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U.S. stocks saw their biggest one-week rally since 1974, with the S&P 500 jumping 12.1% and Dow Jones climbing 13%. The slowdown in the number of cases in the biggest U.S. hot spot, New York, and Europe as well as reduced hospitalizations led to optimism in the market.
Additionally, the large fiscal and monetary stimulus promised by the central bank and the government added to the strength. In the latest move, the Fed announced a $2.3-trillion stimulus to boost local governments as well as small and mid-sized businesses to shield the economy from the effects of the coronavirus pandemic. The central bank said it would also buy investment-grade and junk bonds (read: ETF Areas That Make Good Investment Choices for April).
In the latest Fed minutes, the central bank said it will keep interest rates near zero until the economy has ‘weathered’ the outbreak’s impact and is on track to see maximum employment and meet price stability goals.
Meanwhile, bonds rallied while gold closed at the highest level since late 2012 as investors sought insurance against possibilities of further economic slowdown.
As such, we have highlighted the best and worst performing zones of the last week and their ETFs:
Best Zones
Treasury
Treasuries rallied following weak U.S. jobless claims data and the Fed’s stimulus pushing yields down. iPath US Treasury 5-year Bull ETN was the biggest winner, having soared 48.1% last week. It offers exposure to the Barclays 5Y US Treasury Futures Targeted Exposure Index, charging investors 75 bps in annual fees. The note has amassed $6.1 million in its asset base and trades in average daily volume of under 1,000 shares.
Preferred Stock
The Fed’s rate cut scenario amid concerns related to the economic damage inflicted by the coronavirus has forced investors to seek products that pay outsized yields for their current income. In this regard, Virtus InfraCap U.S. Preferred Stock ETF (PFFA - Free Report) gained 39.7% last week. This fund seeks current income and capital appreciation through a portfolio of preferred securities issued by U.S. companies with market capitalizations of more than $100 million. It charges higher annual fees of 2.01% and has been able to manage an asset base of $75 million. The ETF trades in moderate volume of 78,000 shares (read: 6 Overlooked High-Yielding ETFs in Focus Post Fed Minutes).
Mortgage REITs
The lower rates will continue to keep mortgage rates down, thereby leading to higher profits for mortgage REITs. VanEck Vectors Mortgage REIT Income ETF (MORT - Free Report) was up 39.3%. This ETF follows the MVIS US Mortgage REITs Index, which measures the performance of U.S. mortgage real estate investment trusts. It holds 26 stocks in its basket, with AUM of $110 million and average daily volume of 120,000 shares. The product charges 42 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Top-Ranked ETFs & Stocks to Buy From Bargain Industries).
Worst Zones
Inverse Equity
As these ETFs benefit from a bear market, the rebound in market sentiments led to huge losses in this segment. AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) shed 22.7% last week. It is an actively-managed ETF that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily, comprising large-capitalization U.S.-traded equities. It holds 100 stocks in its basket and charges higher annual fee of 3.07%. The product trades in moderate average daily volume of 141,000 shares and has accumulated $94.1 million in its asset base.
Volatility
Volatility products have been losers as these underperform when the stock market booms. In particular, VelocityShares Daily Long VIX Short-Term ETN has lost 12.6%. It seeks to deliver the daily performance of the S&P 500 VIX Short-Term Futures Index, which provides investors with exposure to one or more maturities of futures contracts on the VIX, which reflects implied volatility of the S&P 500 Index at various points along the volatility forward curve. This ETN is unpopular and illiquid with AUM of $63.7 million and average daily volume of 65,000 shares. The note charges 89 bps in annual fees.
Multi-Asset
Cambria Tail Risk ETF (TAIL - Free Report) seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets will be invested in the basket of long put option premiums, the majority of fund assets will be invested in intermediate term U.S. Treasuries. The product has amassed $114.6 million in its asset base and charges 59 bps in annual fees from investors. It trades in average daily volume of 131,000 shares and shed 8.4% last week (read: 5 ETFs That Outperformed in Q1).
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Top & Flop ETF Zones of Last Week
U.S. stocks saw their biggest one-week rally since 1974, with the S&P 500 jumping 12.1% and Dow Jones climbing 13%. The slowdown in the number of cases in the biggest U.S. hot spot, New York, and Europe as well as reduced hospitalizations led to optimism in the market.
Additionally, the large fiscal and monetary stimulus promised by the central bank and the government added to the strength. In the latest move, the Fed announced a $2.3-trillion stimulus to boost local governments as well as small and mid-sized businesses to shield the economy from the effects of the coronavirus pandemic. The central bank said it would also buy investment-grade and junk bonds (read: ETF Areas That Make Good Investment Choices for April).
In the latest Fed minutes, the central bank said it will keep interest rates near zero until the economy has ‘weathered’ the outbreak’s impact and is on track to see maximum employment and meet price stability goals.
Meanwhile, bonds rallied while gold closed at the highest level since late 2012 as investors sought insurance against possibilities of further economic slowdown.
As such, we have highlighted the best and worst performing zones of the last week and their ETFs:
Best Zones
Treasury
Treasuries rallied following weak U.S. jobless claims data and the Fed’s stimulus pushing yields down. iPath US Treasury 5-year Bull ETN was the biggest winner, having soared 48.1% last week. It offers exposure to the Barclays 5Y US Treasury Futures Targeted Exposure Index, charging investors 75 bps in annual fees. The note has amassed $6.1 million in its asset base and trades in average daily volume of under 1,000 shares.
Preferred Stock
The Fed’s rate cut scenario amid concerns related to the economic damage inflicted by the coronavirus has forced investors to seek products that pay outsized yields for their current income. In this regard, Virtus InfraCap U.S. Preferred Stock ETF (PFFA - Free Report) gained 39.7% last week. This fund seeks current income and capital appreciation through a portfolio of preferred securities issued by U.S. companies with market capitalizations of more than $100 million. It charges higher annual fees of 2.01% and has been able to manage an asset base of $75 million. The ETF trades in moderate volume of 78,000 shares (read: 6 Overlooked High-Yielding ETFs in Focus Post Fed Minutes).
Mortgage REITs
The lower rates will continue to keep mortgage rates down, thereby leading to higher profits for mortgage REITs. VanEck Vectors Mortgage REIT Income ETF (MORT - Free Report) was up 39.3%. This ETF follows the MVIS US Mortgage REITs Index, which measures the performance of U.S. mortgage real estate investment trusts. It holds 26 stocks in its basket, with AUM of $110 million and average daily volume of 120,000 shares. The product charges 42 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Top-Ranked ETFs & Stocks to Buy From Bargain Industries).
Worst Zones
Inverse Equity
As these ETFs benefit from a bear market, the rebound in market sentiments led to huge losses in this segment. AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) shed 22.7% last week. It is an actively-managed ETF that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily, comprising large-capitalization U.S.-traded equities. It holds 100 stocks in its basket and charges higher annual fee of 3.07%. The product trades in moderate average daily volume of 141,000 shares and has accumulated $94.1 million in its asset base.
Volatility
Volatility products have been losers as these underperform when the stock market booms. In particular, VelocityShares Daily Long VIX Short-Term ETN has lost 12.6%. It seeks to deliver the daily performance of the S&P 500 VIX Short-Term Futures Index, which provides investors with exposure to one or more maturities of futures contracts on the VIX, which reflects implied volatility of the S&P 500 Index at various points along the volatility forward curve. This ETN is unpopular and illiquid with AUM of $63.7 million and average daily volume of 65,000 shares. The note charges 89 bps in annual fees.
Multi-Asset
Cambria Tail Risk ETF (TAIL - Free Report) seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets will be invested in the basket of long put option premiums, the majority of fund assets will be invested in intermediate term U.S. Treasuries. The product has amassed $114.6 million in its asset base and charges 59 bps in annual fees from investors. It trades in average daily volume of 131,000 shares and shed 8.4% last week (read: 5 ETFs That Outperformed in Q1).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>