Newsletter · JAVAS
More than seven months into 2021, are likely investors acquainted with the factor landscape at this juncture, at least as it pertains to the ever-popular growth/value debate. Owing to the economic cycle and the reopening/reflation trade, value stocks trounced their growth rivals for much of the first half of the year.
Small caps have been strong performers in 2021 as well as energy and value—wrap all three in one fund and you get a dynamic ETF in the Invesco Dynamic Energy Exploration & Production ETF (PXE) . Looking specifically at the Russell 2000 for small cap strength, the index is up 11% for the year.
The first half rally in small caps doesn’t appear to be running out of steam, which could mean more strength in the second half with exchange-traded funds (ETFs) like the Invesco S&P SmallCap 600 Revenue ETF (RWJ) . RWJ, which is up over 40% so far in 2021, seeks to track the investment results of the S&P SmallCap 600 Revenue-Weighted Index.
On Thursday, J.P. Morgan Asset Management announced the launch of two active equity ETFs, JPMorgan ActiveBuilders U.S. Large Cap Equity ETF ( JUSA ) and JPMorgan ActiveBuilders International Equity ETF ( JIDA ). The funds join JPMorgan ActiveBuilders Emerging Markets Equity ETF ( JEMA ) to round out J.P. Morgan Asset Management’s ActiveBuilders ETF core equity suite.
The S&P 500 Value Index jumped 17.9% in the first half of the year, outperforming the broader S&P 500 by 110 basis points, and while there are recent inklings that growth stocks may be turning a corner, market observers are still bullish on value.
Big banks are raising dividends, amid news that the June U.S. consumer confidence data hit its highest level since the coronavirus pandemic began. Banks have also passed their stress tests, heightening expectations for robust economic growth in Q2.
Investors looking to diversify can consider an ETF strategy that alternates its tilt toward S&P 500 investment factors as the market itself changes. In the recent webcast, Factor Rotation Strategies May Help You Profit in Varying Market Cycles , Sean O’Hara, President, Pacer ETFs Distributors; and John Lunt, President, Lunt Capital Management, explained that public instruments have characteristics and attributes that can be calculated and tracked.
While plenty of market participants are eager for growth stocks to come back into focus, investors shouldn’t be hasty in dismissing RZV and its heavily cyclical lineup. In fact, some analysts see more upside ahead for cyclical equities.
ETF investors seeking to capture the upside of small cap equities without the added dose of volatility can do so with the Invesco S&P SmallCap Low Volatility ETF ( XSLV B- ). As per the fund description, XSLV seeks to track the investment results of the S&P SmallCap 600 Low Volatility Index.
Despite historically low-interest rates weighing on bank earnings, the Financial Select Sector SPDR Fund (NYSE: XLF ) is up 27.5% in 2021, more than double the return of the SPDR S&P 500 ETF Trust (NYSE: SPY ). Earnings Expectations: On Thursday, DataTrek Research co-founder Nicholas Colas said investors should stick with the financial sector for at least two reasons.
It’s often said that small cap value is one of the most potent factor combinations, one which handsomely rewards investors over the long-term. How well that thesis plays out over time remains to be seen, but for investors in 2021, small-cap value is obliterating other factors.
Until late last year, the growth factor spent over a decade outperforming its value rival. That scenario prompted advisors and investors to pump tens of billions of dollars into passive growth strategies, including exchange traded funds.
Exchange traded fund investors can focus on a mid-capitalization fund strategy targeting today’s high-conviction stock picks. In the recent webcast, Don’t Dilute Your Dollars with an Index-Only Strategy , Amy Zhang, Executive Vice President, Portfolio Manager, Alger, highlighted the historical outperformance of the mid cap category, which has generated an annualized total return of 12.3% from 1990 through 2020, compared to the 11.0% for small caps and 10.7% for large caps over the same period.