“Surprise” Stephen … (TWTW – Sept 4-8, 2017)

“Surprise” Stephen … Well, one thing is for certain, markets didn’t see Stephen Poloz coming with his second 25bps hike, delivered this week. The consensus was – later aka October, likely – but September, nope, et pourtant – a second BoC hike materialized… CAD surged, and meanwhile, the odds of a further hike by year end are nearing certainty.

My take on this? I have seen some comments suggesting we may well end up “needing” QE next year. While that view is rather extreme, could it be the Bank of Canada Governor is reading too much into the strength of Canada’s current economic circumstances and strong rebound? Time will tell. If I had to bet, I’d have to say it is a risk not to be underestimated… After all – isn’t the strength in question meaningfully resting on what we keep hearing is unsustainable as far as Canadians’ spending?

Recent Developments:

  • The Geopolitical Backdrop – continues to feature elevated risk of conflict, courtesy North Korea
  • Hurricane (s)- Irma is hitting Florida this week-end after pounding St Martin and Aruba in particular, leaving both 95% devastated. Jose is up next …
  • ECB – rates remained unchanged, with the ECB somewhat coy about the process of ending QE, respectively shifting toward normalization in terms of what “communication” / respectively changes to the current framework are required if any BEFORE altering its current modus operandi
  • Toronto Housing Market – August’s data provided further evidence of the significant shift in sentiment (and price momentum…) that has taken place since the relatively recent Mar/Apr peaks…
  • Oil – Disruption from Hurricane season – heightened volatility in both crude and gasoline …

Latest market numbers as seen through ETFs providing exposure to the most commonly referred to benchmarks:

ticker name change ticker name change ticker name change
XIU S&P/TSX 60 -1.21% PXG RAFI Global Fundamental -1.62% VCN FTSE Canada All Cap Index ETF -1.30%
XIC S&P/TSX Capped Composite -1.28% PXS RAFI US Fundamental Index -2.65% VCE FTSE Canada Index ETF -1.40%
CRQ RAFI CDN Fundamental -1.75% QQC/F NASDAQ 100 CAD Hedged -1.31% VUN CRSP US Total Market Index Unhedged -2.59%
XSP S&P 500 CAD Hedged -0.53% PZC RAFI CDN Small-Mid Fundam 1.79% VSP S&P 500 CAD Hedged -0.59%
XUS S&P500 -2.50% VXC FTSE All-World Ex Canada Index ETF -2.07%
XMU MSCI Min Vol US -1.61% XXM/b Morningstar US Value (Unh) -4.19% VEF FTSE Developed ex North-Am CAD H -0.84%
CLU RAFI US Fund 1000 CAD H -0.93% YXM/b Morningstar US Momentum (Unh) -2.16% VDU FTSE Developed ex North-America -1.24%
XSU Russell 2000 CAD Hedged -0.96% FXM Morningstar CDN Value -1.23% VE FTSE Developed Europe -0.72%
XIN MSCI EAFE CAD Hedged -0.87% WXM Morningstar CDN Momentum -1.23% VA FTSE Developed Asia Pacific -1.83%
XEH MSCI Europe IMI CAD H -0.75% VXM/b Morningstar Intl Value (Unh) -2.11% VEE FTSE Emerging Mkts -2.20%
XEC MSCI EM IMI -2.36% ZXM/b Morningstar Intl Momentum (Unh) -1.48% HAZ Active Global Dividends -1.99%
XMM MSCI Min Vol Emerging -2.51% RWE MSCI Europe Low Risk Weighted (H) -0.23% HHF Morningstar Hedge Fund Index -0.28%
CWO RAFI Broad Emerging -3.25% HMF Auspice Managed Futures -1.66%
CJP RAFI Fundam Japan CAD H -1.29% ZDJ Dow Jones CAD Hedged -1.04% HAC Seasonal Rotation 0.21%
CDZ CDN Div Aristocrats -1.01% ZEQ MSCI Europe High Quality CAD H -0.13% HPR Active Preferred Shares 0.54%
week of: Sept 1-8, 2017 OVERALL Source: ETFinsight/Bloomberg

Respectively through available “FACTORS” (Smart or Strategic Beta) ETFs:

ticker name change ticker name change
RAFI: Value: Yield:
CRQ RAFI CDN Fundamental -1.75% VXM/b Morningstar Intl Value (Unh) -2.11% CDZ iShares S&P/TSX Canadian Dividend Aristocrats Index ETF -1.01%
CLU RAFI US Fund 1000 CAD H -0.93% XXM/b Morningstar US Value (Unh) -4.19% XHU iShares US High Dividend Equity Index ETF -2.66%
CJP RAFI Fundam Japan CAD H -1.29% FXM Morningstar CDN Value -1.23% VGG Vanguard US Dividend Appreciation Index ETF -1.94%
CWO RAFI Broad Emerging -3.25% XCV iShares Canadian Value Index ETF -1.57% CUD iShares US Dividend Growers Index ETF CAD-Hedged -0.08%
PXG RAFI Global Fundamental -1.62% VVL Vanguard Global Value Factor Etf -3.19%
PZC RAFI CDN Small-Mid Fundam 1.79% Momentum:
YXM/b Morningstar US Momentum (Unh) -2.16%
Min Vol: ZXM/b Morningstar Intl Momentum (Unh) -1.48%
VVO Vanguard Global Minimum Volatility Etf -0.55% WXM Morningstar CDN Momentum -1.23% Multi-Factors:
XMW MSCI Min Vol World -1.61% VMO Vanguard Global Momentum Factor Etf -2.57% XFC iShares Edge MSCI Multifactor Canada Index ETF -1.72%
XMI MSCI Min Vol EAFE -1.01% Liquidity: XFS iShares Edge MSCI Multifactor USA Index ETF -2.53%
XMM MSCI Min Vol Emerging -2.51% VLQ Vanguard Global Liquidity Factor Etf -1.86% XFI iShares Edge MSCI Multifactor EAFE Index ETF -1.37%
XMU MSCI Min Vol US -1.61% Quality: Low Risk Weighted:
XMV MSCI Min Vol Canada -1.05% ZEQ BMO MSCI Europe High Quality Hedged To CAD Index ETF -0.13% RWE First Asset MSCI Europe Low Risk Weighted ETF -0.23%
week of: Sept 1-8, 2017 FACTORS / SMART BETA / STRATEGIC BETA Source: ETFinsight/Bloomberg

Factors, Factors, and more Factors –  including Multi Factors, and Single Factors on a Global basis.

Active, you say? – See below, which captures weekly performance for ETFs managed by Strategists, or wraps incorporating several ETFs into one to solve for Conservative, Balanced, or Growth objectives:

ticker name change ticker name change ticker name change
HGM Horizons Managed Global Opportunities ETF -1.32%
EXGG #N/A #N/A HAC Horizons Seasonal Rotation ETF 0.21%
EXGB #N/A #N/A HRA Horizons Global Risk Parity ETF 0.79%
HHF Horizons Morningstar Hedge Fund Index ETF -0.28%
DWG PowerShares DWA Global Momentum Index ETF -2.93%
HMA #N/A #N/A
XTR iShares Diversified Monthly Income ETF -0.71% XGR iShares Growth Core Portfolio Builder Fund -0.46%
FIE iShares Canadian Financial Monthly Income ETF -1.40% XCR iShares Conservative Core Portfolio Builder Fund -0.47%
ZMI BMO Monthly Income ETF -0.69% XGC iShares Global Completion Portfolio Builder Fund -0.53%
CBD iShares Balanced Income CorePortfolio Index ETF -0.83% FUT First Asset US Tactical Sector Allocation Index ETF -0.36%
ETP First Trust Global Risk Managed Income Index ETF -0.57% PRP #N/A #N/A
CBN iShares Balanced Growth CorePortfolio Index ETF -1.44%
XAL iShares Alternatives Completion Portfolio Builder Fund -0.42%
week of: Sept 1-8, 2017 ETF Strategists & ETFs of ETFs Source: ETFinsight/Bloomberg

Brought to you by: 

iShares: Boivin: What low Volatility is and isn’t telling us => click HERE!

Vanguard: Kinniry: How clients view advisors => click HERE!

Sunlife: Is – effectively – backing into the ETF space via its Excel Funds deal => click HERE! What does this mean? I’d expect to see a) flows moving into EXGB and EXGG on the one hand, and in the not too distant future, b) a full fledged effort on the part of Sunlife to make its own push into the ETF space, presumably with launch of variety of ETFs – some of which … most likely of Smart Beta or even Active persuasion…

BMO ETFs: Files for several new ETFs – heading into the Value space (broadening Smart Beta offering beyond Quality and Low Vol), via MSCI based EAFE, US, and Canada Value ETFs.

Reminder: Mid-September is when 5 BMO ETFs migrate to different reference benchmarks => Click HERE!

Horizons ETFs: Better disclosure for ETFs => Click HERE!

First Asset – Rough week for value relative to momentum in the US … (More value now available?) other: Recently launched Covered Call Tech Giants (Unhedged) => click HERE!

Other:

ETFinsight – Perspectives September 2017: Seasonal Glitch?

Weekly Volumes History to September 8, 2017

etfinsight volumes week ending september 8, 2017

Top and Bottom performing ETFs for the week of Sept 4-8, 2017:

Ticker Name % Change Avg Price Weekly Volume $ Volume traded
Top Performers week of Sept 4-8, 2017
HUV CN Equity BetaPro S&P 500 VIX Short-Term Futures ETF 5.05% $8.38 114,775 $973,069
CCX CN Equity Auspice Canadian Crude Oil Index ETF 3.49% $8.68 27,939 $241,122
SVR CN Equity iShares Silver Bullion ETF 1.74% $9.86 59,552 $587,756
HGY CN Equity Horizons Gold Yield ETF 1.72% $5.30 53,067 $280,425
CGL CN Equity iShares Gold Bullion ETF 1.48% $11.63 1,480,307 $17,203,479
HUG CN Equity Horizons Gold ETF 1.47% $12.34 64,037 $792,100
ZJG CN Equity BMO Junior Gold Index ETF 1.45% $9.82 423,147 $4,149,722
XBZ CN Equity iShares MSCI Brazil Index ETF 1.44% $14.06 68,929 $970,897
HHL CN Equity Healthcare Leaders Income ETF 1.40% $8.62 368,886 $3,185,695
ZUH CN Equity BMO Equal Weight US Health Care Hedged to CAD Index ETF 1.08% $48.16 337,329 $16,258,515
Bottom Performers
CWO CN Equity iShares Emerging Markets Fundamental Index ETF -3.25% $35.68 13,933 $499,544
FHB CN Equity First Asset European Bank ETF -3.37% $8.98 45,185 $408,258
ZJO CN Equity BMO Junior Oil Index ETF -3.56% $10.89 53,755 $588,437
FLI CN Equity First Asset U.S. & Canada Lifeco Income ETF -4.08% $12.17 93,372 $1,134,735
ZUB CN Equity BMO Equal Weight US Banks Hedged to CAD Index ETF -4.17% $24.96 1,139,539 $28,433,855
XXM/B CN Equity First Asset Morningstar US Value Index ETF -4.19% $15.16 73,156 $1,104,352
FHF CN Equity First Trust AlphaDEX US Financial Sector Index ETF -4.32% $24.91 20,330 $509,013
ZMT CN Equity BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF -5.67% $11.71 378,942 $4,365,095
XBM CN Equity iShares S&P/TSX Global Base Metals Index ETF -6.05% $13.02 179,401 $2,330,957
ZBK CN Equity BMO Equal Weight US Banks Index ETF -6.18% $21.62 1,397,648 $30,439,708

Top Performing ETFs – Nothing speaking to strong sense of direction – as volatility continues on being elevated (relative to – granted – extremely depressed levels …) and combo of oil and precious metals / healthcare … In terms of US Banks – FED actions this month could trigger strong price action… will it be to the positive? Or is recent price action essentially a precursor to the FEDs having to walk back their tightening, respectively normalization efforts to a degree?

Bottom Performing ETFs – Cyclical “angle” taking a hit (Irma? Korea?) in terms of Financials (Banks) and Base Metals … Noteworthy is that the magnitude of the hit in % terms certainly more noticeable than on the “gainers” front … Buy the dip? Amass cash?

Last week’s Sector Performance:

etfinsight weekly sector performance september 8, 2017

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