The analysts here at ETF Database analyzed the search patterns of visitors to our site during the week. Below, you’ll find our analysis of the top five trends. By analyzing these trends, we hope to unlock a better understanding of the investment themes trending on our site and in the market.
Regional Banks ETF List
The Regional Banks ETF List was a top-trending page on ETF Database this week, with an increase in traffic by 162% from the previous week. It looks like our readers continue to follow industry specific ETFs in order to play a possible December rate hike. After a strong jobs report on Friday, the futures market is showing a 70% probability of an interest rate increase in December. If you believe the Fed will be hawkish this December, the regional banks subsector is a good way to invest going into 2016. If the Federal Reserve raises rates, the outcome will be higher spreads for banks in general. Also, some of the regional banks that have a good non-interest-bearing deposit base will increase earnings going forward. It is important to note that although regional banks have a higher return outlook going forward, they tend to be riskier than their bulge bracket bank peers.
The U.S. Dollar page trended on ETF Database this week. The traffic to this page has increased by 81%. The U.S. dollar has gone up in value 10% YTD. From our article The Impact of the Strong U.S. Dollar, corporate profits have reduced in general due to a stronger U.S. dollar. Also, the current increase in monetary easing across different countries has depreciated foreign currencies against the U.S. dollar. We believe our readers are looking at this page for two reasons. The first one is to hedge their portfolios against an increase in the U.S. dollar; the second one is that going forward, if the Fed thighs the money supply, buying U.S. Dollar ETFs may lead to a potential good investment going into 2016.
The Inverse Bonds page was trending on ETF Database this week, with an increase in traffic by 53%. It seems our readers were interested in ways to gain exposure to funds that invest in inverse bond given the high likelihood of a rate hike. Most of these funds aim to match the inverse performance from different bond indexes. It is important to understand that inverse ETFs might not be an appropriate tool as a long-term investment. ETFs that compound on a daily basis should be held for a few days – the same case with funds that compound monthly, which should be held for a few months but not as a long-term investment.
One of the biggest trends this week was our Non-leveraged India ETF List page, which had an increase in traffic of 25%. This can be related to the Mahurat trading, which refers to the trading activity that takes place in the Indian Stock Market on Diwali. Generally, this day, markets in India tend to outperform. On Wednesday, some of the indexes in India were up, with the Sensex up 0.5% and the Nifty closed at 7825, up 0.5%, helping the Nifty end a five-session losing streak. The Indian government also made a decision on Tuesday to ease Foreign Direct Investment (FDI) for several sectors, helping the rally on Diwali.
The last trend for the week was the Gold ETF page. This page increased in traffic by 17%. Gold has been on a volatile ride this year. Gold dropped to its lowest price in five years on Thursday, with the GLD ETF falling to its lowest levels since late 2008. Moving forward if you have a hawkish view on the Fed this December, stay away from gold, since this precious metal provides no yield.
The Bottom Line
This week, most of the trends were interconnected by a theme, which is whether interest rates will rise in December. We continue to see an increase in interest in ways to play this market event, with U.S. Regional Banks becoming an investment play going forward in 2016, as well as the mainstream themes such the U.S. dollar, the bond market and Gold.
By analyzing how you, our valued readers, search our property, we hope to uncover important trends that can help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of each week, we’ll share these trends for the week, giving you better insight into the relevant market trends that will allow you to make more valuable decisions for your portfolio.