Tag: Exchange Traded Funds

Bitcoin, AI and Magnificent 7: The emerging ETF trends as industry gathers for big conference

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Over two thousand attendees are descending on the Fontainebleau Hotel in Miami Beach for the annual Exchange ETF conference. To entice participants, the organizers rented out the entire LIV Nightclub Miami at the hotel for a Super Bowl party Sunday night.

While much of the conference is an excuse to party among the ETF industry reps and the Registered Investment Advisors  (RIAs) that are the main attendees, the industry needs a lot of advice.

The Good news: still lots of money coming in, but the industry is maturing

The ETF juggernaut continues to rake in money, now with north of $8 trillion in assets under management.  Indexing/passive investing, the main impetus behind ETFs 30 years ago, continues to bring in new adherents as smarter investors, including the younger ones that have begun investing since the pandemic, come to understand the difficulty of outperforming the market.

The bad news is much of the easy money has already been made as the industry is now reaching middle aged. Just about every type of index fund that can be thought of is already in existence. 

To grow, the ETF industry has to expand the offerings of active management and devise new ways to entice investors.  

Actively managed strategies did well in 2023, accounting for about a quarter of all inflows.  Covered call strategies like the JPMorgan Equity Premium Income ETF (JEPI), which offered protection during a downturn, raked in money.  But with the broad markets hitting new highs, it’s not clear if investors will continue to pour money into covered call strategies that, by definition, underperform in rising markets.

Fortunately, the industry has proven very skilled at capturing whatever investing zeitgeist is in the air.  That can range from the silly (pot ETFs when there was no real pot industry) to ideas that have had some real staying power.

Six or seven years ago, it was thematic tech ETFs like cybersecurity or electric vehicles that pulled in investors. 

The big topics in 2024:  Bitcoin, AI, Magnificent 7 alternatives

In 2024, the industry is betting that the new crop of bitcoin ETFs will pull in billions.  Bitcoin for grandma?  We’ll see.

Besides bitcoin, the big topics here in Miami Beach are 1) A.I/ and what it’s going to do for financial advisors and investors, and 2) how to get clients to think about equity allocation beyond the Magnificent 7.

Notably absent is China investing.

Bitcoin for grandma?  Financial advisors are divided on whether to jump in

Ten spot bitcoin ETFs have successfully launched.  The heads of three of those, Matt Hougan, chief investment officer at Bitwise, Steve Kurz, global head of asset management at Galaxy and David LaValle, global head of ETFs at Grayscale, will lead a panel offering advice to financial advisors, who seem divided on how to proceed.

Ric Edelman, the founder of Edelman Financial Engines, the #1 RIA in the country and currently the head of the Digital Assets Council of Financial Professionals (DACFP), will also be present. 

Edelman has long been a bitcoin bull. He recently estimates bitcoin’s price will reach $150,000 within two years (about three times its current price), and has estimated that Independent RIAs, who collectively manage $8 trillion, could invest 2.5% of their assets under management in crypto in the next two to three years, which would translate into over $154 billion.

Inflows into bitcoin ETFs to date have been modest, but bitcoin ETFs are being viewed by some advisors as the first true bridge between traditional finance and the crypto community. 

But many advisors are torn about recommending them, not just because of the large number of competing products, but because of the legal minefields that still exist around bitcoin, specifically around SEC Chair Gary Gensler’s warning that any financial advisor recommending bitcoin would have to be mindful of “suitability” requirements for clients.

For many, those suitability requirements, along with the high volatility, continuing charges of manipulation, and the doubt about bitcoin as a true asset class will be enough to keep them away. 

The bitcoin ecosystem is in going into overdrive to convince the RIA community otherwise.

 Artificial intelligence: What can it do for the investing community?

Thematic tech investing (cybersecurity, robotics, cloud computing, electric vehicles, social media, etc.) has waxed and waned in the last decade, but there is no doubt Artificial Intelligence ETFs (IRBT, ROBT, BOTZ)  has recaptured some interest.  The problem is defining what an AI investment looks like and which companies are exposed to AI.

But the impact is already being felt by the financial advisory community.

Jason Pereira, senior partner & financial Planner, Woodgate Financial, is speaking on how financial advisors are using artificial intelligence.  There are amazing AI tools that financial advisors can now use.  Pereira describes how it is now possible to generate financial podcasts with just snippets of your own voice.  Just plug in a text, and it can generate a whole podcast without ever saying the actual words.  How to generate text?  In theory, you could go to Chat GPT and say, for example, “Write 500 words about current issues in 401(k)s,” and rewrite it slightly for a specific audience.

In a world where a million people can now generate a podcast on financial advice, how do you maintain value?  Much of the lower skilled tasks (data analysis) will quickly become commodified, but Pereira believes a very big difference will quickly emerge between volume and quality.

Equity Allocation Beyond the Magnificent Seven

Financial advisors are beset by clients urging them to throw money at the Magnificent 7.  Roundhill’s new Magnificent 7 ETF (MAGS) has pulled in big money in the last few months, now north of $100 million in assets under management.

Since the end of last year, there have been enormous inflows into technology ETFs (Apple, Microsoft, NVIDIA), and modest inflows into communications (Meta and Alphabet) and consumer discretionary (Amazon).  Most everything else has languished, with particular outflows in energy, health care, and materials. 

Advisors are eager for advice on how to talk to clients about the concentration risks involved in investing solely in big-cap tech and how to allocate for the long haul. 

Alex Zweber, managing director investment strategy at Parametric and Eric Veiel, head of global investments and CIO at T. Rowe Price are leading a panel on alternative approaches that have had some success recently, including ETFs that invest in option overlays, but also on quality and momentum investing in general, which overlaps but is broader than simply investing in the Magnificent 7.

Stop talking about numbers and returns and start offering “human-centric” advice

Talk to any financial advisor for more than a few minutes, and they will likely tell you how difficult it is dealing with some clients who are convinced they should put all their money into NVIDIA, or Bolivian tin mines, or who have investing ADHD and want to throw all their money in one investment one day, then pull it out the next.

Brian Portnoy and Neil Bage, co-founders of Shaping Wealth, are leading one of the early panels on how financial advisors can move away from an emphasis on numbers and more toward engaging with their clients on a more personal and emotional level.

Sounds touchy-feely, but competition for clients has become intense, and there is a new field emerging on how to provide financial advice that is less centered on numbers (assets under management, fees, quarterly statements), and more centered on developing the investor’s understanding of behavioral finance and emotional intelligence. 

Under this style of investment advice, often called “human-centric” or “human-first” advice, more time may be spent discussing behavioral biases that lead to investing mistakes than on stock market minutiae. This may help the clients develop behaviors that, for example, are better suited to longer term investing (less trading, less market timing).  

Advocates of this approach believe this is a much better way to engage and keep clients for the long term.

What’s missing? China

For years, a panel on international investing, and specifically emerging markets/China investing, was a staple at ETF conferences.

Not anymore.  Notably absent is any discussion of international investing, but particularly China, where political risk is now perceived to be so high that investors are fleeing China and China ETFs. 

Indeed, investing “ex-China” is a bit of a thing.

The iShares Emerging Markets ex-China ETF (EMXC) launched with little fanfare in 2017 and had almost no assets under management for several years.  That changed in late 2022, when China ETFs began a long slow descent, and inflows exploded into EMXC from investors who still wanted emerging market exposure, just not to China.

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These ETF strategies won big in 2023. How one analyst sees them doing next year.

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Hello! This is MarketWatch reporter Isabel Wang bringing you this week’s ETF Wrap. In this week’s edition, we look at ETF strategies that have exploded in popularity in 2023, and whether they will continue to gain momentum in the year ahead.

Please send tips or feedback to [email protected] or to [email protected]. You can also follow me on X at @Isabelxwang and find Christine at @CIdzelis.

Sign up here for our weekly ETF Wrap.

U.S. exchange-traded funds have had a strong 2023, attracting around $580 billion in net inflows with assets climbing to a record $8.1 trillion as of December 27, according to FactSet data.

ETFs tracking the large-cap benchmark S&P 500 index
SPX,
which has risen 24.6% this year, have seen the strongest net inflows in 2023 among the nearly 700 funds MarketWatch tracks, according to FactSet data.

The SPDR S&P 500 ETF Trust
SPY,
the world’s largest and oldest ETF with $493 billion assets under management, has recorded the largest net inflows of over $47 billion this year to date, followed by the Vanguard S&P 500 ETF’s
VOO
$41 billion and the iShares Core S&P 500 ETF’s
IVV
$36 billion over the same period, according to FactSet data. 

In terms of year-to-date performance, technology-related stock funds have shown a remarkable turnaround in 2023 after facing a tumultuous bear market the year before. Some of the ETFs tracking the tech-heavy Nasdaq 100 index
NDX
as well as semiconductor stocks are on pace to finish 2023 with gains of more than 50%, thanks to the rise of the “Magnificent Seven” stocks.

The Fidelity Blue-Chip Growth ETF
FBCG
has jumped 58.7% in 2023 to become the best-performing U.S. fund, excluding ETNs and leveraged products, according to FactSet data. The WisdomTree U.S. Quality Growth Fund
QGRW
is up 56.2% this year, while the Invesco QQQ Trust Series I
QQQ
has risen 55.6% in 2023. Gains in all of these funds were fueled by a massive rally in mega-cap technology stocks such as Apple Inc.
AAPL,
+0.22%
and Nvidia Corp.
NVDA,
+0.21%,
which have surged 49% and 239% this year, respectively, according to FactSet data. 

Will these ETF strategies continue to thrive in 2024? Will others emerge to deliver greater returns next year? Here’s how one CFRA ETF analyst sees things shaping up in the new year. 

Tech-driven growth ETFs will continue to stand out in 2024

The recent strong performance of technology and growth-driven ETFs is likely to continue in 2024, although with higher volatility, according to Aniket Ullal, senior vice president and head of ETF data and analytics at CFRA. 

The table below summarizes the best performing ETF sub-categories in 2023, excluding leveraged and inverse ETFs. The best ETF sectors have featured tech- and growth-related themes like fintech, cryptocurrency, semiconductors, software and the metaverse. “These themes are very likely to continue to have a strong year in 2024,” said Ullal.

SOURCE: CFRA ETF DATABASE, DATA AS OF DECEMBER 18, 2023

One concern for investors is whether ETFs linked to technology sectors can continue to appreciate in 2024. But CFRA’s analysts think that some of the largest tech firms have strong balance sheets and cash flows, so they should be “safe havens” with “a growth tilt” next year.

“Despite the AI-driven recent run-up, the tech sector is still growing into its multiple, and ETFs like the Technology Select Sector SPDR Fund
XLK
do not yet have frothy multiples,” Ullal said in a Friday client note. 

See: ‘Magnificent Seven’ up for another bull run? What to expect from technology stocks in 2024.

Meanwhile, the massive amounts of cash parked at U.S. money-market funds could also keep the bull-market rally chugging along next year.

As of December 20, there was still $5.9 trillion sitting in U.S. money-market funds, according to data compiled by the Investment Company Institute. But given the stock-market rally in 2023 and the “likely pivot” to interest-rate cuts next year by the Federal Reserve, Ullal and his team see investors moving money out of cash-like instruments and migrating back to 60/40 portfolios by increasing their equity exposure next year, he wrote. 

Continued growth in options-based ETFs

ETFs using options-based strategies, such as covered-call ETFs or defined-outcome ETFs, have exploded in popularity in 2023. They have “long-term staying power” in sustaining investor interest in the year ahead, said Ullal. 

Specifically, the largest U.S. covered-call ETF, the $31 billion JPMorgan Equity Premium Income ETF
JEPI,
has seen $13 billion in net inflows so far this year and is among the top-five funds attracting the most capital in 2023, according to FactSet data.

A covered-call ETF, or an option-income ETF, is a fund that uses an options strategy called covered-call writing to generate income through collecting premiums. In a covered-call trade, investors sell a call option on an asset they hold, which gives the buyer of the option the right, not the obligation, to purchase the asset from them at a specified “strike” price on or before a certain date.

When the price of the asset goes down and doesn’t reach the “strike” price before the expiration date, the call option will expire as buyers walk away, but investors could still keep the premium as their payout.

That’s why the covered-call strategy usually performs well in a sideways or choppy market environment, because investors will be compensated for giving up the upside in stocks with a higher options premium. 

More on covered-call ETF: This type of ETF is designed to hedge against volatility and help investors navigate a stormy stock market

Ullal attributed the growing popularity of options-based ETFs to the success of JEPI as well as ETF firms relentlessly expanding their covered-call and buffer-ETF suites in 2023, even though these strategies tend to underperform in a rapidly rising stock market. 

“The flows are probably moderate [in 2024] relative to what we’ve seen so far, but I don’t think the flows will be negative or this category will go away,” Ullal said in a follow-up interview with MarketWatch on Thursday. “What’s happening is there are investors who are willing to trade off or sacrifice some [stock] performance for income or downside protection.” 

With that backdrop, Ullal sees options-based ETF strategies continuing to grow in 2024, though they will be put to the test if the current bull-market trend continues. 

Also see: An ETF that can’t go down? This new ‘buffer’ fund is designed to provide 100% protection against stock-market losses

Emerging-markets ETFs without China-related drag

ETF investors may want to “unbundle” their emerging-market exposure by reconsidering China-related assets in their ETF portfolios, according to Ullal.

Having a high exposure to China in emerging-market holdings was challenging for ETF investors in 2023, as China significantly underperformed other emerging markets this year due to a slower-than-anticipated post-Covid economic recovery, weakness in the country’s property sector and geopolitical tensions with the U.S., Ullal said.

China exposure in two of the most popular emerging-market ETFs, the Vanguard FTSE Emerging Markets ETF
VWO
and the iShares Core MSCI Emerging Markets ETF
IEMG,
stands at 31% and 24.4%, respectively, according to FactSet data. In turn, VWO has risen 8.3% this year, while IEMG has climbed 10.7% in 2023.

Meanwhile, the SPDR S&P China ETF
GXC
has slumped 12.8% year to date, per FactSet data. But the iShares MSCI Emerging Markets ex China ETF
EMXC,
which has no China exposure, has advanced 18.9% over the same period.

One option for investors would be to calibrate their exposure by combining emerging-market ex-China ETFs like EMXC with China-focused ETFs, Ullal said.

Alternatively, investors could construct the EM sleeve of their portfolios with country-specific ETFs, or use active ETFs like the KraneShares Dynamic Emerging Markets Strategy ETF
KEM,
as that fund’s China exposure is dynamically adjusted based on fundamental, valuation, and technical signals, he added.

Rising demand and competition in active bond ETF category 

The U.S. fixed-income ETF sector is dominated by funds passively tracking Treasury bonds like the 10-year Treasury note
BX:TMUBMUSD10Y,
which has seen declining yields lately as discussions around the Fed’s interest-rate path, and a possible pivot to rate cuts, continue to take center stage heading into 2024.

But MarketWatch reported last week that demand for active bond ETFs has picked up, with Vanguard launching two new active bond funds earlier this month. The desire for active bond ETFs among the firm’s clients has grown significantly over the past two years, John Croke, Vanguard’s head of active fixed-income product management, told MarketWatch.

Meanwhile, the firms that dominate the indexed and active bond ETF categories are different, Ullal noted. In the indexed bond ETF category, Vanguard competes with traditional rivals BlackRock and State Street, while in the active bond ETF category where it is now expanding its footprint, Vanguard is competing with managers like JPMorgan, First Trust and PIMCO. 

“This competition will put pressure on the incumbent players, but will be good for investors, and will be an important trend to watch in the next year,” said Ullal.

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good…

Top Performers

 %Performance
AdvisorShares Pure U.S. Cannabis ETF
MSOS 		12.7
Amplify Transformational Data Sharing ETF
BLOK 		10.5
SPDR S&P Biotech ETF
XBI 		9.9
ARK Genomic Revolution ETF
ARKG 		8.3
ARK Innovation ETF
ARKK 		6.4
Source: FactSet data through Wednesday, Dec 27. Start date Dec 21. Excludes ETNs and leveraged products. Includes NYSE-, Nasdaq- and Cboe-traded ETFs of $500 million or greater.

…and the bad

Bottom Performers

 %Performance
iMGP DBi Managed Futures Strategy ETF
DBMF 		-2.9
Vanguard Total International Bond ETF
BNDX 		-2.2
iShares 20+ Year Treasury Bond BuyWrite Strategy ETF
TLTW 		-2.1
VanEck BDC Income ETF
BIZD 		-1.2
Vanguard Short-Term Inflation-Protected Securities ETF
VTIP 		-1.2
Source: FactSet data

New ETFs

  • TCW Group filed to convert its TCW Artificial Intelligence Equity Fund TGFTX into the TCW Artificial Intelligence ETF, and is seeking to convert its TCW New America Premier Equities Fund TGUSX into the TCW Compounders ETF, according to the fund’s prospectus filed with the Securities and Exchange Commission on Tuesday.

Weekly ETF Reads



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Friday’s S&P 500 and Nasdaq-100 rebalance may reflect concerns over concentration risk

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It’s arguably the biggest stock story of 2023: a small number of giant technology companies now make up a very large part of big indexes like the S&P 500 and the Nasdaq-100. 

Five companies (Apple, Microsoft, Amazon, Nvidia and Alphabet) make up about 25% of the S&P 500. Six companies (Apple, Microsoft, Amazon, Nvidia, Alphabet and Broadcom) make up about 40% of the Nasdaq-100. 

The S&P 500 and the Nasdaq are rebalancing their respective indexes this Friday. While this is a routine event, some of the changes may reflect the concerns over concentration risk. 

A ton of money is pegged to a few indexes 

Now that the CPI and the Fed meeting are out of the way, these rebalances are the last major “liquidity events” of the year, corresponding with another notable trading event: triple witching, or the quarterly expiration of stock options, index options and index futures. 

This is an opportunity for the trading community to move large blocks of stock for the last gasps of tax loss harvesting or to position for the new year. Trading volume will typically drop 30%-40% in the final two weeks of the year after triple witching, with only the final trading day showing significant volume.

All of this might appear of only academic interest, but the big move to passive index investing in the past 20 years has made these events more important to investors. 

When these indexes are adjusted, either because of additions or deletions, or because share counts change, or because the weightings are changed to reduce the influence of the largest companies, it means a lot of money moves in and out of mutual funds and ETFs that are directly or indirectly tied to the indexes. 

Standard & Poor’s estimates that nearly $13 trillion is directly or indirectly indexed to the S&P 500. The three largest ETFs (SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF, and Vanguard S&P 500 ETF) are all directly indexed to the S&P 500 and collectively have nearly $1.2 trillion in assets under management. 

Linked to the Nasdaq-100 — the 100 largest nonfinancial companies listed on Nasdaq — the Invesco QQQ Trust (QQQ) is the fifth-largest ETF, with roughly $220 billion in assets under management. 

S&P 500: Apple and others will be for sale. Uber going in 

For the S&P 500, Standard & Poor’s will adjust the weighting of each stock to account for changes in share count. Share counts typically change because many companies have large buyback programs that reduce share count. 

This quarter, Apple, Alphabet, Comcast, Exxon Mobil, Visa and Marathon Petroleum will all see their share counts reduced, so funds indexed to the S&P will have to reduce their weighting. 

S&P 500: Companies with share count reduction

(% of share count reduction)

  • Apple        0.5%
  • Alphabet   1.3%
  • Comcast    2.4%
  • Exxon Mobil  1.0%
  • Visa                0.8%
  • Marathon Petroleum  2.6%

Source: S&P Global

Other companies (Nasdaq, EQT, and Amazon among them) will see their share counts increased, so funds indexed to the S&P 500 will have to increase their weighting. 

In addition, three companies are being added to the S&P 500: Uber, Jabil, and Builders FirstSource.  I wrote about the effect that being added to the S&P was having on Uber‘s stock price last week.  

Three other companies are being deleted and will go from the S&P 500 to the S&P SmallCap 600 index: Sealed Air, Alaska Air and SolarEdge Technologies. 

Nasdaq-100 changes: DoorDash, MongoDB, Splunk are in 

The Nasdaq-100 is rebalanced four times a year; however, the annual reconstitution, where stocks are added or deleted, happens only in December. 

Last Friday, Nasdaq announced that six companies would be added to the Nasdaq-100: CDW Corporation (CDW), Coca-Cola Europacific Partners (CCEP), DoorDash (DASH), MongoDB (MDB), Roper Technologies (ROP), and Splunk (SPLK). 

Six others will be deleted: Align Technology (ALGN), eBay (EBAY), Enphase Energy (ENPH), JD.com (JD), Lucid Group (LCID), and Zoom Video Communications (ZM).

Concentration risk: The rules

Under federal law, a diversified investment fund (mutual funds, exchange-traded funds), even if it just mimics an index like the S&P 500, has to satisfy certain diversification requirements. This includes requirements that: 1) no single issuer can account for more than 25% of the total assets of the portfolio, and 2) securities that represent more than 5% of the total assets cannot exceed 50% of the total portfolio. 

Most of the major indexes have similar requirements in their rules. 

For example, there are 11 S&P sector indexes that are the underlying indexes for widely traded ETFs such as the Technology Select SPDR ETF (XLK). The rules for these sector indexes are similar to the rules on diversification requirements for investment funds discussed above. For example, the S&P sector indexes say that a single stock cannot exceed 24% of the float-adjusted market capitalization of that sector index and that the sum of the companies with weights greater than 4.8% cannot exceed 50% of the total index weight. 

At the end of last week, three companies had weights greater than 4.8% in the Technology Select Sector (Microsoft at 23.5%, Apple at 22.8%, and Broadcom at 4.9%) and their combined market weight was 51.2%, so if those same prices hold at the close on Friday, there should be a small reduction in Apple and Microsoft in that index. 

S&P will announce if there are changes in the sector indexes after the close on Friday. 

The Nasdaq-100 also uses a “modified” market-capitalization weighting scheme, which can constrain the size of the weighting for any given stock to address overconcentration risk. This rebalancing may reduce the weighting in some of the largest stocks, including Apple, Microsoft, Amazon, Nvidia and Alphabet. 

The move up in these large tech stocks was so rapid in the first half of the year that Nasdaq took the unusual step of initiating a special rebalance in the Nasdaq-100 in July to address the overconcentration of the biggest names. As a result, Microsoft, Apple, Nvidia, Amazon and Tesla all saw their weightings reduced. 

Market concentration is nothing new

Whether the rules around market concentration should be tightened is open for debate, but the issue has been around for decades.

For example, Phil Mackintosh and Robert Jankiewicz from Nasdaq recently noted that the weight of the five largest companies in the S&P 500 was also around 25% back in the 1970s.

Disclosure: Comcast is the corporate parent of NBCUniversal and CNBC.

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Here’s where ETF investors could turn to hide as Treasurys sell-off upends U.S. stocks

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Hello! This is MarketWatch reporter Isabel Wang bringing you this week’s ETF Wrap. In this week’s edition, we look at how ETF investors can navigate the choppy financial markets which remain on edge after a sell-off in U.S. government bonds drove long-term borrowing costs to the highest level in more than a decade, undercutting stock prices.

Sign up here for our weekly ETF Wrap.

A renewed rout in the U.S. government bond markets that sent the yield on the 10-year Treasury bond to 16-year highs as a new era of higher-for-longer interest rates takes hold, is leaving ETF investors scrambling for the exits on a wide range of exchange-traded funds in the past week, most notably the iShares 20+ Year Treasury Bond ETF
TLT.
 

TLT, one of the most popular fixed-income ETFs that tracks a market-weighted index of the U.S. Treasury bonds with maturities of 20 years or more, earlier this week suffered its lowest close since the early days of the 2007-2009 financial crisis. The yield on the 10-year Treasury 
BX:TMUBMUSD10Y
slipped 2 basis points to 4.715% on Thursday, after reaching 4.801% on Tuesday, its highest closing level since Aug. 8, 2007, according to Dow Jones Market Data.

See: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

The bond market, particularly the U.S. Treasury market, has historically been less volatile and and has often performed better than other financial assets during economic slowdowns. However, that doesn’t mean bonds don’t come without their own risks.

Rising yields reflect a diminishing price for the securities when interest rates rise, and hit existing holders of Treasuries.

See: Rising Treasury yields are upsetting financial markets. Here’s why.

The surprising strength of the U.S. economy, as demonstrated by this week’s labor-market data, coupled with hawkish talk from Federal Reserve officials indicating the central bank may need to keep tightening monetary policy, have led to the bond sell-off this week.

Meanwhile, a positive Treasury term premium, or the compensation that investors require for the risk of holding a Treasury to maturity, have also contributed to a steep sell-off as a ballooning U.S. budget deficit and the Treasury’s need to issue more debt have pushed Treasury prices to 16-year lows.

TLT
TLT
has fallen over 50% since its peak in August 2020, according to FactSet data. The losses are “pretty much” what the equity-market loss was from peak to trough during the global financial crisis, said Tim Urbanowicz, head of research and investment strategy at Innovator ETFs. 

“It is not insignificant… It really makes you think about how you’re doing risk management because you can’t have the piece of the portfolio that’s supposed to be the risk mitigator falling the worst we’ve ever seen in the equity-market fall. That’s a big issue,” Urbanowicz told MarketWatch. 

That’s why ETF investors have very few options when developing or adjusting their asset allocation play in the higher-for-longer rates environment, but there are still some shockproof assets for safety, according to ETF strategists. 

Ultra short-term bond funds 

ETF investors that still favor bonds can consider hiding in ultra short-term bond funds to avoid duration risk as the Fed may still need to raise interest rates to curb inflation by the end of 2023, said Neena Mishra, director of ETF research at Zacks Investment Research. 

The SPDR Bloomberg 1-3 Month T-Bill ETF
BIL,
which tracks all publicly issued U.S. Treasury Bills that have a remaining maturity of less than 3 months and at least 1 month, offers a yield of 5.43%. The fund attracted over $1 billion of inflows in the week to Wednesday, the largest inflows among over 800 ETFs that MarketWatch tracked in the past week, according to FactSet data. 

Meanwhile, Mishra said investors who want active management with “better navigation to the markets” can consider the JPMorgan Ultra-Short Income ETF
JPST,
which is an actively managed fund that invests in a variety of debts including corporate issues, asset-backed securities, and mortgage-related debt as well as U.S. government and agency debt. JPST recorded $15 million of inflows in the past week and has yielded 5.76%, according to FactSet data. 

Flows into longer duration bonds, utilities sector

Despite the bond rout hitting the popular TLT fund hard as the 10-year Treasury yield surged, some retail traders have already started to buy the historic dip of the fund devoted to longer-dated Treasuries, said a team of Vanda Research data analysts led by Marco Iachini, senior vice president.

TLT attracted a total of $686 million flows in the week to Wednesday, ranking the 8th out of over 800 ETFs that MarketWatch tracked in the past week, according to FactSet data. 

Along with the strong “dip buying” in TLT, retail traders have also poured an “unprecedented amount” of capital into the utilities sector, Iachini and his team said in a Thursday note. The Utilities Select Sector SPDR Fund
XLU
recorded $141 million of inflows last week, according to FactSet data. 

“While purchases of utilities stocks are typically of a significantly smaller scale than purchases of tech stocks, the inflow seen over the past week is far larger than any other prior 5-day stretch, easily surpassing inflows into the sector at the onset of the Covid downturn,” the Vanda team said. “The flip side of this dynamic is that institutional investors have likely lightened up their utilities exposure during this bond sell-off episode, making the sector a potentially more appealing equity bet should rates be nearing a local peak.” 

See: Utilities stocks ‘decimated’ by rising rates fall into uncommon trading territory, Bespoke chart shows

Small-caps are ‘cheap for a reason,’ so don’t buy them too soon

Many small-cap stocks have traded at a significant discount to their larger-company counterparts, creating an attractive entry point for some investors who think the forward price-earnings ratio for small-caps are low enough to offer potential for outperformance in the longer run. 

However, small caps
IWM
are by nature more sensitive to higher interest rates compared with a lot of the larger-cap stocks which have the ability to be “nimble” with strong cash flow, said Urbanowicz.

“It is really important right now not to just rely on a specific sector but really have that built-in risk management at the index level to take a lot of that guesswork out of the equation,” he added.

See: Small-cap ETFs may look attractive as recession concerns fade, but blindly chasing the rally is not without risk

Defined-outcome ETFs

That’s why Urbanowicz and his team at Innovator ETFs think the increasingly popular defined-outcome ETFs, or the “buffer” funds, could limit the downside risk and help investors navigate a stormy rates environment.

See: An ETF that can’t go down? This new ‘buffer’ fund is designed to provide 100% protection against stock-market losses

For example, the Innovator Equity Defined Protection ETF
TJUL,
the “first-of-its-kind” fund, aims to offer investors the upside return of the SPDR S&P 500 ETF Trust
SPY
to a 16.62% cap, as well as a complete buffer against its downside over a two-year outcome period. 

Meanwhile, the Innovator Defined Wealth Shield ETF
BALT
offers a 20% downside buffer on the SPY every three months, which is a “very shortened outcome period” and doesn’t require the equity market to actually go up for the strategy to appreciate a value, Urbanowicz said. 

“A big reason [to consider this strategy] is it gives investors a place to not only maintain equity exposure, but also to hide out because they [funds] have known levels of risk management that are in place,” he added. 

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good…

Top performers

 %Performance
YieldMax TSLA Option Income Strategy ETF
TSLY 		6.2
United States Natural Gas Fund LP
UNG 		2.0
Quadratic Interest Rate Volatility & Inflation Hedge ETF
IVOL 		1.6
Technology Select Sector SPDR Fund
XLK 		0.9
ProShares Bitcoin Strategy ETF
BITO 		0.9
Source: FactSet data through Wednesday, October 4. Start date September 28. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater.

…and the bad

Bottom performers

 %Performance
AdvisorShares Pure U.S. Cannabis ETF
MSOS 		-11.3
Sprott Uranium Miners ETF
URNM 		-10.6
Global X Uranium ETF
URA 		-10.2
VanEck Oil Services ETF
OIH 		-9.2
SPDR S&P Oil & Gas Exploration & Production ETF
XOP 		-9.1
Source: FactSet data

New ETFs

  • J.P. Morgan Asset Management Friday announced the launch of a new actively managed hedged equity ETF, JPMorgan Hedged Equity Laddered Overlay ETF
    HELO.
    The outcome-oriented ETF invests in U.S. large-cap equities with a laddered options overlay designed to provide downside hedging relative to traditional equity strategies.

  • Zacks Investment Management Tuesday announced the launch of the Zacks Small and Mid Cap ETF
    SMIZ,
    which seeks to generate positive risk-adjusted returns by investing in small and mid-cap companies.

  • Calamos Investments LLC Wednesday announced the launch of the Calamos Convertible Equity Alternative ETF
    CVRT,
     the first product of its kind to provide ETF investors with targeted access to equity-sensitive convertibles.

Weekly ETF Reads

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You can still run with the stock market’s bulls, but watch the exits

Post By Stock , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The stock market, as measured by the S&P 500 Index
SPX,
-0.64%
), has been moving upward. The U.S. benchmark index is essentially crawling up the higher “modified Bollinger Bands” (mBB), which is a bit of an overbought condition, but not a sell signal.

The next major resistance appears to be in the 4650 area, which at one time seemed far away but is now within range. There is minor support at 4527 (last week’s lows), with stronger support below that, at 4440, 4385, 4330 and 4200. Given the strong upward momentum of the market, a couple of those could be violated without giving the bull market any problem, but a fall below 4330 would be a game changer.

The S&P 500 has recently closed above the +4σ mBB, which sets up a “classic” sell signal. That “classic” signal was generated on Thursday when SPX closed below the +3σ Band — 4560. But we do not trade the “classic” signals, preferring to wait for the further confirmation of a McMillan Volatility Band (MVB) signal. Just because a “classic” sell signal has occurred does not mean that a MVB sell signal will automatically follow. We will keep you up to date on these developments weekly.

Equity-only put-call ratios have continued to edge lower as stocks have risen. This means that the put-call ratios are still on buy signals, but they are in deeply overbought territory because they are so low on their charts. The computer programs that we use to analyze these charts are once again warning of a sell signal, but we prefer to wait until we can visibly see the ratios begin to rise before taking on any negative position based on these ratios. Despite the fact that these ratios are at lows for the last year or so, it should be noted that they were much lower all during the 2021, as that bull market was pressing forward, and eventually gave way to a bear market.

Market breadth has been generally positive. Both breadth oscillators are on buy signals and are in overbought territory. They could withstand a day or two of negative breadth and still remain on those buy signals. Perhaps more importantly, cumulative volume breadth (CVB) is approaching what could be a major buy signal. If CVB makes a new all-time high, then SPX will follow. CVB is within just a small distance of its all-time high and could attain that today. Doing so would mean that an upside target of 4800+ would be in force for SPX.

New Highs on the NYSE continue to dominate New Lows, so this indicator remains strongly positive for stocks.

VIX
VIX,
+9.25%
is languishing between 13 and 14. As long as this continues, stocks can rise. The only time problems would surface would be if VIX spurted higher. So far, that hasn’t happened. It appears that “big money” still has some fear of this market, so they are buying SPX puts, keeping VIX a bit elevated. It should also be noted that VIX normally makes its annual low in July and begins to rise in August. So that is a potentially negative seasonal factor on the horizon.

The construct of volatility derivatives remains bullish for stocks, since the term structures of both the VIX futures and of the CBOE Volatility Indices continue to slope upwards.

Overall, we are maintaining our “core” bullish position because of the bullish SPX chart. We are raising trailing stops and rolling deeply in-the-money calls upward as we go along. Eventually, we will trade other confirmed signals around that “core” position.

New recommendation: Potential CVB buy signal

We made this recommendation last week and recommended using the cumulative total of daily NYSE advancing volume minus declining volume as a guide. That cumulative total did reach our projected value as of July 26. In reality, the “stocks only” CVB ended just shy of a new all-time high. We are going ahead with the recommendation, since the way that we stated it last week did generate the buy signal.

Buy 4 SPY Sept (29th) 480 calls: Since CVB reached a new all-time high, we are going to buy SPY
SPY,
-0.66%
calls with a striking price equal to SPY’s all-time high. We will hold without a stop initially.

New Recommendation: Emerging markets ETF (EEM)

There has been a high-level buy signal generated from the weighted put-call ratio for the Emerging Markets ETF
EEM,
-1.23%.
Put buying has been extremely strong for more than a month and is now is abating. This has generated the buy signal.

Buy 5 EEM Oct (20th) 41 calls in line with the market

We will hold these calls as long as the EEM weighted put-call ratio remains on a buy signal.

Follow-up action: 

We are using a “standard” rolling procedure for our SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread, or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed. 

Long 800 KOPN: 
KOPN,
-4.76%
The stop remains at 1.70.

Long 2 SPY Aug (4th) 453 calls: This is our “core” bullish position. The calls have been rolled up three times. Stop out of this trade if SPX closes below 4330. Roll up every time your long SPY option is at least 6 points in-the-money.

Long 1 SPY Aug (4th) 453 call: Bought in line with the “New Highs vs. New Lows” buy signal. The calls have been rolled up three times. Stop out of this trade if, on the NYSE, New Lows outnumber New Highs for two consecutive days. Roll up every time your long SPY option is at least 6 points in-the-money.

Long 2 PFG Aug (18th) 80 calls: This position has been was rolled up twice. We will hold this PFG
PFG,
-1.07%
position as long as the weighted put-call ratio remains on a buy signal.

Long 10 VTRS
VTRS,
-1.43%
August (18th) 10 calls: The stop remains at 10.15. 

Long 5 CCL
CCL,
+3.23%
Aug (18th) 17 calls: Raise the stop to 17.10.

Long 2 PRU
PRU,
-0.46%
Aug (18th) 87.5 calls: We will continue to hold these calls as long as the weighted put-call ratio remains on a buy signal.

Long 8 CRON
CRON,
-1.66%
Aug (18th) 2 calls: Hold these calls without a stop while takeover rumors play out.

Long 6 ORIC
ORIC,
-9.06%
Aug (18th) 7.5 calls: The stop remains at 7.40.

Long 2 EW
EW,
-9.78%
Aug (18th) 95 puts: Continue to hold these puts as long as the weighted put-call ratio remains on a sell signal.

All stops are mental closing stops unless otherwise noted.

Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of the best-selling book, Options as a Strategic Investment. www.optionstrategist.com

©McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory. 

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This once popular ETF used to hedge against inflation is now out of favor. What investors are doing now.

Post By Stock , , , , , , , , , , , , , , , , , , , , , , , ,

Hello! This is markets reporter Isabel Wang bringing you this week’s ETF Wrap. In this week’s edition, we take a look at inflation-protected bond ETFs. They saw significant outflows in the past week as U.S. consumer prices showed signs of moderating in April, though inflation pressures continued to squeeze Americans’ pocketbooks. 

Please send tips, or feedback, to [email protected] or to [email protected]. You can also follow me on Twitter at @Isabelxwang and find Christine at @CIdzelis.

Sign up here for our weekly ETF Wrap.

The iShares TIPS Bond ETF
TIP,
+0.22%,
which tracks an index of Treasury inflation-protected securities, or TIPS, has seen outflows of nearly $340 million over the past week. Outflows on Wednesday alone exceeded $100 million following the release of a widely followed inflation report, according to FactSet data. 

The U.S. Consumer Price Index report Wednesday showed inflation cooled to the lowest annual rate in two years, but it still remained about more than double the prepandemic average and well above the Federal Reserve’s 2% target rate. 

CPI rose 0.4% in April from the previous month, much faster than the 0.1% increase recorded in March. Prices climbed 4.9% on a year-over-year basis, down from 5% in March. Excluding volatile food and energy categories, the core CPI rose 0.4% monthly and 5.5% from a year ago, both in line with expectations.

Todd Rosenbluth, head of research at VettaFi, said the outflows indicate that investors are responding to inflationary data, and they continue to “be nervous about having exposure to TIPS products.” 

TIPS are a type of Treasury security issued by the U.S. government, which are indexed to inflation to protect investors from a decline in the purchasing power of their money. Unlike other Treasury securities where the principal is fixed, the principal value of a TIPS adjusts with movements in inflation. When it matures, investors get either the inflation-adjusted price or the original principal, whichever is greater. 

“Investors have been racing into TIPS ETFs in 2021 in anticipation of higher inflation, and then they’ve been paring back that exposure ever since,” Rosenbluth told MarketWatch in a phone interview on Thursday. 

“The CPI numbers that came out show that inflation is still here to stay in perhaps different ways than people had been expecting…Now I think there are some mixed signals as to whether or not there are more hikes to occur,” he said. 

Market participants hope that the lower-than-expected inflation data may leave room for the central bank to refrain from raising interest rates further at its June meeting. They also placed a 42% chance that policy makers would begin to trim borrowing costs at their July 25-26 meeting, according to CME FedWatch Tool. 

There is “certainly a risk” for investors who pulled their money out of the inflation-linked bond ETFs to overestimate the disinflationary process and position for the price pressures to fall back to prepandemic levels, warned Tim Urbanowicz, head of research and investment strategy at Innovator ETFs. 

“The risk to see additional hikes probably outweighs the probability that you’re going to see cuts this year,” said Urbanowicz. 

See: ‘The Fed is way late and they’ve already screwed it up.’ This stock strategist is banking on gold, silver and Treasurys to weather a recession.

The divergence between the Fed and the financial markets has driven investors to move back to fixed-income ETFs, especially ultra short-term bond funds. Avoiding interest-rate volatility has replaced inflation protection to be at the forefront of investors’ playbooks, said market strategists.

The SPDR Bloomberg 1-3 Month T-bill ETF
BIL,
+0.07%
has seen over $86 million of inflows in the week to Wednesday, while the inflows over the past three months totaled nearly $5.3 billion. The iShares 0-3 Month Treasury Bond ETF
SGOV,
+0.06%
has recorded a total of $3.9 billion inflows over the same three-month period, according to FactSet data. 

“There is a lot of gravitation towards yield products,” said Urbanowicz. “The flows that we’re seeing on the shorter end of the yield curve continue to be prominent. Also other yield enhancement strategies are becoming extremely popular…as a way to really generate extra income.”

“Inflation was a fear for investors in prior years, and then sentiment has shifted towards interest-rate hikes and interest-rate sensitivity,” said Rosenbluth. “Investors want to manage their interest-rate sensitivity, and in particular, still have a focus on Treasury ETFs given the debt-ceiling crisis, and given what’s going on with inflation.” 

Another example is BondBloxx Bloomberg One Year Target Duration U.S. Treasury ETF
XONE,
+0.04%,
which made its debut in September 2022. The fund has attracted over $514 million of inflows in the past week, and is among the top five ETFs that gathered maximum capital in the week to Wednesday, per FactSet data. 

“It’s rare to see an ETF that new get that level of demand,” said Rosenbluth. 

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good…

Top Performers

%Performance

Sprott Uranium Miners ETF
URNM,
-3.18% 		9.3
ARK Innovation ETF
ARKK,
+0.18% 		8.5
Global X Cybersecurity ETF
BUG,
-0.57% 		8.3
VanEck Rare Earth/Strategic Metals ETF
REMX,
+0.12% 		8.1
Global X Uranium ETF
URA,
-3.29% 		8.0
Source: FactSet data through Wednesday, May 10. Start date May 4. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater.

…and the bad

New ETFs

  • IndexIQ announced on Wednesday the launch of the IQ CBRE Real Assets ETF
    IQRA,
    -1.06%    ,
    an actively managed ETF across real estate and infrastructure equity securities, subadvised by CBRE Investment Management Listed Real Assets LLC.

  • PIMCO said Wednesday that it launched the PIMCO Commodity Strategy Active ETF, which invests in a range of commodity-linked instruments and seek out “diverse sources of excess returns” by incorporating multifactor considerations such as storage costs of physical commodities and historic performance trends.

  • J.P. Morgan Asset Management on Thursday announced the launch of two new ETFs: JPMorgan BetaBuilders Emerging Markets Equity ETF
    BBEM,

    and JPMorgan BetaBuilders U.S. TIPS 0-5 Year ETF
    BBIP,
    -0.16%    .
    BBEM seeks investment results that closely correspond to the performance of the Morningstar Emerging Markets Target Market Exposure Index SM, while BBIP tracks the performance of the ICE 0-5 Year U.S. Inflation-Linked Treasury Index.

Weekly ETF reads



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‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

Post By Oil and Gas , , , , , , , , , , ,

A man dressed in a thawb walks past Dassault Falcon executive jets, Dubai, United Arab Emirates

Leonid Faerberg | Sopa Images | Lightrocket | Getty Images

The organizers of the Investopia x Salt conference in Abu Dhabi — the brainchild of American financier and one-time White House press secretary Anthony Scaramucci and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum — expected to see 1,000 guests over its two-day event in early March. Instead, it got 2,500. 

“We’re a little overwhelmed, but it’s a great sign,” one of the organizers told CNBC. Some others were annoyed. “It’s too many people. Everyone is coming to the Gulf now begging for money. It’s embarrassing,” one Dubai-based fund manager said. Both sources declined to be named due to professional restrictions. 

That oil-rich Gulf states have a lot of money to spend isn’t new. The region’s 10 largest sovereign wealth funds combined manage nearly $4 trillion, according to the Sovereign Wealth Fund Institute. That’s more than the gross domestic product of France or the U.K. — and it doesn’t include private money.

But the influx of foreign institutional investors — and visible interest from venture capitalists and startup founders in advanced sectors like fintech, digital transformation and renewable energy technology — shows a level of sophistication that’s being noticed now more than ever, industry players say.

“Investment used to only flow from the Gulf outward. Now it’s going both ways; institutional investors are coming and investing here,” Marc Nassim, partner and managing director at Dubai-based investment bank Awad Capital, told CNBC.    

The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before.

Marc Nassim

Partner & Managing director, Awad Capital

“The Middle East feels more stable than Europe does right now,” Stephen Heller, founding partner at Germany-based AlphaQ Venture Capital, told CNBC. “Europe’s security issues, economic inequality are getting worse … meanwhile, the Gulf has its s— together.” Heller’s fund of funds, which invests in megatrends like climate technology, infrastructure, health and fintech, recently opened its first Middle Eastern office in Abu Dhabi.

“There’s an entrepreneurial energy in the UAE and Saudi Arabia today,” Heller said. “I see the potential because you have technically infinite capital, and if you have entrepreneurs coming here, you can have huge outcomes.”

Follow the capital

As oil prices made a roaring comeback in the last two years, the Gulf’s public wealth funds went on a spending spree. The top five regional funds in terms of spending in the last year — Abu Dhabi’s ADIA, ADQ and Mubadala, Saudi Arabia’s PIF and Qatar’s QIA — deployed a combined total of more than $73 billion in 2022 alone, according to sovereign wealth fund tracker Global SWF. 

Abu Dhabi city skyline, United Arab Emirates.

kasto80 | iStock | Getty Images

Meanwhile, the value of sovereign wealth funds’ assets globally dropped from $11.5 trillion to $10.6 trillion between 2021 and 2022, Global SWF reported, and those held by public pension funds also dropped amid a dramatic downturn in stock and bond markets.

“Five out of the ten most active investors hail from the Middle East,” and ADIA is currently the “world’s largest allocator to hedge funds,” Global SWF’s 2023 report wrote. It added that GCC sovereign wealth funds “played an important role in 2020 during the Covid-19 pandemic and now again in 2022 during times of financial distress.” 

So it’s an understatement to say that foreign demand is high. “A lot of places in the world are low on capital – Western institutional funds are kind of hamstrung. And this region has a lot of capital. Our phones are ringing off the hook,” one manager from a UAE investment fund said, declining to be named due to professional restrictions. 

No longer ‘dumb money’

But while many overseas companies have long seen the Gulf as a source of “dumb money,” some local investment managers said – referring to the stereotype of oil-rich sheikhdoms throwing cash at whoever wants it – investment from the region has become much more sophisticated, employing deeper due diligence and being more selective than in past years.

“The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before,” Awad Capital’s Nassim said. “They are much more diligent than before in terms of who they write the check to.” 

“Before it was much easier to come and say, ‘I’m a fund manager from San Francisco, please give me a couple million’. Now, not only are they more sophisticated but there are far more funds from all over the world – the U.S., Latin America, from Europe, Southeast Asia – coming here to raise capital. I think that a very small minority of them will be able to take money from the region – they are much more selective than before.”

A screen broadcasts Khaldoon Al Mubarak, chief executive officer of Mubadala Investment Co., during a session at the Future Investment Initiative (FII) conference in Riyadh, Saudi Arabia, on Tuesday, Oct. 25, 2022.

Tasneem Alsultan | Bloomberg | Getty Images

In the UAE in particular, liberalizing reforms, a much-praised handling of the Covid-19 pandemic and a willingness to do business with anyone — including countries like Israel and Russia – have enhanced its image to foreign investors. In Saudi Arabia, financiers are attracted to historic reforms and a massive growth market of nearly 40 million people, some 70% of whom are below the age of 34. 

The money from the GCC funds still overwhelmingly goes to developed markets, in particular the U.S. and Europe. Priority sectors include energy, renewables, climate technology, biotech, agri-tech and digital transformation, fund managers say. 

Like any commodity-related economic boom, however, fortunes are subject to change – it was not so long ago that the pandemic pushed oil prices to multi-decade lows, forcing Gulf governments to reign in spending and introduce new taxes. Saudi Arabia and the UAE in particular are investing heavily in diversification, with a view to the long term. 

“The music would stop if [the price of] oil goes down in a way that some SWFs are forced to use their reserves to help governments shore up their fiscal positions – very unlikely – or geopolitical risk” such as war or uprisings, Nassim said.

“If oil goes down, the surplus generated and which is usually allocated to the SWFs would obviously reduce, and that would force them to reduce their investments and limit them to assets that generate higher returns,” he added, though noted that not all SWFs have the same mandate when it comes to investment strategy.

For those companies seeking investment from the deep pockets of the Middle East, they are wise to do so while the music is playing.

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