Value and Equal Weight ETFs Had a Strong Six Weeks
Brian Gilmartin | Nov 17, 2022 01:33AM ET
Please excuse the excel spreadsheet, but it’s the easiest way for me to track the data and keep it logical.
Readers should note the recovery in “value” from 9/30/22. Those YTD returns as of last night had to be re-checked. It was surprising even as crude oil has been relatively flat.
Also surprising was the outperformance of “equal-weight” versus market-cap weight. To hedge the 2001 – 2002 type of market-risk, the RSP was added to client accounts in 2020 and 2021, managing the capital gains within taxable accounts, and by 12/31/21, RSP had made it into the top 10 client positions.
The RSP has done it’s job this year exactly as hoped. now waiting for the breakout in the Russell 2000 (IWM) and biotech has been like Waiting for Godot i.e. much talked about, but never seems to arrive.
Two data points to note:
- Looking at the middle section of the spreadsheet, i.e. the annualized returns, large-cap growth (the first line) is still out of whack in terms of above-average returns, with the rest of the large-cap value down through small-cap value asset classes. While large-cap growth, which is really dominated by mega-cap stocks, given their influence, large-cap growth could tread water for ’23, even as the other asset classes outperform.
- Note too the SP 500 (SPY) versus the RSP and the QQQs versus the ares QQQE: while the SPY improved it’s YTD return 8.8% from 9/30 to 10/15, the RSP improved it’s return 11.5%, so the RSP is outperforming in both up and down periods this year. The QQQs improved it’s return 559 bps from 9/30/22 to 11/15, while the QQQE rose 9.38% or 938 bps.
It was long anticipated the “non large-cap growth” asset class would eventually assert itself in terms of market leadership and revert to the mean (so to speak) but in 2022, it just did less worse than the S&P 500 and the mege-cap stock space, rather than positive returns, but that’s all 2022 offered really across US domestic, international and emerging markets. Everything was negative in 2022 (so far) expect energy.
The sudden dollar weakness has driven good volume in some of the EEM ETFs like EMXC and a Vanguard ETF like VEU which is the FTSE All-World Ex-US ETF. The dollar looks broken as this Bespoke chart from yesterday indicates. Pay attention to your favorite Non-US, International and EM funds and ETFs.
Get The News You Want
International has lagged from a return perspective for some time, taking the asset class as a whole.
Take all this with substantial skepticism. Past performance is no guarantee of future results. While the style-box update arrives every 6 weeks, it may contain different emphasis each time. This information and data may not be updated.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.