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Top ETF Stories of February

Sanghamitra Saha

After a spectacular January, the second month of 2019 also turned out positive for Wall Street with SPDR S&P 500 ETF SPY, SPDR Dow Jones Industrial Average ETF DIA and Invesco QQQ ETF QQQ adding about 3.4%, 4% and 3.7%, respectively. Overall, the broader market was charged up and iShares Core S&P Total US Stock Mkt ETF ITOT gained about 6.1% past month (as of Feb 27, 2019).

In fact, February’s performance positioned the S&P 500 for its best year-to-date performance in more than three decades, per financial times. The S&P 500 has recoiled sharply this year from the Christmas slump and is now less than 5% away from its record high five months ago as indicated by financial times.

Against this backdrop, let’s delve a little deeper into the key ETF events of February that helped Wall Street maintain its 2019 mojo.

Dovish Fed

The Fed minutes from the Jan 29-30 meeting confirms the patient view of the central bank toward future rates hike. The Fed started offering a dovish tone from the start of this year, which is one of key reasons for the market rally. A dovish Fed has kept Invesco DB US Dollar Bullish (UUP) (up 0.6% past month) at a subdued level.

U.S.-China Trade Relation: Peaks & Valleys

Apparently, the month was all about U.S.-China trade optimism. On Feb 25, President Donald Trump even announced a delay in the increase of tariffs to 25% on about $200 billion worth of Chinese goods, citing “substantial progress” in trade talks with Beijing (read: Top Performing ETF Areas of February).

With this, the year-long trade dispute between the world’s biggest economies was thought to be reaching a conclusion. However, there was skepticism too in the U.S.-China trade relation. At month-end, U.S. trade representative Robert Lighthizer told Congress that the disagreement between both countries “was too serious to be solved by promises by China to buy more US products.”

Whatever the case, China ETFs were clear winners in the month. Global X MSCI China Information Tech ETF CHIK, VanEck Vectors ChinaAMC SME-ChiNext ETF CNXT and VanEck Vectors ChinaAMC CSI 300 ETF PEK returned in the range of 15% to 20%.

Zero-Fee ETF to Hit Market?

In late February, Social Finance Inc., an online lender also known as SoFi, made headlines by proposing two ETFs that will waive off managed fees for at least the first year of operation. Not only this, renowned issuer Vanguard also cut fees of the 10 key ETFs like Vanguard FTSE Emerging Markets ETF VWO as part of the ongoing fee war trend (read: Zero-Fee ETFs to Hit the Market Finally?).

M&A Holds Up Biotech Sector

A solid merger-and-acquisition momentum has been instrumental in the biotech rally this year. February was no exception as Swiss pharma giant Roche Holdings RHHBY announced the acquisition of the U.S.-based gene therapy company Spark Therapeutics ONCE for $4.8 billion (read: Biotech ETFs Jump on Roche-Spark Deal).

Principal Healthcare Innovators Index ETF BTEC, ALPS Medical Breakthroughs ETF SBIO and Virtus LifeSci Biotech Products ETF BBP are some of the winners in the month, having gained around 10% each.

Marijuana Maintains its Mojo

Pot stocks are on a tear this year on positive industry-specific news and renewed risk appetite. February’s key tailwind in the marijuana market was Canadian cannabis firm Tilray Inc.’s TLRY announcement of acquisition of the world’s largest hemp food maker Manitoba Harvest for $318 million. Growing efforts of inducing cannabis in food, beverage, tobacco and beauty products explain the 15% one-month gains in ETFMG Alternative Harvest ETF MJ (read: Tilray's Deal to Buy Hemp Food Maker Bolsters Marijuana ETF).

Busy U.S. IPO Market

Just as the government reopened, the U.S. IPO market charged up in February.  In late February, Up Fintech and NASH biotech Genfit came up with IPO filings. Cardiovascular disease device maker ShockWave Medical, Diamondback midstream services unit Rattler Midstream LP, and NASH biotech Cirius Therapeutics are also on their way for a March IPO. Renaissance IPO ETF IPO was up 14% in the past month (read: Will IPO ETFs Sizzle in 2019?).

Brexit Could Be Delayed

Amid huge internal differences, the UK parliament is now likely to decide between “no deal” and delay in Brexit. If the no-deal option is voted down, the Commons in the U.K. will have a chance to request prime minister May for an extension to Article 50, postponing Brexit by a few months, per an article published on CNN. However, France and Spain already signed their disapproval to a likely last-minute request for a two-month extension of the Brexit (read: Brexit Delay in the Cards? Europe ETFs to Rally). 

If Brexit delays, several Europe-related ETFs like Invesco CurrencyShares British Pound Sterling FXB, First Trust Europe Alphadex Fund FEP, Europe Smallcap Dividend Wisdomtree DFE and Europe Financials iShares MSCI ETF EUFN should go higher.

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Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT): ETF Research Reports
 
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
 
iShares Core S&P Total U.S. Stock Market ETF (ITOT): ETF Research Reports
 
iShares MSCI Europe Financials ETF (EUFN): ETF Research Reports
 
WisdomTree Europe SmallCap Dividend Fund (DFE): ETF Research Reports
 
Invesco CurrencyShares British Pound Sterling Trust (FXB): ETF Research Reports
 
ALPS Medical Breakthroughs ETF (SBIO): ETF Research Reports
 
Principal Healthcare Innovators Index ETF (BTEC): ETF Research Reports
 
First Trust Europe AlphaDEX Fund (FEP): ETF Research Reports
 
Renaissance IPO ETF (IPO): ETF Research Reports
 
Virtus LifeSci Biotech Products ETF (BBP): ETF Research Reports
 
VanEck Vectors ChinaAMC CSI 300 ETF (PEK): ETF Research Reports
 
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