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Top ETF Stories of September

Sanghamitra Saha

The month of September was moderate for the broader market. The S&P 500-based ETF SPY, Dow Jones-based ETF DIA and Nasdaq 100-based QQQ added in the range of 0.7% to 1.9% in September. Against this backdrop, let’s take a look at the factors that drove the broader market in September and helped the key indexes post those gains.

Bank ETF Rally

Bank ETFs rebounded in September after a prolonged underperformance caused by a flattening yield curve. Since banks borrow money at short-term rates and lend capital at long-term rates, steepening of the yield curve bodes well for bank ETFs.

Actually, the movement of short-term bonds is more dependent on Fed behavior than long-term bonds. The Fed has enacted a rate cut in September after a slash in July and may cut rates further this year, thanks to rising slowdown fears owing to U.S.-China trade tensions and global growth worries.

Meanwhile, reports of a meeting between the United States and China in October boosted risk-on sentiments, which in turn provided a boost to the broader market. This contributed to the rise in long-term bond yields in the month of September.

This factor has benefited funds like Invesco KBW Bank ETF KBWB , First Trust Nasdaq Bank ETF FTXO and iShares U.S. Regional Banks ETF IAT (read: Bank ETFs Benefit From Steepening Yield Curve, But How Long?).

Low-Volatility ETFs Gain

Low-volatility ETFs performed well in the month due to a host of uncertainty in the market. The gainers were iShares Edge MSCI Min Vol USA ETF USMV (up 0.5%), SPDR SSGA US Large Cap Low Volatility Index ETF LGLV (up 0.7%)and Invesco S&P 500 High Dividend Low Volatility ETF SPHD (up0.5%) (read: ETF Strategies to Follow as Volatility Seems Underpriced).

Saudi Oil Attack & Oil Price Jump

After an attack on Saudi Arabia’s largest oilfields in Hijra Khurais and the world’s biggest crude processing facility at Abqaiq on Sep 14, supply disruption sent oil prices higher. However, United States Oil Fund LP USO lost 1% in the past monthas the mid-month price spurt was largely offset by the weakening demand growth.  However, United States Brent Oil Fund, LP BNO has gained about 3% past month (as of Sep 30, 2019).

Developments in the Bitcoin Space

Giving a shock to investors who wish for SEC approval to a bitcoin ETF, CBOE BZX Exchange withdrew its VanEck/SolidX bitcoin ETF proposal on Sep 13. The news was disclosed on Sep 17 on a notice published by the SEC. Investors should note that the latest proposal for a bitcoin ETF was Van Eck’s third attempt.

The decision of withdrawing the proposal came just weeks after Van Eck began offering a limited Bitcoin ETF for institutions.However, the limited version of bitcoin ETF failed to garner enough response from the market.

Still, if retail investors cannot lay their hands on a bitcoin ETF now, they can definitely familiarize themselves with the concept through blockchain ETFs like Reality Shares Nasdaq NexGen Economy ETF BLCN, Amplify Transformational Data Sharing ETF BLOK and First Trust Indxx Innovative Transaction & Process ETF LEGR (read: Van Eck, SolidX Attempt to Bring a Partial Bitcoin ETF). 

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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
iShares U.S. Regional Banks ETF (IAT): ETF Research Reports
 
First Trust NASDAQ Bank ETF (FTXO): ETF Research Reports
 
Invesco KBW Bank ETF (KBWB): ETF Research Reports
 
iShares Edge MSCI Min Vol USA ETF (USMV): ETF Research Reports
 
United States Brent Oil Fund LP (BNO): ETF Research Reports
 
United States Oil Fund, LP (USO): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
SPDR SSgA US Large Cap Low Volatility Index ETF (LGLV): ETF Research Reports
 
First Trust Indxx Innovative Transaction & Process ETF (LEGR): ETF Research Reports
 
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
 
Reality Shares Nasdaq NexGen Economy ETF (BLCN): ETF Research Reports
 
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): ETF Research Reports
 
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