Animal Spirits Are Stirring

11/14/2024

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This week, Strategas ETF Expert Todd Sohn provides a look at how overbought the ETF universe is, an update on where flows stand, sector allocations, and how money market funds fit into the overall puzzle.

Definitions:

The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.

The SPDR S&P 500 ETF Trust (SPY) is an exchange-traded fund that seeks to track the performance of the S&P 500 index, which is a basket of the largest publicly traded companies in the U.S. SPY is the oldest ETF listed on a U.S. exchange and is one of the most popular ETFs in the world.

Cumulative asset flow is the total cash flow over a specific period of time, and it provides a view of a company's financial performance. It's calculated by adding the current period's net cash flow to the previous cumulative cash flow.

An exchange-traded fund (ETF) is a pooled investment security that can be bought and sold like an individual stock.

Equity ETFs invest in a basket of company stocks (also known as equities or shares). They are the most common type of ETFs.

Fund flows represent the cash that goes into or out of companies, financial assets, sectors, or other market categories.

Assets under management (AUM) is the market value of the investments managed by a person or entity on behalf of clients. AUM is used in conjunction with management performance and management experience when evaluating a company.

An equity market is a form of equity financing in which a company gives up a certain percentage of ownership in exchange for capital.

Sector ETFs focus on groups of companies that are pursuing the same type of business, like energy, health care, utilities, or technology, for example.

Fund flows represent the cash that goes into or out of companies, financial assets, sectors, or other market categories.

Cyclical stocks are stocks with prices that are affected by macroeconomic or systematic changes in the overall economy. They rise and fall with the economy.

Defensive stocks provide consistent dividends and stable earnings regardless of the state of the stock market or economy.

Money market funds are a type of mutual fund that invests in highly liquid, near-term instruments. These instruments include cash, cash equivalent securities, and high-credit-rating, debt-based securities with a short-term maturity (such as U.S. Treasuries).

A market low can be defined as a period of time where the prices of stocks decline significantly and remain at a low level for an extended period.

The Vanguard Federal Money Market Fund (“VMFXX”) primarily holds cash, U.S. government securities and/or repurchase agreements collateralized by U.S. government securities.

This communication was prepared by Strategas (“we,” “us,” or “our”), a brand that offers investment advisory services through Strategas Asset Management, LLC, an SEC Registered Investment Adviser, and provides research to institutional investors through Strategas Securities, LLC, a broker-dealer and FINRA member firm and an SEC Registered Investment Adviser. This communication represents our views as of 11/12/2024, which are subject to change, and presented for illustrative purposes only. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.

Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.

The ETFs described herein are referenced solely for illustrative purposes and should not be construed as an investment recommendation. An investment in exchange traded funds involves risk, including the possible loss of principal. For important disclosures and risks relating to each ETF referenced herein, see each respective funds’ prospectus or contact your financial professional