AdvisorShares Weekly Market Review – Week Ending 4/18/2014
Highlights of the Prior Week
In last week’s update we wondered whether the 2.65% drop for the S&P 500 in the week ending March 11 was the start of something serious or just a blip. At first glance that decline may have been a blip thanks to a Janet Yellen Tailwind as the S&P 500 took 2.71% back last week.
Surprisingly the Russell 2000 Index was only up 2.37%. Typically, when small caps have lagged behind large cap it has been a sign that the bull market was close to ending. While this comparison considered for just one week means nothing, the Russell is trailing the S&P 500 YTD by 309 basis points, for the last 6 months it is trailing by 484 basis points but for the last 12 months the Russell is ahead by 478 basis points.
Foreign markets also bounced back last week with gains, although mostly smaller than the gain in the US. Germany and the UK were each up less than 1%, France up 1.51% and perhaps as somewhat of a surprise, Japan rallied 2.8%.
News from foreign markets has not been driving returns lately and YTD foreign markets have generally performed in line with US markets but over the last month foreign markets had outperformed dramatically.
At this point it would be merely guess to say that whether foreign investing is rotating back into favor or even to know why it would be happening now if there is a rotation underway, sometimes these changes occur for no reason at all and we’ll soon see if this is one of those times.
ETF News & Data
While there was a net outflow of $6 billion from equity ETFs last week, most coming from the SPDR S&P 500 (NYSEARCA: SPY), the iShares US Real Estate ETF (NYSEARCA: IYR) had $543 million of net inflows amounting to 12% of the fund’s total AUM.
While there can only be unsubstantiated rumor (unless someone admits to it), this sort of huge create in a fund is often a huge money management firm executing a trade. Huge flows in the largest funds like SPY or iShare MSCI EAFE Index Fund (NYSEARCA: EFA) are far less noteworthy than in something like IYR that is rarely on the leaderboard for creations or redemptions.
The only new ETF last week was the WisdomTree Japan Hedged Health Care Fund (NYSEARCA: DXJH).
QZ.com had a fun read titled The Complete Guide to Structuring Your Ideal Work Day. It turns out there is biochemistry behind the times we are most likely to be productive, the best times to consume caffeine and that people do need to take little breaks periodically. Also stressed as being important is the need to stick to a routine.
Although not mentioned in the article but key to productivity is knowing your own optimal times to get work done. Writing a big report or doing some serious number crunching shortly after lunch will be difficult for most people for example.
This week Boston celebrated Patriot’s Day with the 118th running of the Boston Marathon. Growing up in Boston, you don’t realize that Patriot’s Day is a quirky holiday only celebrated in Massachusetts.
There were years where the Marathon was held in snowy conditions and other years when the temperature was in the 90’s.
Also part of the Patriot’s Day tradition is that the Red Sox play a home game at 11AM local time. As a kid I went to the Patriot’s Day Game in 1976 when the Red Sox beat the Minnesota Twins 2-0.
Of course the marathon and Patriot’s Day are getting far more attention than ever before due to last year’s bombing. While 2013 was of course tragic and now historically significant this year’s events were a celebration of life and resiliency.
Roger Nusbaum, AdvisorShares ETF StrategistGoogle Finance, Yahoo Finance, ETF.com, Barron’s, XTF.com, QZ.com
Weekly ETF Flows
For April 14, 2014 to April 18, 2014
S&P Sector Analysis
As for the sectors of the S&P 500, three outperformed the broad benchmark – Financials, Materials and Technology. The remaining seven – Utilities, Healthcare, Discretionary, Staples, Industrials, Energy, and Telecom, – each underperformed. The dispersion between the top-performing and bottom-performing sectors dropped to 2.76% this week, with Financials outperforming all, and Telecom coming in last.
For April 14, 2014 to April 18, 2014
Sector performances, as measured by the S&P 500 sector indices were: