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ETF Trading Report: Oil, Revenue Weighted ETFs In Focus

Eric Dutram

Tuesday was another weak day in American equity markets as more worries over European events plagued investor sentiment. As a result, all three of the major benchmarks finished lower with the Nasdaq and the S&P 500 sliding by 0.4% while the Dow tumbled by 0.6% in the session.

The biggest losers came in the tech and financial space, although much of the services segment was lower, led by weakness in McDonald’s and Home Depot. However, investors did see some strength in consumer staples and health care, while utilities also held up nicely in what was overall a rough session.

Given the ongoing concern over the euro, the dollar saw some gains in today’s trading, pushing the dollar index up to the $79.80 mark. Trading was rough in the euro market, although the common currency did manage to hang on to the $1.30 level at the end of the day, while the Aussie dollar was also weak in Tuesday trading (read ArrowShares Debuts Global Yield ETF).

Partly due to this risk-off trade, the 10 Year note saw continued inflows as yields on this benchmark security tumbled back down to the 1.85% mark. However, yields were flat—or even rose—on short-term debt in Tuesday’s session suggesting a move into longer dated securities.

Unsurprisingly, commodity markets also saw weakness across the board as well, with multi-percentage point losses hitting the precious metal, industrial metal, and sugar markets. Winners were few and far between in this segment, as wheat added marginally while natural gas continued its surge, adding another 4.3% today.

In ETF trading, robust volume seems to be the name of the game as a number of securities saw outsized amounts of shares change hands in Tuesday’s session. Trading was solid across not only the big name equity products targeting the U.S., but many foreign ETFs, and commodity funds as well (read Time for South Africa ETFs?).

In particular, two RevenueShares ETFs, the Large Cap ETF (RWL) and the Mid Cap ETF (RWK), saw a great deal of interest throughout Tuesday’s session.  RWL saw volume that was roughly 5.5 times normal while RWK saw a similar move in its trading activity.

Interestingly, both volume spikes came about due to huge block trades, although they came about at different times of the day. The mid cap ETF saw nearly 120,000 shares change hands around 11:08am while the large cap ETF saw nearly all of its volume increase come in a 146,800 block around 3:09pm.

This unusual activity came pretty much only in these revenue-weighted products in the large and mid cap segments, suggesting that at least some investors wanted to obtain exposure to these spaces via a ‘non-traditional’ route in Tuesday’s session (read Alternative ETF Weighting Methodologies 101).

Another ETF that experienced a huge increase in trading volume was the PowerShares Dynamic Oil & Gas Services Portfolio (PXJ). This fund usually sees about 64,800 shares change hands in a normal session compared to today’s spike that saw about 1.97 million shares move during the day.

This move came as outsized volume hit the rest of the oil services space as well, although none of the other funds saw the same moves that PXJ did on the day. Thanks to this and the oil service leadership in today’s trading, the product managed to add about 1% on the day, easily beating out broad based energy ETFs for the session.  

(see more in the Zacks ETF Center)

Read the analyst report on RWL

Read the analyst report on RWK

Read the analyst report on PXJ

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