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ETF Scorecard: September 23 Edition

To help investors keep up with the markets, we present our ETF Scorecard. The Scorecard takes a step back and looks at how various asset classes across the globe are performing. The weekly performance is from last Friday’s open to this week’s Thursday close.

Markets were all considerably up. This week, three important central banks provided updates on monetary policy. First, Britain elected to hold interest rates unchanged at record lows of 0.25%, and to keep the newly enlarged government bonds purchase program in place at £435 billion. It also increased its forecast for the third quarter growth to 0.3% from 0.1% previously. The Bank of Japan followed suit, but fell short of meeting expectations of pushing rates further into negative territory from -0.1%. The BoJ said it will now target long-term interest rates, with a goal of maintaining the ten-year government yield at zero. The move is seen as a lending hand to Japan’s struggling banks. The U.S. Federal Reserve was the last to issue an update, and said it will keep interest rates unchanged at 0.50%, but strongly hinted a rate increase was possible by the end of this year. Inflation in the U.S. edged up 0.2% in August, beating expectations of 0.1%. Year-to-date, inflation has risen 1.1%. Consumer sentiment, meanwhile, was flat at 89.8, against forecasts of 91. Housing starts in August decreased in the U.S. from 1.21 million to 1.14 million. Pundits forecasted a reading of 1.19 million. Crude oil stockpiles fell by 6.2 billion barrels this week, against forecasts of a 3.2 million rise. Jobless claims came in at 252,000 for the week versus consensus of 261,000.

Risk Appetite Review

The broad market (SPY A) is up 1.73% this week, representing the worst performance of the bunch. The Low Volatility ETF (SPLV A) is up 2.78% since last Thursday, posting the best performance for the week, as investors flocked to safer equities. The High Beta ETF (SPHB B-) jumped 1.85%.

Major Index Review

All major indexes have risen this week. Emerging Markets (EEM A-) posted the best performance for the week and the rolling month, advancing 4.55% and 1.87%, respectively as the equity markets across the globe were in recovery mode. The Dow Jones (DIA A-) has risen the least this week, by 1.19%. The index remains down 1.10% over the past month, failing to recover all the lost ground in the recent sell-off.

Foreign Equity Review

Foreign ETFs were all up for the week. Japan (EWJ A) has been the best performer over the past five days with a 5.86% advance, helped primarily by a surge in banking stocks. An ETF tracking Japanese banks, (DXJF C), has soared nearly 8% this week, as BoJ’s emphasis on banks’ profitability excited investors. The best performer for the rolling month is China (FXI A-), up 3.87%, as the country prepares for an extended holiday during which the markets will be closed for one week. India (EPI B+) has had the worst performance this week, rising only 2.45%. Investors tread cautiously following a renewal of tensions between India and Pakistan. On the bright side, investors expect a rate cut to underpin equities. For the rolling month, Britain’s stock markets (EWU A-) fared the worst, dropping 0.44%.

Commodities Review

Unexpectedly, commodities were all up this week. Silver (SLV C+) has had the best performance this week, rising as much as 6.36%, underpinned by dovish stances of the U.S. Federal Reserve and the Bank of Japan. Copper (JJC A), meanwhile, has posted the worst performance for the week, advancing just 1.92%. For the rolling month, natural gas (UNG B-) has risen the most, about 8.83%, helped by easing worries of a supply glut. Oil (USO A) has had the worst monthly performance, falling 2.50%.

Currency Review

Currencies were all up for the week, with two exceptions. The Australian dollar (FXA A-) has risen 2.18% since last Thursday, trumping the performance of its peers, boosted by the Federal Reserve’s decision to keep interest rates unchanged and by surging commodity prices. The U.S. dollar (UUP A) was the worst performer this week, falling 0.44%, as a dovish Federal Reserve proved a headwind to performance. However, the greenback has posted the best performance for the rolling month, rising 1.07%. Euro (FXE A) has dropped the most for the rolling month, by 1.14%.

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Disclosure: No positions at time of writing.

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