Top ETFs To Buy In The Wake Of Sudden Market Volatility
Stocks closed lower to end the week for two days in a row, in a wild swing that saw technology stocks get hammered to end the week. The S&P 500 tech sector fell more than 1% on Friday, but closed lower than 4% for the week underscoring the excessive valuation gains since the pandemic recovery in stocks. It will remain to be seen if there will be a follow through after the Labor Day long weekend, or if investors will use the pullback as a buying opportunity. On the economic side, there was the jobs report out on Friday that showed gains of 1.37 million jobs in August, topping expectations of 1.32 million, and the unemployment rate fell to an unexpected 8.4% versus expectations of 10.2%. Pretty good rebound, considering most economists did not expect single digit unemployment for some time. If you’re looking at what ETFs you should be buying and selling in this market, Q.ai’s deep learning algorithms have used Artificial Intelligence (“AI”) technology to identify the Top ETFs by AUM for the last week.
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iShares JP Morgan USD Emerging Markets Bond ETF (EMB)
There was one Top Buy on the ETF list this week in the iShares JP Morgan USD Emerging Markets Bond ETF EMB . Apparently, our deep learning algorithms think that the attractiveness of emerging market sovereigns yields outweighs the local here, expecting this ETF to go higher in the near term. Fund flows look like they agree, with the 1-week inflow of $473.2 million, a 30-day inflow of $699.3 million, and a 90-day inflow of $2.0 billion. These are strong inflows considering the assets under management of $16.8 billion. The net expense ratio of the fund is elevated at 0.4%, but given the global nature of the holding, this can be expected. After a sharp drop initially during the coronavirus pandemic, the holdings have recovered quite remarkably since.
Vanguard Total Stock Market ETF (VTI), Vanguard S&P 500 ETF (VOO)
There are two Neutral rated ETFs this week, both from Vanguard, and both fairly passive overall market exposure. The two ETFs named are the Vanguard Total Stock Market ETF VTI and the Vanguard S&P 500 ETF VOO , two bellwethers of overall market exposure. Both of these funds, unsurprisingly, carry the same net expense ratio of 0.03%, very attractive when comparing across holdings. Assets under management for these giants are similar, with the former coming in at $162.9 billion, and the latter trailing close behind at $162.5 billion. Our deep learning algorithms have no indication one way or another whether they will be strong long or short candidates. Investor flows, however, have been positive. In the 1-week period, fund flows were $568.8 million and $496.3 million, respectively. Over the last 30-days, $2.465 billion and $527.5 million. And over the last 90-days, both funds have added an extremely impressive $4.7 billion and $5.2 billion.
SPDR S&P 500 ETF Trust (SPY), iShares Edge MSCI USA Value Factor ETF (VLUE), Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC), ARK Innovation ETF (ARKK)
There were four Unattractive ETFs this week in the SPDR S&P 500 ETF Trust SPY , the iShares Edge MSCI USA Value Factor ETF VLUE , the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF GSLC , and the ARK Innovation ETF ARKK . These are varied in what they hold underlying, and the performance difference varies from a gain of 98% in the last year (Ark) to a loss of 3.75% (iShares Value). However, our deep learning algorithms think these are more likely to head lower in the coming months. The net expense ratios of these holdings are 0.094%, 0.15%, 0.09%, and a much higher 0.75%, respectively. Assets under management are vastly different as well, with the first having a massive $301.8 billion, and the following having $6.99 billion, $10.2 billion, and $8.0 billion. Investor flows are generally positive except for the massive SPDR S&P 500 ETF Trust, likely due to the higher fees when stacked up against competitors offering extremely similar products. In the last 30 days, flows have been -$2.76 billion, $1.2 billion, $891 million, and $1.2 billion, and in the last 90 days, flows have been -$1.2 billion, $1.7 billion, $1.1 billion, and $2.5 billion. Clearly, investors have chased the Ark innovation ETF for its gains this year.
Vanguard Total Bond Market ETF (BND), iShares Gold Trust (GLD), Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
Three Top Shorts this week from our AI systems, targeting defensive holdings in bonds and gold. The Vanguard Total Bond Market ETF BND , the iShares Gold Trust GLD , and the Vanguard Intermediate-Term Corporate Bond ETF VCIT have all been pegged as losers from here on out. Investors have flocked to the safe havens this year, as shown in the 1-year returns of 6.72% and 8.14% for the fixed income holdings, whereas gold has really shone with an increase of 26.9%. The net expense ratios of the three holdings are 0.05%, 0.25%, and 0.07%, respectively. Total assets under management are steady for the three holdings, showing at $61.1 billion, $31.8 billion, and $39.1 billion. Investors may be piling in at the wrong time, however, as all three have had increasing fund flows despite the negative rating from our AI. In the last 30-days, inflows have been $2.5 billion, $1.2 billion, and $1.3 billion, whereas in the last 90-days flows have been even larger, gaining $6.7 billion, $4.4 billion, and $7.9 billion.
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