And if I had 3 Trillion Dollars … (TWTW – Mar 29- April 2, 2021)
Hedge Fund Blow up – So the news entering this shortened workweek, aside from the Suez Canal saga heading for the history books, is that there was indeed some explanatory power to be found regarding the market’s recently heightened bouts of Volatility …
Specifically, a hedge fund by the name of Archegos, which means (in the category of “you can’t make this sh*t up”), “one that takes the lead in anything and thus affords an example, a predecessor in a matter, pioneer”. Mission accomplished, Mr. Bill Hwang – it looks like you’ve succeeded in taking the leader position on the board of spectacular blow-ups with your USD 20 Billion margin call, which aside from causing a couple of stocks to drop spectacularly (Viacom), also looks to have dented financial heavies Nomura and Credit Suisse, both warning of significant losses related to this mess.
As I tweeted Monday morning:
“Anyone else thinking banks are owners of massive casinos … And we are all being made to play to save our nest “egg”?”
Bitcoin ETF: continuing to break records with inflows still pouring in … Purpose Investments’ Bitcoin ETF:
COVID-19 – And so March wraps up with, on the one hand, folks looking forward to furthering the ramp-up of vaccination exercise and full economic reopening, at the same time as coping with near-term setbacks including rising COVID-19 caseloads and fears of W3. What will April look like as the weather drives people outdoor, and folks – starved for human interaction – become inclined to let down their COVID-19 guards, comforted by the expanding vaccination of the masses? BTW – in the meantime in Brazil, from what I read recently … things are outright dismal on the COVID-19 front…
In terms of the title of this week’s The Week That Was – and if I had 3 Trillion Dollars … as of Tuesday, President Joe Biden’s answer is: I’d look at spending $ 4 Trillion on infrastructure …
At the same time as I consider $3.5 T of new taxes (What? Someone has to pay for all of this? … How will that play out?) Certainly upgrading … actually .. probably … never mind … just bringing existing infrastructure to where it should already be, definitely worthwhile CAPEX … even as obvious duration mismatch between the spend and related future cash flows.
Who has an ETF looking at that whole “Infrastructure” upgrade exercise? Global X in the US – ticker PAVE. More info on it: Click HERE!
Tuesday – markets held their own despite Large-Cap Tech not faring that well, respectively 10-year yields resuming their climb. All-in tough! The positive side of that glass-half-full/glass-half-empty is that despite recent setbacks by FAANGM, the broader market overall keeps seeing new highs, spelling out the fact that market breadth has significantly improved.
Starbucks turned 50 this past week … and what a brand it is. Starbucks ranks 61 in the S&P 500, ahead of companies such as Caterpillar, IBM, Raytheon, Morgan Stanley, AND GE to name a few. Coffee … it turns out … well, Starbucks 😊
Jonathan Chevreau from Findependencehub.com led the yearly ETF All-Stars exercise, which I was happy to participate in. In case you haven’t seen it yet – here is the class of 2021, with everyone involved sharing their take on it => MoneySense ETF All-Stars 2021
March 31, 2021, Pre-view => Gauging from asset growth month over month at Vanguard ETFs, I’d expect March will see the overall industry reach yet higher highs in terms of AUM, flows, etc.
Specifically, Vanguard’s AUM as at March 31, 2021, had risen by some 55.4% relative to March 31, 2020 (close to the bottom of that little thing referred to as a pandemic …), respectively 5.2% from Feb 28, 2021, with inflows estimated at some $1.2 Billion contributing around 69% of the month over month increase, the rest by definition being market gains aka the weighted performance of all their ETFs. Of note, the majority of inflows favoured equities, and Asset Allocation ETFs garnered sales of some CAD 355 MM during the course of March 2021.
ARK: In the US, the launch of ARK’s Space Exploration and Innovation ETF as you can imagine, captured a fair amount of attention given the firm’s prominence in the disruption and innovation space and the world of “thematic investing”. Already, people dissected the holdings, questioning the rationale for name inclusion, etc. Will this ETF ultimately be a success from an uptake, but more importantly from a thematic relevance and finally in terms of its performance? Well, what should I say? The sky is the limit? Or is it the moon, Mars, or … whatever? For me at the moment, it might be a planet too far, but investing is about the future – is it not? For those in the present, perhaps exposure to travel, leisure, reopening, etc., is still where it should be at.
Harvest: On that front, by the way, Canada’s Harvest Portfolios joined the space (ETF) race, launching their very own Harvest Space Innovation Index ETF on pretty much the same day. Read more => Click HERE! From the top, I’d say they are obviously very different “animals”. Costs being one difference, but more importantly, the strategy looks to be entirely different as well. One is active management, with famous, and by now controversial as well, Cathie Wood at the helm, the other more of a “more passive” construct using equal weight as a framework. Net-on-net that likely means the ARK one may well be higher octane, but with possibly greater volatility, while … well, Harvest’s might give you the thematic exposure without as much buzz. This … evidently, isn’t an endorsement of either on my part, although going back to the one planet too far comment above, I will say this: I am long Harvest’s TRVL ETF, which recently accomplished a significant milestone in Canada: crossing CAD 100MM (now at CAD 155 MM). So congrats on that one to the Harvest team. As far as ARK – well, I am and remain “long” some ARKK – having had the good fortune of latching on to that ETF and Cathie’s story well ahead of the spectacular 2020 performance and the huge inflows attracted to the ARK story since. ARK, as you would by the way also know, is available here via EMERGE = > Click HERE!
BTW – there are, as you might have noticed, haters (jealousy/envy the likely explanation …) respectively quasi cult followers in the ARK story. I think the haters need to get a life, personally, and as far as the cult followers – well, let’s just say I worry about the type of folks that end up wearing black Nikes and are prepared to off themselves for some nefarious reason or other. Owning ARK isn’t what this should be about either and it isn’t for me. I view it as high octane, high risk and possibly high returns type exposure – and as it stands, an exposure for me to disruption and innovation that I am thankful to have Cathie and her team steer through for me. Incidentally, Morningstar published some thoughts on ARK this past week – Read More => Click HERE!
Why this segway? Because the ETFs launched by CIBC this past week are all “powered” by Morningstar Indices.
And – wrapping up here, circling back to the “thematic” space, to take note of the fact that whilst BMO ETFs joined the “thematic” fray via 4 MSCI Indices powered ETFs in January, thus far, inflows are insignificant, with only one of the 4 seeing some additional albeit modest units creation, and performance-wise, the month of March not seeing any of them in the positive. In fact, % changes were modest in March across all four, with the Genomics one (the one that had some inflows) sustaining a drop of some 5.2% MOM in terms of NAV performance.
ETF Champion of the Year
Bruce Cooper – TD Asset Management
Kevin Prins – BMO Global Asset Management
Lisa Langley – Emerge Canada
Mark Noble – Horizons ETFs
Mary Hagerman – The Mary Hagerman Group at Raymond James
Michael Cooke – Mackenzie Investments
Pat Dunwoody – Canadian ETF Association
Scott Sather – RBC Dominion Securities (Sather Securities)
Som Seif – Purpose Financial
Tyler Mordy – Forstrong Global Asset Management
Congrats to all the nominees!
If anyone feels like sharing their thoughts on the nominations, or for that matter, anything related to the industry – feel free to reach out 🙂
Happy Easter All!