Top ETFs As Markets Rally Into Week With Cautious Optimism

Markets closed last week in the green yet again. After a tumultuous September, October is off to a hot start. Last week, the Dow jumped 3.3% to post its biggest one-week gain since August, while the S&P and Nasdaq NDAQ posted their best weeks since July with gains of 3.8% and 4.6% respectively. Investors are bracing for a big week ahead, with the unveiling of Apple’s new iPhone, the start of earnings releases, and the release of new economic data. Although there are still fears of a stimulus impasse, along with fears of a second wave of COVID-19, there is cautious optimism on both fronts. Both Republicans and Democrats are back to the negotiating table regarding a stimulus, and Goldman Sachs  GS expressed optimism on a COVID vaccine. There are different market forces pushing and pulling the indices right now. For investors, Q.ai’s deep learning algorithms have identified several interesting ETFs based on their fund flows over the last 90-days, 30-days, and 7-days. This includes one Top Buy, one Neutral, four Unattractive, and one Top Short.

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Top Buy

iShares JP Morgan USD Emerging Markets Bond ETF (EMB)

The only Top Buy we have for this week is the iShares JP Morgan USD Emerging Markets Bond ETF EMB . Emerging Market Bonds contain a variety of unique risks that U.S. Bonds don’t necessarily pose, and involve investors needing to do a deeper dive into both country risk and regional risk. However, today, these bonds offer higher returns than U.S. bonds with considerably more upside. The iShares JP Morgan USD Emerging Markets Bond ETF specifically tracks an index composed of U.S. dollar-denominated, emerging market bonds, with top holdings consisting of bonds issued by countries such as Qatar, Saudi Arabia, Russia, The Philippines, and Turkey. The ETF currently has $17,376,004,643.600 AUM, and has seen consistently positive fund flows. The iShares JP Morgan USD Emerging Markets Bond ETF has seen 90-day fund flows of $2,168,671,580.000, 30-day fund flows of $791,777,280.000, and 1-week fund flows of $674,734,390.000. Its 0.40% net expense ratio is on the pricier side compared to other ETFs.

Neutral

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iShares Russell 2000 ETF (IWM)

The only Neutral rated ETF we have for this week is the iShares Russell 2000 ETF IWM . This ETF seeks to track the small-cap Russell index. While the Russell 2000 is still down for the year, and was hurt even more than the larger-cap indices from the coronavirus, it has led a furious rally since it bottomed in March. Two of the ETFs top 5 holdings have seen some of the most robust returns in the entire market ever since the March bottoms, including Penn National Gaming PENN and Caesars Entertainment CZR . The iShares Russell 2000 ETF is middle of the pack size wise with $44,376,329,184.200 AUM. It has also seen consistently positive fund flows with a 90-day fund flow of $2,833,759,470.000, 30-day fund flow of $1,306,177,360.000, and 1-week fund flow of $2,620,417,775.000. It also has a net expense ratio of .20%, which is fairly reasonable.

Unattractive

SPDR S&P 500 ETF Trust (SPY)

Our AI systems identified four Unattractive ETFs this week- with three out of the four being ETFs that seek to track the S&P 500. The first of these ETFs is the SPDR S&P 500 ETF Trust SPY . This ETF seeks to track the S&P 500, and is the largest ETF in the world with $301,688,979,016.670 AUM. It has seen negative fund flows over the last 90-days with a -$6,804,201,231.500 fund flow, and negative fund flows over the last 30-days with a fund flow of -$4,806,485,273.500. It has seen inflows over the last 7-days however, with a 1-week fund flow of $2,467,187,760.550. With a net expense ratio of .094%, this ETF is extremely cheap.

iShares S&P 500 ETF (IVV)

The next Unattractive ETF IVV  which also seeks to track the S&P 500, is the iShares S&P 500 ETF. With $222,938,018,259.000 AUM, it is not quite as large as the SPDR S&P 500 ETF, however, it is still a large ETF based on AUM. Its fund flows have been consistently positive unlike the SPDR S&P 500 ETF, with a 90-day fund flow of $4,835,377,870.000, 30-day fund flow of $4,820,068,355.000, and 1-week fund flow of $954,608,680.000. With a net expense ratio of 0.03%, it is also cheap.

Vanguard S&P 500 ETF (VOO)

The third Unattractive S&P 500 ETF is the Vanguard S&P 500 ETF VOO . This is the smallest of the 3 S&P 500 ETFs on this week’s list with $166,725,968,192.280 AUM. It has also seen consistently positive fund flows, with a 90-day fund flow of $964,674,298.200, 30-day fund flow of $2,081,007,733.680, and 1-week fund flow of $610,211,752.850. Its net expense ratio of 0.03% is also the same as the iShares S&P 500 ETF, making it particularly cheap to own.

Vanguard Total Stock Market ETF (VTI)

The final Unattractive ETF is the Vanguard Total Stock Market ETF VTI . This ETF is unique, because it aims to be an ETF tracking the broader stock market, across all indices, across large, mid, and small caps, and with both growth stocks and value stocks. This ETF is also on the larger side, with $170,911,035,436.830 AUM. It has seen consistently positive fund flows, with a 90-day fund flow of $7,922,576,372.260, 30-day fund flow of $3,846,741,440.700, and 1-week fund flow of $731,113,657.090. Its net expense ratio of 0.03% is the same as both the iShares S&P 500 ETF and Vanguard S&P 500 ETF.

Top Shorts

iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

The only Top Short we have for this week is the iShares iBoxx $ Investment Grade Corporate Bond ETF LQD . The ETF aims to track an index composed of investment-grade corporate bonds- in other words, bonds issued by high quality companies. This fund is made up of over 1000 bonds issued by high quality companies, including Bank of America BAC , JP Morgan, Wells Farg WFC o, Comcast CMCSA , and AT&T. This is considered a good ETF for stability and consistent income streams. Currently, the ETF has $56,281,667,398.400 AUM, and has seen marginally positive fund flows. The ETF has 90-day fund flows of $26,819,130.000, 30-day fund flows of $31,531,290.000, and 1-week fund flows of $885,233,700.000. While .15% net expense ratio is slightly more expensive than many of the ETFs, this is still reasonably cheap.

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