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ETF Trading Report: Sovereign Bond, Health Care ETFs In Focus

Eric Dutram

Despite worries over Greece and the euro zone in general, U.S. equity markets surged to close out the volatile week. All the major benchmarks performed well during the Friday session, as the Dow added 0.9%, the S&P 500 rose by 1.0%, and the Nasdaq gained 1.3% to finish the week.

These solid performances followed generally strong days in Europe and Asia as well, with most benchmarks finishing in the green around the globe. Events were especially good in the Hang Seng market as it added about 2.3%, while the Italian market saw a gain of about 2.3% to lead Europe higher.

Back in the U.S., green was pretty much across the board in the S&P 500 with significant strength coming in the basic materials, technology, and financial segments. Consumer goods and utilities were weaker, while services were also mixed during Friday trading (see 11 Great Dividend ETFs).

Investors also saw the U.S. dollar weaken slightly against the world’s major currencies led by poor performances against both the euro and especially the pound. Despite this, Treasury bonds did see inflows, pushing the benchmark 10 year note down to a 1.59% yield ahead of what looks to be a volatile week.

Although concerns over risk were high, commodities did manage to perform well during Friday trading. Most energy products rose while the precious metal and industrial metal spaces saw gains as well. However, it was once again a rocky day in the agricultural market, as sugar gained while wheat and corn both fell on the session.

In ETF trading, volume was relatively light as it appears as though most traders are waiting for more clarity on the Greek situation before plunging into the markets. Still, a few U.S. sector products, gold, and foreign currency ETFs saw outsized volumes on the day.

Particularly, investors saw a great deal of interest in the iShares S&P/Citi International Treasury Bond ETF (IGOV). This product usually sees volume of about 30,000 shares but saw a spike to just over 210,000 during Friday trading (see Three Bond ETFs For A Fixed Income Bear Market).

Undoubtedly, the product was in focus thanks to its high levels of European bond exposure and the focus of the product on sovereign debt. In fact, European bonds make up about two-thirds of the total exposure suggesting that it could be a solid proxy for broad debt woes on the continent.

Another fund which piqued investors’ interest today was the iShares Dow Jones US Medical Devices ETF (IHI). This product usually has volume around the 50,000 share mark but saw a move to about 180,000 during Friday trading (read Medical Device ETFs: A Better Way To Play Health Care?).

Thanks to this boost of volume, IHI easily outperformed the broad S&P 500 on the day, gaining about 1.5%. While the reason for the extra volume was unclear—many of the top components were flat on the day—it did come after outsized volume in many of the device makers themselves.

In fact, of the top five components in the fund—which account for roughly 40% of the total assets—four saw outsized volumes on the day. This includes nearly 2.2x the normal volume for Stryker Corp (SYK), the fifth biggest company in the ETF.

(see more on ETFs at the Zacks ETF Center)

Read the analyst report on IGOV

Read the analyst report on IHI

Read the analyst report on SYK

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