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ETF Wrap: ETF Wrap: Banks, bonds and a 98% return for a inventory picker

What just happened

It's the Trump Show and we only live in it. From the shocking news that the President tested positive for coronavirus and checked into Walter Reed National Military Medical Center for three nights, to his proclamation that there would be no tax incentives, to his reversal the next day, President Donald Trump dominated the conversation in the markets last week.

We covered the ups and downs for ETFs with an airline and travel focus: a lot of turbulence, you could say. The materials sector began to strengthen as well, and financials rose as markets began to price in a democratic course that could boost household spending and boost returns.

This is reflected in the weekly cash flows shown at the bottom of this page. Pension funds were sold, but bank funds rallied.

Thank you for reading.

"A fascinating time to be an active manager"

A fund launched in 2019 is having a great 2020. The Hoya Capital Housing ETF
HOMZ,
+ 3.42%
Initially, it was branded as the only ETF that covers the entire ecosystem of the real estate market, from builders to brokers, REITs to Home Depot. But it struggled to amass assets. In August, the fund's founder, Alex Pettee, renamed it to compete more directly with the two better-known “homebuilders” ETFs, the SPDR S&P Homebuilders ETF
XHB,
+ 1.29%
and the iShares US Home Construction ETF
ITB,
+ 1.10%,
Both are also laden with stocks that aren't homebuilders.

Among the ETFs that have raised the most incoming money over the past month, there was only one actively managed fund in the top 20: ARK Invest's flagship fund, the Innovation ETF
ARKK,
+ 3.70%.
Despite the recent excitement about "semi-transparent" ETFs and "active non-transparent" ETFs, ARK founder Cathie Wood, a blatant and active stock picker, happens to prefer the transparency that good, old-fashioned ETFs offer.

MarketWatch practically sat down with Wood in June after getting through the spring great. She had a great time in the disruption after the market passed out in March. "It's a fascinating time to be an active manager," she said at the time. Wood's career has always been focused on innovative technologies, including products and services that span industries and industries, and others, such as distance learning and medicine, that seemingly leap into the future. You can find a previous long conversation with her here.

In the year to date, ARKK's share price has essentially doubled: it rose 98.2% at the close of business on Wednesday. This corresponds to an increase of 26% for the Nasdaq
COMP,
+ 1.88%
over the same route. ARKK's assets under management also skyrocketed, increasing by $ 4.2 billion in 2020 to $ 8.9 billion in 2020, according to FactSet.

"The ARK lineup, and the ARKK in particular, are tackling thematic investments that have grown in prominence and carrying out stock selection with a very patient approach," said Todd Rosenbluth, CFRA director of ETF research. "She was very right. It's just amazing. This strategy combines some different innovative themes. It's also a swing to the fence strategy and she's bonded and hit home runs. It's a home run year. Will it go on? yet to be determined, but we have a five-star rating for the ETF based partly on its performance and partly on its holdings. "

In addition to her active approach, Wood is known as the Tesla over-bull. Your last call is a share price of $ 7,000. No, we didn't add an extra zero.

Is there an ETF for this?

Is there an ETF for every corner of the financial markets? With the launch of the Defiance Next Gen SPAC Derived ETF last week
SPAK,
-0.53%,
it seems likely.

SPACs – Special Purpose Acquisition Companies – are sometimes
called "blank check company." You raise capital and then already identify a company
in operation as an acquisition target. As part of the merger process, the new
Company goes public – and shares in SPAC are converted into equity in the new company.

The traditional IPO market was a "closed ecosystem" for most ordinary investors, said Paul Dellaquila, president of Defiance. Investing in SPAK gives businesses access to a very early stage in their life cycle with the promise of oversized returns.

The ETF's portfolio is currently heavily geared towards companies that have already gone public through a SPAC. Only about 20% come from pre-IPO companies. Dellaquila believes this will balance out as the SPAC market matures and individual SPACs become more liquid. For now, that means the portfolio is focused on a few names that investors probably know well: 18.6% owns DraftKings Inc.
DKNG,
-6.07%,
and 4.2% stake in Virgin Galactic Holdings Inc.
SPCE,
+ 3.75%.

"This will not replace an investor's core holding," Dellaquila told MarketWatch. He thinks it's a good addition to the alternative section of the portfolio.

Top 5 winners last week

Invesco SmallCap Consumer Discretionary ETF
PSCD,
-1.15%

10.4%

First Trust NASDAQ ABA Community Bank Index Fund
QABA,
+ 2.30%

8.1%

Invesco KBW Regional Banking ETF
KBWR,
+ 2.61%

8th%

SPDR Kensho Clean Power ETF
CNRG,
+ 4.85%

7.7%

SPDR S&P Regional Banking ETF
KRE,
+ 2.83%

7.7%

Source: FactSet, until close of trading on Wednesday, October 7th, excluding ETNs and leveraged products

Top 5 losers in the last week

Vanguard Extended Duration Treasury Index Fund ETF
IT,
-0.91%

-2.7%

iShares Trust – iShares 25+ Years Treasury Strips Bond ETF
GOVZ,
-1.29%

-2.3%

AGFiQ US market-neutral anti-beta fund
BTAL,
-1.04%

-2.2%

HCM Defender 100 Index ETF
BTAL,
-1.04%

-1.8%

SPDR Portfolio Long Term Treasury ETF
SPTL,
-0.69%

-1.8%

Source: FactSet, until close of trading on Wednesday, October 7th, excluding ETNs and leveraged products

Top 5 largest inflows of the past week

iShares 20+ Year Treasury Bond ETF
TLT,
-0.72%

$ 1.67 billion

iShares US real estate ETF
IYR,
+ 0.10%

$ 788.5 million

SPDR Bloomberg Barclays High Yield Bond ETF
JNK,
+ 0.39%

$ 623.7 million

Vanguard Intermediate-Term Corporate Bond ETF
VCIT,
-0.05%

$ 592.2 million

iShares iBoxx $ Investment Grade Corporate Bond ETF
LQD,
+ 0.03%

$ 561.4 million

Source: FactSet, until close of trading on Wednesday, October 7th, excluding ETNs and leveraged products

Visual of the week

The ARK innovation fund has been flowing since 2020. Source: FactSet

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