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‘Robinhood is a good long-term strategy for investors to consider’: CFRA Head of ETF & Mutual Fund Research

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Todd Rosenbluth, Head of ETF and Mutual Fund Research at CFRA, joins Yahoo Finance Live to discuss the record levels of ETF inflows in 2021, Robinhood’s impact on the ARK Innovation ETF, and outlook on tech ETFs.

Video Transcript

KRISTIN MYERS: It's time now for our ETF Report brought to you by Invesco QQQ. We're joined now by Todd Rosenbluth, head of ETF and mutual fund research at CFRA. Todd, great to have you back here with us. I see in your notes that you say that these broad-based ETFs have really been leading the charge, so to speak. I'm wondering if you think that that trend is going to continue, at least in the second half of the year?

TODD ROSENBLUTH: We do. We're at record flows already for 2021, beating 2020 with $540 billion of money that's flown into ETFs. And these broad market ETFs, like Vanguard's 500 ETF VOO, iShares 500 IVV, and VTI, which is Vanguard's total stock market, we're seeing these as broad asset allocation products, and they continue to gain traction as we see investors become more comfortable in using ETFs for their broad exposure.

But we're also seeing value-oriented plays that were popular in the good chunk of the first half of the year. You showed energy earlier, but energy-- being out of favor. But energy ETFs like XLE or financial ETFs like XLF have been popular this year, as well as broader value-oriented ETFs.

ALEXIS CHRISTOFOROUS: You know, Todd, I want to ask you about Robinhood because we've seen a lot of activity in that stock. They just went public. Now they're above their IPO price. And despite being a very new stock, they're actually part of the ARK Innovation ETF. Have you seen more activity and more money flowing into that particular ETF since the Robinhood IPO?

TODD ROSENBLUTH: Well, the ARK family of products and in particular, ARKK has been a popular actively-managed ETF, given the success it had in 2020. The performance is down. You know, I see you showing a chart here. It's struggled versus the broader market, but it's benefiting today from a 1% stake within Robinhood. It's also in ARKF, which is a fintech version of that product.

It, again, shows the potential benefits of active management. You can get in early into some of these companies. And that's going to help investors that have been looking for the longer term. And obviously, Robinhood is a good long-term strategy for investors to consider, and it fits into these active ETFs much more easily than an index-based product like the Vanguard 500, among others.

KRISTIN MYERS: Now, I know that value ETFs were also favored by investors, but we have had a lot of blockbuster earnings, at least from some of those big tech names. Now, we had seen a lot of rotation out of that sector. However, I'm wondering if investors right now should start looking again to some of those tech ETFs and really increase some of their exposure again?

TODD ROSENBLUTH: We think we've seen really strong numbers from some of the growth-oriented and technology companies that you'd find within a growth ETF like the QQQs, like you'd see in VUG, which is Vanguard Growth ETF, or a more targeted ETF like XLK, which is a technology Select Sector SPDR. So heading towards the second half of the earnings season, technology tends to do well within the fourth quarter. We think growth-oriented ETFs certainly are warranted investor attention. And they can use ETFs to rotate between growth to value and back to growth, as we've seen throughout much of the year.

ALEXIS CHRISTOFOROUS: Are there any ETFs that were hot earlier in the year, say in January, and now, as we're in the second part of the year, investors are having second thoughts?

TODD ROSENBLUTH: Well, we've seen a rotation in-- with fixed income, for example. So we've seen a rotation away from some of the more higher-yielding products. Investors have rotated away from these products and gone into something that has more-- less interest rate sensitivity, like a senior loan ETF. So we've seen a rotation within fixed income, investors shifting their risk appetite and using, again, the benefits that they can get in and out of ETFs relatively easily.

KRISTIN MYERS: And before we let you go, Todd, I do want to ask you about the infrastructure bill. Right now, they have that bipartisan package. They're going to be taking up a vote on that. I think so many investors are expecting that a deal is going to be getting passed hopefully somewhat soon. If you are looking for some exposure there, where should folks really start to look, especially as that infrastructure bill is going to get passed?

TODD ROSENBLUTH: So GlobalX has a suite of thematic-oriented ETFs and P-A-V-E, PAVE-- the tickers are great with these. They tell you exactly what they're doing. PAVE is a US infrastructure development ETF focused on industrials and materials companies that have 50% or more of their revenues tied to the United States. It's perfectly suited to benefit. We've seen the flows, we've seen the returns strong in 2021, and we see it for a-- this is our focus ETF for this current month. We think it's going to perform well over the next nine months, and we think PAVE is a good way to play the infrastructure theme.

KRISTIN MYERS: Yeah, as you can see there, up almost 64% for the year. Todd Rosenbluth, head of ETF and mutual fund research at CFRA, thanks so much for joining us.