Epic week … (TWTW – Nov 29-Dec 3, 2021)

Epic week …

Although obviously others have described it differently – some as “a bit of a shift in communication” on the part of the US FED’s Jay Powell, who seemed to indicate that rates may rise sooner as opposed to later – (OMICRON or not … click HERE! ) as possibly inflation could become less transitory than earlier presumed (or something to that effect …)

In any event, as you’d have noticed, THAT … didn’t help markets anymore than the ongoing uncertainty associated with OMICRON has … with volatility spiking through the week, a week otherwise marked by lower than expected payroll numbers, a bear market for most of the positions held by ARK Invest’s Cathie Wood, and Twitter’s CEO Jack Dorsey passing on the baton at the SM company. Oh, and OPEC+ … staying put at the moment, not being reactive to Biden’s earlier announcement of SPR release, nor to OMICRON factor – for the moment. Eric Nuttall, Senior PM at Ninepoint circled back to the oil space, continuing to describe it as the investment opportunity of a lifetime – which … I tend to agree with, all the while noting as well, that Canada’s Energy sector produces the most “ethical” oil around! click HERE!

In Omicron or not (link above), I took a look at how Vanguard fared in November, and where flows continued to be directed (will that change in December, in light of the rising uncertainty?). In the overall, this has translated into Vanguard’s Assets being broken down as follows (as at Nov 30, 2020, respectively Nov 30, 2021):

Bottom line:

  • One ticket solutions remain the fastest growing category for Vanguard
  • flows remain tilted toward the bullish side of the equation (perhaps TINA induced …?)
  • AUM grew a solid 54.2% y/o/y to the end of November 2021, with net inflows comprising some 72.9% of that total (AUM growth in dollars: +$16.44 Billion

In terms of taking a look at other providers, here are iShares Canada’s top and bottom 10 performing ETFs to the end of November (1 month, respectively YTD returns):

  • Rising volatility / risk obviously showed up late in November … with potentially more (negative?) impact on performance to be felt from OMICRON in December …
  • Notwithstanding what I’d describe as a lack of follow through … Gold equities topped returns last month, with Real Return bonds (long duration …) following closely
  • Dividend ETFs were hit hard (see CDZ and XHD for instance
  • so was Real Estate (XRE) – “fears” of higher rates (likely not the primary culprit …) more likely concerns regarding OMICRON jeopardizing future of returning to the office …

  • Energy still topping YTD performance table (and from what I see thus far, behaving relatively well given context …)
  • Financials in Canada – Banks last week ALL raised dividends (BMO by 25%!), and announced share buybacks, as OSFI had basically notified everyone they could (and would) back in early November
  • if looking to diversify into areas that have underperformed significantly in 2021 – look no further than EM and China (though the latter … forget about ESG …)

on the factors front:

  • Fundamental indexing still on top YTD
  • Value and Dividend otherwise factors beating “market” YTD
  • ESG “solutions” not far away from market benchmark
  • Min Vol – lower downside last month = doing “its” thing …
  • Small and Mid cap – Tis still a large cap performance market …

Sector-wise:

  • Do laggards such as Materials (huge gold overweight though …), respectively Utilities, or Staples present “diversification” opportunities? Probably worth entertaining the thought

New ETFs:

Metaverse ETFs launched last Monday – with both Evolve and Horizons launching theirs.

A couple of Horizons launches late in the week – click HERE!

looking at leveraging their sister company Global X’s “thematic” IP and creds πŸ™‚

Enjoy this for now πŸ™‚

More later …