MSTR and VAS. ETFS S&P Biotech ETF (CURE), which tracks a basket of the world’s leading biotechnology companies listed in the U.S., returned 8% for the week. The sub-sector remains popular given the demand for a COVID-19 treatment or vaccine.
May 05, 2020
This week's highlights Equity markets were mixed last week. India funds (NDIA and IIND) were the top performers for the week, returning 8.4% and 6.1% respectively. European funds (ESTX and HEUR) as well as a range of active ETFs (IMPQ, INES and VVLU) were also amongst the top performers. Biotech (CURE) and healthcare (IXJ) funds were amongst the poorest performers amidst coronavirus-related volatility. Precious metals mostly declined last week with GOLD down 2.8% and palladium (ETPMPD) falling 4.6%. Oil remained volatile, but finished the week relatively unchanged. The Australian dollar traded above US65c before ending just above US64c. Total flows into domestically domiciled ETFs were $317m, while outflows totalled $76m. Cash fund AAA saw the biggest inflows for the week, followed by QUAL and a range of domestic equity funds (A200, IOZ and STW). Hedged MSCI World fund (IHWL) saw the week’s biggest outflows. Bearish domestic fund BBOZ was the most traded fund for the week, followed by VAS and bearish US fund BBUS. OOO saw above average volumes in-line with its flows. ETFS Reliance India Nifty 50 ETF (NDIA), which tracks the 50 largest companies listed on India’s NSE, returned 8.4% for the week. The Indian market was buoyed by better than expected corporate earnings and encouraging initial results of a potential COVID-19 treatment.
Apr 28, 2020
This week's highlights Equity markets mostly retreated last week as the rebound stalled across many sectors. Gold miners (MNRS and GDX) and biotechnology (CURE) were the top performing long-only equity funds. Bearish funds (BBOZ, BEAR and BBUS) also fared well. Australian property funds (MVA, SLF and VAP), dividend yield funds (ZYAU and MVS) and sustainability funds (GRNV and FAIR) were amongst the poorest performers for the week. Oil continued its dramatic slide, with OOO dropping 45.6% for the week. Gold consolidated above US$1,700/ounce, with GOLD, PMGOLD and QAU all amongst the week’s top performers. Total flows into domestically domiciled ETFs were $333m, while outflows totalled $128m. Oil fund OOO saw the biggest inflows as investors looked to profit from historically low prices. Domestic floating rate note funds (FLOT and QPON) saw the biggest outflows for the week along with emerging market equities (IEM). Bearish domestic fund BBOZ was the most traded fund for the week, followed by broad-based funds OOO and VAS. IEM saw above average volumes in-line with its flows. ETFS S&P Biotech ETF (CURE), which tracks the performance of an equally weighted portfolio of US-listed biotechnology companies, returned 5.7% for the week and is up 11.7% year-to-date. In comparison, the benchmark S&P 500 Index has declined by 2.7% year-to-date in Australian dollar terms.
Apr 21, 2020
This week's highlights The rebound in equity markets continued last week. Healthcare (Biotechnology) and technology sectors provided many of the top performing ETFs for the week with FANG and CURE returning 10.1% and 8.7% respectively. Precious metals GOLD and ETPMPD are the top performers year to date. Oil continued its slide, with OOO dropping 14.7% for the week and oil futures moving well into uncharted territory. Total flows into domestically domiciled ETFs were $225m, while outflows totalled $133m. International bear equity fund BBUS saw the biggest inflows, while funds OOO, BBOZ and IOZ also saw strong flows. Australian portfolio diversifier fund EX20 saw the week’s biggest outflows. Bearish domestic fund BBOZ was the most traded fund for the second week running, followed by broad-based funds VAS and STW. ETFS FANG+ ETF (FANG), which tracks the performance of technology leaders such as Apple, Alphabet (Google), Amazon, Facebook and Netflix, returned 10.1% for the week and is now up 7.8% since its inception at the end of February 2020.
Apr 20, 2020
Watch Webinar Recording: The FANG Future Recorded on the 7th April 2020, this webinar looks at the ETFS FANG+ ETF: How the FANG companies have been affected by the current COVID-19 situation and the outlook ahead The highly traded high growth companies held in FANG Why we launched FANG and how to use it in a portfolio Why invest via an ETF rather than using alternative investment options Note: skip to 2:53 for start of presentation