What just happened?

Raise your hand if you had “worldwide pandemic” on your 2020 bingo card.

Raise your hand if you had “violent occupation at the nation’s capitol” on your 2021 bingo card.

Raise your hand if you have no idea what a bingo card even looks like, anyway.

Here at ETF Wrap, we can’t make the bad news go away, but we can help you, perhaps with a bit of humor, focus on the work that still needs to be done: allocating capital, making sense of market shifts and preparing for the financial future.

Over the past week, some of the trends that we’ve been awaiting for months seemed to finally blossom. As results from the Georgia run-off elections were announced, the Blue Wave that had been teased in November was confirmed.

The ETF winners? Marijuana and clean-energy funds, among others. Earlier in the week, funds that make out in a reflationary environment — including commodities and outright inflation hedges — rallied. And an ETF that tracks freight futures focused on dry bulk shipping
BDRY,
+8.09%
,
a vehicle for the global commodity market, was one of the biggest asset gainers of the past week (as noted in the flows section at the bottom of this newsletter.)

Thanks for reading, as always.

Exchange-traded sundries
Is there an ETF for that?

Re-opening? Work from home? How about an ETF that straddles both worlds?

Scott McKenna, marketing director for ETFLogic, has a unique suggestion: a fund that might serve as a “bridge” between the virus and the post-vaccine worlds, in his words.

McKenna has been watching the iShares U.S. Medical Devices ETF
IHI,
+1.11%

for some time. He likes its concentrated exposure to medical companies that stand to benefit from ongoing COVID-19 testing, as well as from the nascent vaccine rollout.

Companies that fit in both buckets include Abbott Laboratories
ABT,
+0.40%
,
Thermo Fisher Scientific Inc.,
TMO,
+3.51%

Medtronic
MDT,
+0.02%

and Danaher Corp.
DHR,
+2.35%
.
Together, those stocks, the fund’s top four holdings, make up about 45% of its portfolio.

“Your average investor isn’t going to know a lot about the scientific industry, and a lot of biotech companies are pretty volatile so an ETF can help diversify that,” McKenna told MarketWatch. “IHI would be a great pick because it’s going to give you exposure to those stocks.”

Many of the companies in the IHI portfolio are already
involved with deploying flu vaccines, so it’s a natural pivot for them to start
to contribute to the coronavirus efforts, McKenna noted. “I think they’re
positioned to do really well without investors needing to be so speculative.”

One other way to play the vaccine distribution might be to look for ETFs with concentrated exposure to pharmacy stocks like CVS Health
CVS,
+2.04%

and Walgreens Boots Alliance Inc.
WBA,
+6.95%
,
he said.

IHI carries a 0.42% expense ratio, according to fund documents. It’s gained about 24.5% over the past 12 months, putting its performance about halfway between that of the S&P 500 and the Nasdaq Composite.

Hindsight is 2020

CFRA this week published a look back at 2020’s ETF flows. The ‘Big Three’ stayed big but were joined by Cathie Wood’s ARK fund family — no surprise to anyone who reads ETF Wrap.

Asset Manager

Net inflows, billions

Market share of flows

Vanguard

$200

40%

BlackRock

$122

24%

State Street Global Advisors

$36

7.1%

ARK Invest

$21

4.1%

Invesco

$21

4.1%

Source: CFRA

Visual of the week

Weekly rap
Top 5 gainers of the past week

Global X Cannabis ETF
POTX,
+5.42%
16%

Cannabis ETF
THCX,
+4.70%
15.6%

Invesco S&P SmallCap Energy ETF
PSCE,
+1.78%
14.2%

SPDR S&P Oil & Gas Equipment & Services ETF
XES,
+0.04%
13.8%

Breakwave Dry Bulk Shipping ETF
BDRY,
+8.09%
13.6%

Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products

Top 5 losers of the past week

TrueShares Technology, AI & Deep Learning ETF
LRNZ,
+3.91%
-5.2%

Simplify Volt Cloud and Cybersecurity Disruption ETF
VCLO,
+4.36%
-4.9%

WisdomTree Cloud Computing Fund
WCLD,
+3.15%
-4.7%

Global X Cloud Computing ETF
CLOU,
+2.17%
-4.6%

First Trust Brazil AlphaDEX Fund
FBZ,
-2.55%
-4.5%

Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products

Top 5 biggest inflows of the past week

iShares Russell 2000 ETFIWM

$1.11 billion

SPDR Gold Shares
GLD,
-0.30%
$1.03 billion

Vanguard Total Stock Market ETF
VTI,
+1.42%
$923 million

Invesco Russell 1000 Dynamic Multifactor ETF
OMFL,
+0.77%
$824 million

Vanguard FTSE Emerging Markets ETF
VWO,
+0.31%
$703 million

Source: FactSet, through close of trading Wednesday, January 6, excluding ETNs and leveraged products

MarketWatch has launched ETF Wrap, a weekly newsletter that brings you everything you need to know about the exchange-traded sector: new fund debuts, how to use ETFs to express an investing idea, regulations and industry changes, inflows and performance, and more. Sign up at this link to receive it right in your inbox every Thursday.

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