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iShares Russell 1000 ETF

Technology

Financial Services

Healthcare

Consumer Cyclical

Industrials

Consumer Defensive

Communication Services

Energy

Real Estate

Utilities

Basic Materials

Other

The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index.

Apple Inc

Microsoft Corp

Nvidia Corp.

Amazon.Com Inc

Meta Platforms, Inc.

Alphabet, Inc. (cl A)

Alphabate, Inc Class C

Berkshire Hathaway, Inc.

Broadcom Inc

Eli Lilly & Co.

trader ai3

Broad U.S. Equity ETFs

Small Cap Analysis

Small Cap

Markets

Trading Ideas

ETFs

COMM

HUMA

QTTB

SAVA

SERV

Macro environment favors large-caps, but July saw impressive gains for small-caps, with Serve Robotics leading at 803% and Q32 Bio at 101%.

8 Best-Performing Small Caps In July: Find Out Which Stock Jumped 803%

Wall Street

Analyst Color

MAGS

2024: Small-cap stocks struggling, large-cap soaring. Possible trend reversal on June CPI report&#39;s effect on interest rates. Outlier day in history.

The Market Did Something Thursday That Has Only Occurred 4 Times In History

Spotify DJ

Entertainment

Equities

News

Media

General

SPDW

SPOT

Spotify introduces new Basic streaming plan at $10.99/mo in the US, after raising Premium price. Plans for Supremium with high-fidelity audio.

Spotify Unveils New Basic Plan After Recent Premium Price Hike

trader ai7

Large Cap

Mid Cap

Sector ETFs

Currency ETFs

Tech

Rydex ETF Trust Rydex S&P Equal Weight ETF

US stock market at all-time highs, but top 100 companies dominate, raising concerns about lack of breadth and participation in the rally. Tech sector driving extreme valuations, surpassing historical highs. Risk is high, according to analysts.

5 Charts Expose Troubling Weaknesses In Record-High Stock Market: &#39;This Is Not Normal&#39;

Young,Woman,Relaxing,On,Beach,,Ocean,View,,Vacation,Outdoors,Seascape

Market Summary

Upgrades

Price Target

Travel

Global

ABNB

BEDZ

CRUZ

EXPE

JRNY

NCLH

WYNN

Value investors are turning to the travel and leisure industry for potential growth and discounted valuations, as travel stocks catch up to the broader market.

Airbnb, Norwegian Cruise See Analyst Upgrades: Are Travel And Leisure Stocks The New Value Heaven?

Young,People,Waiting,For,Job,Interview,Indoors

Macro Economic Events

Economics

5 Experts On June Jobs Surprise: Data &#39;All But Ensures&#39; Fed Rate Hike, Says 1 Economist

Bear.Shutterstock

Short Ideas

Movers

SNOW

UPST

Brace for Impact: These 5 Overvalued Stocks Face Bearish Pressure In Impending Market Reversal

Hedge Funds

AAPL

ADNT

ALLY

AMCX

AMZN

AXTA

BABA

Brighthouse Financial, Inc. - Common Stock

BLMN

BRK-B

CARS

CELG

CLDR

CNDT

DLTR

FISV

FLMN

GOOG

INST

JACK

LYFT

MDLZ

MRVL

NAVI

NBSE

NFLX

NLSN

NTUS

PRGO

PTON

SIRI

WORK

Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolios

Long Ideas

What&#39;s Ailing Small-Caps? A Sector Differential Solves The Mystery

Growth ETFs Can Keep Commanding Premiums Over Value

The United States&#8217; macroeconomic environment was favorable to large-cap companies and unfriendly to small-caps through the first half of 2024. <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/07/39739225/the-market-did-something-today-that-has-only-occurred-4-times-in-history">That changed in July</a>.
Best Performers: These were the 10 best-performing small caps (defined as a market cap between $500 million and $10 billion) in July, according to data from <a href="http://benzinga.com/pro">Benzinga Pro</a>:
<ul>
<li>Serve Robotics Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SERV#NASDAQ">SERV</a>) shares surged an astonishing 803%.</li>
</ul>
Serve Robotics, the top performer of any publicly traded company, received attention from investors after NVIDIA Corp <a href="https://www.benzinga.com/news/24/07/39860370/serve-robotics-stock-rises-after-nvidia-discloses-10-stake">disclosed a 10% stake</a> in the company. The Uber-backed company developed an advanced, AI-robotics mobility platform, with last-mile delivery in cities such as Los Angeles. The company&#8217;s rise reflected investors&#8217; enthusiasm for NVIDIA&#8217;s investment.
<ul>
<li>CommScope Holding Company Inc&#8216;s (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/COMM#NASDAQ">COMM</a>) stock rose by 121%.</li>
</ul>
CommScope, a network infrastructure provider, enthused investors with its <a href="https://www.benzinga.com/news/24/07/40015083/on-semiconductor-posts-upbeat-earnings-joins-oil-states-international-commscope-holding-and-other-bi">strong preliminary financial results</a>. Shares <a href="https://www.benzinga.com/news/24/07/39840503/cintas-posts-upbeat-earnings-joins-commscope-holding-virtu-financial-and-other-big-stocks-moving-hig">jumped earlier in the month</a> when fiber optic cable producer Amphenol announced plans to acquire mobile networks businesses from CommScope.
<ul>
<li>Hawaiian Electric Industries, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HE#NYSE">HE</a>) saw a 102% share appreciation.</li>
</ul>
Hawaiian Electric, the largest utility provider in Hawaii, had a newsworthy month. <a href="https://www.benzinga.com/markets/equities/24/07/39861173/why-hawaiian-electric-industries-shares-are-rocketing-today">Shares of the company surged</a> after a report suggested the company reached a settlement to resolve lawsuits related to the <a href="https://www.benzinga.com/general/travel/23/08/33712878/tragedy-in-paradise-thousands-flee-as-hawaiis-maui-island-faces-one-of-deadliest-us-wildfires">2023 Maui wildfires</a>.
<ul>
<li>Q32 Bio Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QTTB#NASDAQ">QTTB</a>) shares ballooned by 101%.</li>
</ul>
Q32 Bio had <a href="https://www.benzinga.com/news/24/07/39934830/at-t-group-1-automotive-mattel-seagate-and-other-big-stocks-moving-higher-on-wednesday">a great month</a> after analysts covering the stock issued Buy ratings.
<ul>
<li>Meta Data Ltd&#8216;s (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AIU#NYSE">AIU</a>) stock saw an impressive 92% increase.</li>
</ul>
AIU shares catapulted more than 100% in a day after the company announced a 1 for 5 reverse stock split, according to Benzinga Pro.
<ul>
<li>Cassava Sciences Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SAVA#NASDAQ">SAVA</a>) shares appreciated by 83%.</li>
</ul>
Cassava shares <a href="https://www.benzinga.com/news/24/07/40083892/whats-going-on-with-cassava-sciences-shares-today">jumped on the last day of the month</a> after the company announced an extension of its open-label trials for its Alzheimer&#8217;s treatment, simufilam. <a href="https://www.benzinga.com/general/biotech/24/07/39891005/cassava-sciences-advances-alzheimers-drug-through-high-stakes-phase-3-trials?_gl=1&#x2A;1ly5tmi&#x2A;_gcl_au&#x2A;MTMxNjc0NDI3OS4xNzE1MTc5Mzc4&#x2A;_ga&#x2A;MTg1OTMzNTE1My4xNzE1MTc5Mzc4&#x2A;_ga_V7ZK73W7N0&#x2A;MTcyMjUxNjU5Ni4zNjguMS4xNzIyNTM5OTA5LjAuMC4w">The company announced</a> the beginning of Phase 3 trials for the drug on July 22.
<ul>
<li>Emergent Biosolutions Inc&#8216;s (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EBS#NYSE">EBS</a>) stock rose by 80%.</li>
</ul>
Healthcare company Emergent Biosolutions saw sustained gains throughout the month before reversing slightly. On July 9, the company <a href="https://www.benzinga.com/general/biotech/24/07/39687792/emergent-biosolutions-and-johnson-johnson-resolve-claims-over-covid-19-vaccine-manufacturing">reached a settlement</a> with Johnson &amp; Johnson to resolve disputes related to J&amp;J&#8217;s COVID-19 vaccine.
<ul>
<li>Humacyte Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HUMA#NASDAQ">HUMA</a>), whose shares rose by 76%.</li>
</ul>
Humacyte, a biotech company, saw its <a href="https://www.benzinga.com/news/24/07/39802259/whats-going-on-with-huamacyte-shares-tuesday">share price soar</a> after the company entered a license agreement with Pluristyx and received Regenerative Medicine Advanced Therapy (RMAT) designation by the FDA for its&nbsp;<a href="https://www.benzinga.com/news/24/07/39580994/why-humacyte-stock-is-trading-15-higher-monday" target="_blank" rel="noreferrer noopener">Acellular Tissue Engineered Vessel</a>.
Index Performance: The small-cap iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) rose by over 11% in July, while the large-cap iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>) appreciated by just 1%.
The small-cap outperformance indicated a rebalancing from large caps to small caps. <a href="https://www.benzinga.com/markets/equities/24/06/39340719/inflation-cools-in-may-fed-hints-at-slower-pace-of-rate-cuts-stocks-hit-new-record-highs-this-we">Cooling inflation data</a> increased the perceived likelihood of <a href="https://www.benzinga.com/news/large-cap/24/07/40080168/jerome-powell-finally-concedes-rate-cut-could-be-on-the-table-in-september-stocks-gold-rise-dollar">interest rate cuts</a> by the Federal Reserve by the end of the year.
Want To Learn More?: Chicago is gearing up to host Benzinga's highly anticipated <a href="https://www.benzinga.com/events/small-cap/global-small-cap-conference-2024/">SmallCap Conference 2024 on October 9-10.</a> This event promises to be our biggest yet, with a live-stream audience of 10 million.
Investors will have the exclusive opportunity to connect with emerging small-cap companies, attend captivating presentations, participate in interactive Q&amp;A sessions, and network extensively.
Don't miss out on this unparalleled opportunity:
<ul>
<li><a href="https://www.benzinga.com/events/small-cap/global-small-cap-conference-2024/" target="_blank" rel="noreferrer noopener">Register now to secure your spot at Benzinga's Largest SmallCap Conference ever in Chicago!</a></li>
</ul>
Image created using artificial intelligence via Midjourney.

In 2024, the share prices of large-cap companies have soared while small-caps have struggled. Thursday&#8217;s price action could mark a key reversal in <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/07/39673296/just-17-of-s-p-500-stocks-outperform-the-index-what-does-that-mean-for-the-market">this year&#8217;s trend</a>.
Price Action: The iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>), which tracks small-cap stocks, closed up 3.63% on the day. The iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>), which tracks large-cap stocks, was down 0.66% on the day.
The difference between the two indexes&#8217; performances was therefore over 4%.
The Roundhill Magnificent Seven ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MAGS#NASDAQ">MAGS</a>), which tracks Microsoft Corp, Apple Inc, NVIDIA Corp, Alphabet Inc, Meta Platforms Inc, Amazon.com Inc and Tesla Inc, saw a big down day. The share prices of the Magnificent Seven collectively fell 4.49%.
Why it Matters: According to a <a href="https://x.com/edclissold/status/1811426303750643828">post</a> on X by strategist Ed Clissold, the Russell 2000 posted one of its best days ever compared to the Russell 1000 on Thursday. A difference between the two indexes of over 4% has only occurred on four occasions:
<ul>
<li>On Oct. 19, 1987, &#8220;Black Monday.&#8221;</li>
<li>On Oct. 10, 2008, during the Great Recession.</li>
<li>On Oct. 4, 2011, following a market low during the European debt crisis.</li>
<li>And on March 19, 2020, near the bottom of a pandemic-driven low.</li>
</ul>
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">FWIW, here are Russell 2000/1000 ratio returns after the previous 4 cases. Mixed bag. 2/2 <a href="https://t.co/fXKeKtm61t">pic.twitter.com/fXKeKtm61t</a>
&mdash; Ed Clissold (@edclissold) <a href="https://twitter.com/edclissold/status/1811426470499319950?ref_src=twsrc%5Etfw">July 11, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
All of the dates mentioned above occurred during periods of decline; the latest addition to the list is an outlier, as the S&amp;P 500 index is near an all-time high. Alternatively, Thursday&#8217;s results could suggest outcomes similar to historical performance following 4% days.
Small caps seemingly benefited from Thursday&#8217;s <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39728268/inflation-slows-more-expected-to-3-in-june-heightens-expectations-for-rate-cuts-t">cooler-than-expected</a> June consumer inflation report, which could play a part in preempting interest rate cuts later this year. The higher-for-longer interest rate environment <a href="https://www.benzinga.com/news/24/05/39013274/newedge-wealths-cameron-dawson-talks-prolonged-high-interest-rates-on-premarket-prep">benefitted large-cap</a> companies with extensive cash piles and hurt smaller businesses reliant on debt.
Also Read: 
<ul>
<li><a href="https://www.benzinga.com/markets/asia/24/07/39733667/inflation-data-sparks-rush-for-gold-real-estate-treasuries-yen-traders-see-september-rate-cut-as-don">Inflation Data Sparks Rush For Gold, Real Estate, Treasuries, Yen: Traders See September Rate Cut As Done Deal</a></li>
</ul>

Spotify Technology SA (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPOT#NYSE">SPOT</a>) announced on Friday that it is introducing a new &#8220;Basic&#8221; streaming <a target="_blank" href="https://newsroom.spotify.com/2024-06-21/more-choice-for-us-subscribers/" rel="noreferrer noopener">plan </a>in the U.S. The new plan costs $10.99 per month and includes all of the benefits of a Premium plan but without the monthly audiobook listening time.
The new streaming plans were launched a few weeks after Spotify increased the price of its Premium plan from $10.99 to $11.99.
Related: <a target="_blank" href="https://www.benzinga.com//node/39138449" rel="noreferrer noopener">Spotify Turns Up The Volume On Pricing, Premium Plans See A Hike</a>
The higher prices would help the streaming service cover the cost of audiobooks, TechCrunch <a target="_blank" href="https://techcrunch.com/2024/06/21/spotify-launches-a-new-basic-streaming-plan-in-the-us/" rel="noreferrer noopener">reports</a>. This new plan is ideal for users who don&#8217;t utilize the monthly 15 hours of audiobook listening with the Premium plan.
The streaming giant is <a target="_blank" href="https://www.benzinga.com/news/24/06/39274302/whats-going-on-with-spotify-stock-on-tuesday" rel="noreferrer noopener">reportedly developing a </a>&#8220;Supremium&#8221; plan that will include high-fidelity audio and cost at least $5 more monthly.
In April, Spotify reported a quarterly gross margin of 27.6%, implying a growth of 243 bps,&nbsp;reflecting improved podcast and music profitability.
Also Read: <a target="_blank" href="https://www.benzinga.com/news/24/04/38493319/spotify-co-founder-daniel-ek-cashes-out-more-spotify-stock-shifts-focus-to-tech-and-climate-startups" rel="noreferrer noopener">Spotify Co-founder Daniel Ek Cashes Out More Spotify Stock, Shifts Focus to Tech and Climate Startups</a>
<a target="_blank" href="https://www.benzinga.com/news/24/05/39010168/spotify-discontinues-car-thing-device-shifts-focus-to-new-user-features" rel="noreferrer noopener">Analysts predict accelerated</a> revenue growth in 2024, driven by increased Premium Subscribers benefiting from the shift to access-based streaming models. They praised Spotify&#8217;s capability to boost revenue and enhance profitability through effective pricing strategies.
Spotify stock gained over 100% in the last 12 months. Investors can gain exposure to the stock via SPDR Portfolio Developed World Ex-US ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPDW#NYSE">SPDW</a>) and iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>).
Price Action: SPOT shares were trading higher by 0.65% at $315.93 at the last check Friday.
Also Read: <a target="_blank" href="https://www.benzinga.com/24/06/39418475/spotify-challenges-youtube-adds-video-support-for-all-platform-podcasters" rel="noreferrer noopener">Spotify Challenges YouTube, Adds Video Support For All Platform Podcasters</a>
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

As the S&amp;P 500 and Nasdaq 100 indices continue to notch <a href="https://www.benzinga.com/top-stories/24/06/39383798/the-ai-big-10-10-ai-stocks-now-comprise-28-of-s-p-500-up-from-14-in-2023">new all-time highs</a>, it&#8217;s clear that the rising tide has not lifted all boats.
Sharp-eyed analysts and investors have noted some discordant features in a stock market at its peak, raising questions about the euphoria that currently reigns <a href="https://www.benzinga.com/markets">supreme on Wall Street.</a>
<h2 class="wp-block-heading">Mega-Cap Dominance Unprecedented Since Late 2008</h2>
The dominance of mega-cap stocks hasn&#8217;t been this pronounced in nearly sixteen years. 
The top 100 U.S. stocks by market capitalization, monitored through the iShares S&amp;P 100 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OEF#NYSE">OEF</a>), have never been stronger against the Russell 1000 Index, as tracked by the iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>), since December 2008-.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1024x500.png" alt="" class="wp-image-397825" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
David Morrison, senior market Analyst at Trade Nation, commented, &#8220;There are concerns about the US market's lack of breadth with so much of the overall performance concentrated in the stock price of a few corporations. In fact, the five biggest companies by market capitalization in the S&amp;P 500 account for nearly 30% of its value. The size and outperformance of this select group is reflected in its valuation, which is way above that of the rest of the constituents.&#8221;
<h2 class="wp-block-heading">Poor Participation In Market Rally</h2>
The current bull market rally lacks broad participation, with only a few companies driving the major indices higher.
The cap-weighted S&amp;P 500 Index, tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), has surged to levels last seen in November 2008 when compared to its equally-weighted counterpart, represented by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1024x500.png" alt="" class="wp-image-397797" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
&#8220;We haven't had a four-week span where the US stock market has gone up so much with so many stocks within the market going down, based on data going back to 2002,&#8221; said Luke Kawa, markets editor at Sherwood.
SentimenTrader in a post on social media X, indicates that while the Nasdaq 100 continues to achieve record highs, many of its constituent stocks are underperforming, dropping to monthly, quarterly, or even yearly lows and falling below their 10-, 50-, and 200-day moving averages. 
&#8220;This is not normal. In fact, it&#8217;s never happened before to this degree. There is a possibility that the average stock will catch up to the index, that is not how things usually pan out. Almost never, in fact. Risk is high in that index,&#8221; they wrote.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">The Nasdaq 100 continues to notch record high after record high. Many of its stocks are not only lagging, but they&#39;re falling to monthly, quarterly, or even yearly lows and below their 10-, 50-, and 200-day moving averages. This is not normal. In fact, it&#39;s never happened before… <a href="https://t.co/gopsw8WUJn">pic.twitter.com/gopsw8WUJn</a>
&mdash; SentimenTrader (@sentimentrader) <a href="https://twitter.com/sentimentrader/status/1802687052724527265?ref_src=twsrc%5Etfw">June 17, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
<h2 class="wp-block-heading">Tech Supremacy Surpassing Historical Extremes</h2>
The tech sector has been the primary driver of the extreme relative valuations among major U.S. stock indices. 
The Nasdaq 100, when compared to both the Dow Jones Industrial Average and the Russell 2000, is at historic highs, surpassing previous peaks seen during the dot-com bubble and in December 2021 at the end of the ultra-low interest rate era.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1024x500.png" alt="" class="wp-image-397801" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1024x500.png" alt="" class="wp-image-397808" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read now: <a href="https://www.benzinga.com/government/24/06/39400726/us-budget-crunch-cbo-warns-federal-interest-costs-now-higher-than-defense-spending-deficits-to-remai">US Budget Crunch: CBO Warns Federal Interest Costs Now Higher Than Defense Spending, Deficits To Remain Above 5.5% Until 2034</a>
Image created using artificial intelligence via Midjourney.

5 Charts Expose Troubling Weaknesses In Record-High Stock Market: 'This Is Not Normal'

Shares in the travel and leisure industry are increasingly catching the eye of value investors, presenting discounted valuations alongside promising growth prospects for <a href="https://www.benzinga.com/topic/travel">the upcoming tourist season.</a>
Since the start of the current bull-market rally, major industry exchange-traded funds (ETFs) tracking travel and leisure companies have underperformed relative to the broader stock market.
The Defiance Hotel, Airline, and Cruise ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CRUZ#NYSE">CRUZ</a>), the Alps Global Travel Beneficiaries ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JRNY#NYSE">JRNY</a>), and the AdvisorShares Hotel ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BEDZ#NYSE">BEDZ</a>) have gained 28%, 24.5%, and 22.8%, respectively, compared to a 29% surge in the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) since late October 2023.
Yet, the outlook for travel-related stocks is improving, drawing interest from traders looking to invest in underperforming sectors amid the broader bull market.
<h1 class="wp-block-heading">Chart: Travel Stocks Lagged Behind The Broader S&amp;P 500 In The Current Bull-Market Rally</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116-1024x500.png" alt="" class="wp-image-358966" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/28110853/image-116.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read also: <a href="https://www.benzinga.com/insights/options/24/05/38949636/market-whales-and-their-recent-bets-on-ccl-options">Market Whales and Their Recent Bets on CCL Options</a>
What Happened: On Tuesday, Airbnb Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ABNB#NASDAQ">ABNB</a>) and Norwegian Cruise Holdings Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NCLH#NYSE">NCLH</a>) received analyst upgrades.
Wedbush upgraded Airbnb Inc. from Neutral to Outperform, raising the price target from $160 to $165. 
Analyst Scott Devitt suggested investors should capitalize on this period of relative weakness, seeing potential upside to near-term estimates following conservative second-quarter guidance.
He emphasized Airbnb&#8217;s strong growth prospects and significant potential as the company expanded beyond its core offerings. Wedbush highlighted Airbnb&#8217;s leading competitive position in the alternative accommodation market and opportunities for growth in adjacent products and services.
"We believe the company's expansion will start with the relaunch of Airbnb experiences, with an announcement likely within the next 6-12 months," Wedbush noted. The analyst increased estimates for the second quarter and second half revenue and adjusted EBITDA by 1% and 3%, respectively.
Shares of Airbnb Inc. rose 1.69% to $146.91 on Tuesday at publication.
Mizuho Securities upgraded Norwegian Cruise Holdings from Neutral to Buy, raising the price target from $21 to $24.
Executive Director Ben Chaiken noted a shift in sentiment towards the cruise line, driven by compelling valuations, improving business efficiency and a favorable industry backdrop.
"Valuation has completely reset," Chaiken remarked, highlighting that Norwegian Cruise has underperformed peer Royal Caribbean Cruise Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RCL#NYSE">RCL</a>) by 160% since January 2023. 
Mizuho Securities raised revenue forecasts from $9.35 billion to $9.41 billion for 2024, and from $9.97 billion to $10.13 billion for 2025, also boosting EBITDA forecasts.
"Together, we find the risk/reward particularly compelling at current levels, with upside/downside of approximately 6:1," Chaiken stated.
Shares of Norwegian Cruise Holdings rose 3.91% to $16.63 on Tuesday at publication.
<h1 class="wp-block-heading">Top 10 Travel &amp; Leisure Stocks With The Highest Upside Potential</h1>
Currently, the Street&#8217;s median price target on Airbnb and Norwegian Cruise Holdings is about 2.2% and 19.7% higher than current prices.
Examining Travel &amp; Leisure stocks included in the iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>), the stocks with the highest upside potential based on the difference between the median Street price target and current prices are:
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Median target (% vs. current price)</th>
</tr>
</thead>
<tbody>
<tr>
<td>Caesars Entertainment, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CZR#NASDAQ">CZR</a>)</td>
<td>61.27%</td>
</tr>
<tr>
<td>MGM Resorts International (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MGM#NYSE">MGM</a>)</td>
<td>43.40%</td>
</tr>
<tr>
<td>Carnival Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CCL#NYSE">CCL</a>)</td>
<td>40.66%</td>
</tr>
<tr>
<td>Las Vegas Sands Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LVS#NYSE">LVS</a>)</td>
<td>38.10%</td>
</tr>
<tr>
<td>Wynn Resorts, Limited (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/WYNN#NASDAQ">WYNN</a>)</td>
<td>34.45%</td>
</tr>
<tr>
<td>Boyd Gaming Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BYD#NYSE">BYD</a>)</td>
<td>33.40%</td>
</tr>
<tr>
<td>Alaska Air Group, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ALK#NYSE">ALK</a>)</td>
<td>30.58%</td>
</tr>
<tr>
<td>Expedia Group, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EXPE#NYSE">EXPE</a>)</td>
<td>29.13%</td>
</tr>
<tr>
<td>United Airlines Holdings, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UAL#NYSE">UAL</a>)</td>
<td>28.30%</td>
</tr>
<tr>
<td>Wyndham Hotels &amp; Resorts, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WH#NYSE">WH</a>)</td>
<td>27.16%</td>
</tr>
</tbody>
</table>
</figure>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/39037833/magnificent-7-becomes-the-magnificent-one-wall-street-guru-hails-single-tech-stock-">Magnificent 7 Becomes &#8216;The Magnificent One&#8217;: Wall Street Guru Hails Single Tech Stock As Market Leader</a>
Photo: Shutterstock

The latest data on nonfarm payrolls (NFPs) in June delivered a surprise Friday as the figure came in at 209,000, missing economist expectations of 225,000 jobs. This marks the lowest print since December 2020 and a notable decline from May&#8217;s revised figure of 306,000, signaling a softening of <a href="https://www.benzinga.com/economics/macro-economic-events/23/07/33146887/june-nonfarm-payrolls-miss-estimates-unemployment-drops-but-wages-rise-investors-" target="_blank" rel="noreferrer noopener">employment momentum last month.</a>
The unemployment rate decreased as predicted, reaching 3.6% in June and remaining only 0.2 percentage points above a five-decade low.
Salary growth rose unexpectedly, as average hourly wages showed a 0.4% month-over-month increase, surpassing expectations of 0.3%, while annual wage growth stood at 4.4%, above the 4.2% expected. 
In terms of stock reactions, small-cap stocks in the iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>) rose 0.7%, outperforming large caps in the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), down 0.1%. 
Following the release of the jobs report, economists weighed in on the implications of the data:
<ol>
<li>Quincy Krosby, chief global strategist for LPL Financial, acknowledged that NFPs fell below consensus estimates but still indicate a resilient labor market. The unemployment rate at 3.6% will continue to keep the Fed in play for additional rate hikes, he said. Krosby highlighted the importance of next week&#8217;s CPI report in determining whether inflation is decreasing at a satisfactory pace for the Federal Reserve&#8217;s future rate hike decisions. </li>
<li>Jeffrey Roach, chief economist for LPL Financial, focused on the increase in average hourly earnings, which grew at a faster rate than expected. Roach said that wages are running &#8220;too hot for central bankers trying to quell inflation.&#8221; The market for blue-collar workers remains extremely tight as businesses appear desperate to attract and retain workers. &#8220;The latest jobs report all but ensures the Fed will increase rates later this month,&#8221; Roach said. </li>
<li>Adam Crisafulli, Vital Knowledge Media LLC founder, emphasized that the headline NFP figure, although lower than the ADP report, indicates decent job creation and is unlikely to significantly impact the Fed&#8217;s outlook. The expert noted that private job creation was relatively weak at 149,000, the prior months&#8217; revisions were negative and wages ran hotter than expected, which he said suggests a combination closer to the &#8220;stagflation&#8221; end of the spectrum. </li>
<li>Dave Gilbertson, labor economist at UKG, said that while job growth might not be as explosive as in May, it is still healthy and reflects a stable labor market. He highlighted the continued demand for labor in sectors such as retail, hospitality and health care, and said the balance of power favors the blue-collar workforce. </li>
<li>Joseph Brusuelas, chief economist at RSM US LLP, tweeted that a remarkable streak of robust monthly job gains continued in June, with the economy creating 209,000 new jobs and the unemployment rate standing at 3.6%. Total employment has increased by 1.77 million in 2023, with the economy creating an average of 296,500 jobs per month.</li>
</ol>
Read more: <a href="https://www.benzinga.com/economics/macro-economic-events/23/07/33140458/the-chart-no-stock-investor-wants-to-see-10-year-treasury-yields-rise-above-infla" target="_blank" rel="noreferrer noopener">The Chart No Stock Investor Wants To See: 10-Year Treasury Yields Rise Above Inflation For The First Time In Three Years Edit Edit New CMS Republish Revisions Workflow Nodequeue Translate Clear Cache Alert Tools</a>
<h2 class="wp-block-heading">Chart: Annual Wage Growth Remains Well Above Pre-Covid Levels</h2>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="793" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358-1024x793.png" alt="" class="wp-image-64072" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358-1024x793.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358-300x232.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358-768x595.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358-1536x1190.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/07094354/USAHEYY_2023-07-07_15-43-28_a4358.png 1588w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Photo via Shutterstock.

5 Experts On June Jobs Surprise: Data 'All But Ensures' Fed Rate Hike, Says 1 Economist

The U.S. stock market began on Tuesday (June 20) to show the first signs of a reversal from the impressive surge that began in early May as investors worry about the future path of monetary policy ahead of impending Federal Reserve Chair Jerome <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32924024/powell-to-testify-before-congress-after-fed-pause-what-the-market-is-watching-for" target="_blank" rel="noreferrer noopener">Powell&#8217;s testimony before the U.S. Congress.</a>
A wave of negative&nbsp;performance hit all the main U.S. stock indexes and sectors on Tuesday, giving the market an overall gloomy feel.
The market alert was initially flagged by Benzinga last Friday (June 16), when it reported the relative strength index (RSI) for the S&amp;P 500 Index had reached its <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/23/06/32896664/ai-frenzy-pushes-s-p-500s-rsi-to-most-overbought-level-since-november-2021-what-does-h" target="_blank" rel="noreferrer noopener">most overbought level since November 2021</a>, signaling that bullish momentum had likely peaked.
Based on their&nbsp;valuation metrics, such as the forward price-to-earnings ratio and the forward price-to-sales ratio, five overvalued stocks that are part of the holdings of the iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>) have been identified as being particularly vulnerable to an uptick in bearish momentum if the current market decline intensifies.
<h2 class="wp-block-heading">5 Overvalued Stocks Poised For Bears&#8217; Comeback</h2>
<h3 class="wp-block-heading">5) Cloudflare, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NET#NYSE">NET</a>)</h3>
<ul>
<li>Cloudfare is a web infrastructure and security company providing a range of services to enhance website performance and protect against cyber threats.</li>
<li>Forward price-to-earnings ratio (based on the next 12 months expected earnings): 191.7x</li>
<li>Forward price-to-sales ratio (based on the next 12 months expected revenues): 16.3x</li>
<li>Year-to-date performance: 44%</li>
<li>Short interest: 6.34%</li>
</ul>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="689" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd-1024x689.png" alt="" class="wp-image-54772" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd-1024x689.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd-300x202.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd-768x517.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd-1536x1033.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115231/NET_2023-06-20_17-52-11_929fd.png 1834w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">4) Upstart Holdings, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/UPST#NASDAQ">UPST</a>)</h3>
<ul>
<li>Upstart is an innovative lending platform that utilizes artificial intelligence and machine learning algorithms to assess creditworthiness and offer personalized loans to individuals.</li>
<li>Forward P/E Ratio: 211.4x</li>
<li>Forward P/S Ratio: 4.5x</li>
<li>Year-to-date performance: 147%</li>
<li>Short interest: 29.7%</li>
</ul>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="689" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de-1024x689.png" alt="" class="wp-image-54773" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de-1024x689.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de-300x202.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de-768x517.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de-1536x1033.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20115549/UPST_2023-06-20_17-55-38_c46de.png 1834w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">3) MongoDB, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MDB#NASDAQ">MDB</a>)</h3>
<ul>
<li>MongoDB, Inc. is a leading provider of modern, document-oriented database software, offering a flexible and scalable solution for managing structured and unstructured data in diverse applications and environments.</li>
<li>Forward P/E Ratio: 256.3x</li>
<li>Forward P/S Ratio: 16.5x</li>
<li>Year-to-date performance: 89%</li>
<li>Short interest: 5.07%</li>
</ul>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="689" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6-1024x689.png" alt="" class="wp-image-54776" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6-1024x689.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6-300x202.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6-768x517.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6-1536x1033.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120038/MDB_2023-06-20_18-00-27_85cc6.png 1834w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">2) Snowflake, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SNOW#NYSE">SNOW</a>)</h3>
<ul>
<li>Snowflake is a cloud-based data platform that enables organizations to store, manage and analyze vast amounts of data in a highly scalable and secure manner, helping businesses derive valuable insights and make data-driven decisions.</li>
<li>Forward P/E Ratio: 292.4x</li>
<li>Forward P/S Ratio: 19.6x</li>
<li>Year-to-date performance: 21%</li>
<li>Short interest: 4.4%</li>
</ul>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="689" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb-1024x689.png" alt="" class="wp-image-54780" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb-1024x689.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb-300x202.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb-768x517.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb-1536x1033.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/20120436/SNOW_2023-06-20_18-03-52_ed7fb.png 1834w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">1) 10x Genomics, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TXG#NASDAQ">TXG</a>)</h3>
<ul>
<li>Description: 10x Genomics is a biotechnology company focused on developing advanced genomic tools and technologies to enable researchers to gain deeper insights into biology and accelerate discoveries in areas such as cancer research, immunology, and drug development.</li>
<li>Forward P/E Ratio: 381.1x</li>
<li>Forward P/S Ratio: 10.6x</li>
<li>Year-to-date performance: 57%</li>
<li>Short interest: 4.6%</li>
</ul>
Read Next: <a href="https://www.benzinga.com/government/23/06/32928945/senate-banking-committee-gears-up-for-vote-on-seizing-executive-compensation-following-bank-failures" target="_blank" rel="noreferrer noopener">Senate Banking Committee Gears Up For Vote On Seizing Executive Compensation Following Bank Failures: Sen. Warren Says Bankers Can&#8217;t &#8216;Walk Away Scot-Free&#8217;</a>

WIIM

SPDR Dow Jones Industrial Average ETF Trust

US indices are trading higher after Pfizer and BioNTech announced data from their BNT162 mRNA-based coronavirus vaccine program, which showed the drug created neutralizing antibodies.

The latest round of 13F filings from institutional investors is out, revealing to the world the stocks that some of the richest and most successful investors have been buying and selling.
<h3>Takeaways From 13F Season</h3>
Investors who follow particular fund managers can easily look up what each was buying and selling in the quarter, but other investors may be more interested in overall themes from 13F filings. Overall, it appears buying and selling among fund managers was split relatively evenly in the third quarter.
<ul>
<li>Surprisingly, despite a 27.1% drop in Netflix, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nflx#NASDAQ">NFLX</a>) shares in the third quarter, no major fund manager mentioned below was buying or selling shares.</li>
<li>The FANG group didn&rsquo;t get much attention at all in the third quarter aside from David Tepper buying Facebook, Amazon and Google.</li>
<li>Carl Icahn took a gamble on Caesars Entertainment, while George Soros dialed back his position.</li>
<li>Several fund managers made major adjustments to their ETF positions, including Tepper selling the XOP ETF, Leon Cooperman buying the GLD ETF, and Soros selling both the QQQ and the IWB funds.</li>
<li>As interest rates fell, dividend stocks were getting some love this quarter, with fund managers buying stocks like General Motors, BP and Carnival, each of which yield more than 4%.</li>
</ul>
Here&rsquo;s a rundown of how the smart money was playing some of the most popular stocks last quarter.
<h3>David Einhorn&rsquo;s Greenlight Capital</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Chemours Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cc#NYSE">CC</a>)</li>
<li>Brighthouse Financial Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bhf#NASDAQ">BHF</a>)</li>
<li>General Motors Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gm#NYSE">GM</a>)</li>
<li>Neubase Therapeutics Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nbse#NASDAQ">NBSE</a>)</li>
<li>Adient PLC (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/adnt#NYSE">ADNT</a>)</li>
</ul>
<h3>David Tepper&rsquo;s Appaloosa Management</h3>
<ul>
<li>Hilton Grand Vacations Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hgv#NYSE">HGV</a>)</li>
<li>KAR Auction Services Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kar#NYSE">KAR</a>)</li>
<li>Valaris PLC (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/val#NYSE">VAL</a>)</li>
<li>Dillard&#39;s, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dds#NYSE">DDS</a>)</li>
</ul>
Notable Q3 Buys/Increases:
<ul>
<li>Alphabet Inc Class C (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/goog#NASDAQ">GOOG</a>)</li>
<li>Micron Technology, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mu#NASDAQ">MU</a>)</li>
<li>Alibaba Group Holding Ltd - ADR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/baba#NYSE">BABA</a>)</li>
<li>Facebook, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/fb#NASDAQ">FB</a>)</li>
<li>Amazon.com, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>)</li>
<li>PG&amp;E Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pcg#NYSE">PCG</a>)</li>
<li>Boeing Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ba#NYSE">BA</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>SPDR S&amp;P Oil &amp; Gas Explore &amp; Prod. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xop#NYSE">XOP</a>)</li>
</ul>
<h3>Leon Cooperman&rsquo;s Omega Advisors</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Fiserv Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/fisv#NASDAQ">FISV</a>)</li>
<li>SPDR Gold Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>)</li>
<li>Nabors Industries Ltd. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/nbr#NYSE">NBR</a>)</li>
<li>Carnival Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ccl#NYSE">CCL</a>)</li>
<li>Navient Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/navi#NASDAQ">NAVI</a>)</li>
</ul>
Notable Q3 Sells/Decreases:
<ul>
<li>Nielsen Holdings PLC (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/nlsn#NYSE">NLSN</a>)</li>
<li>Thermo Fisher Scientific Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tmo#NYSE">TMO</a>)</li>
<li>AMC NETWORKS INC (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amcx#NASDAQ">AMCX</a>)</li>
</ul>
<h3>Barry Rosenstein&rsquo;s Jana Partners</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Instructure Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/inst#NYSE">INST</a>)</li>
<li>Bloomin&#39; Brands Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/blmn#NASDAQ">BLMN</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>Axalta Coating Systems Ltd (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/axta#NYSE">AXTA</a>)</li>
<li>Zimmer Biomet Holdings Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/zbh#NYSE">ZBH</a>)</li>
<li>HD Supply Holdings Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/hds#NASDAQ">HDS</a>)</li>
<li>Jack in the Box Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/jack#NASDAQ">JACK</a>)</li>
<li>Falcon Minerals Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/flmn#NASDAQ">FLMN</a>)</li>
</ul>
<h3>Jeff Smith&rsquo;s Starboard Value</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Perrigo Company PLC (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/prgo#NYSE">PRGO</a>)</li>
<li>Natus Medical Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ntus#NASDAQ">NTUS</a>)</li>
<li>Marvell Technology Group Ltd. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mrvl#NASDAQ">MRVL</a>)</li>
<li>Dollar Tree, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/dltr#NASDAQ">DLTR</a>)</li>
<li>Cars.com Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cars#NYSE">CARS</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>Box Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/box#NYSE">BOX</a>)</li>
</ul>
<h3>Warren Buffett&rsquo;s Berkshire Hathaway</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Occidental Petroleum Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/oxy#NYSE">OXY</a>)</li>
<li>Restoration Hardware Holdings, Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/rh#NYSE">RH</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>Wells Fargo &amp; Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/wfc#NYSE">WFC</a>)</li>
<li>Apple Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>)</li>
<li>Phillips 66 (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/psx#NYSE">PSX</a>)</li>
<li>Sirius XM Holdings Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/siri#NASDAQ">SIRI</a>)</li>
</ul>
<h3>George Soros&rsquo; Soros Fund Management</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Peloton Interactive Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pton#NASDAQ">PTON</a>)</li>
<li>Ally Financial Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ally#NYSE">ALLY</a>)</li>
<li>BP plc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bp#NYSE">BP</a>)</li>
<li>Citigroup Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/c#NYSE">C</a>)</li>
<li>Celgene Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/celg#NASDAQ">CELG</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>PowerShares QQQ Trust, Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)</li>
<li>Caesars Entertainment Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/czr#NASDAQ">CZR</a>)</li>
<li>Walt Disney Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dis#NYSE">DIS</a>)</li>
<li>iShares Russell 1000 Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>)</li>
<li>Morgan Stanley (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ms#NYSE">MS</a>)</li>
<li>Slack Technologies Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/work#NYSE">WORK</a>)</li>
<li>LYFT Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/lyft#NASDAQ">LYFT</a>)</li>
</ul>
<h3>Carl Icahn&rsquo;s Icahn Capital</h3>
Notable Q3 Buys/Increases:
<ul>
<li>HP Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hpq#NYSE">HPQ</a>)</li>
<li>Cloudera Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cldr#NYSE">CLDR</a>)</li>
<li>Icahn Enterprises LP (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/iep#NASDAQ">IEP</a>)</li>
<li>Hertz Global Holdings Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/htz#NYSE">HTZ</a>)</li>
<li>Conduent Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cndt#NYSE">CNDT</a>)</li>
<li>Caesars Entertainment</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>Cheniere Energy, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lng#NYSE">LNG</a>)</li>
<li>Freeport-McMoRan Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/fcx#NYSE">FCX</a>)</li>
<li>Occidental Petroleum</li>
</ul>
<h3>Bill Ackman&rsquo;s Pershing Square Capital</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Berkshire Hathaway Inc. Class B (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/brk-b#NYSE">BRK-B</a>)</li>
</ul>
Notable Q3 Sells/Reductions:
<ul>
<li>Automatic Data Processing (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/adp#NASDAQ">ADP</a>)</li>
<li>Chipotle Mexican Grill, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cmg#NYSE">CMG</a>)</li>
<li>Hilton Hotels Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hlt#NYSE">HLT</a>)</li>
<li>Restaurant Brands International Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/qsr#NYSE">QSR</a>)</li>
<li>Lowe&#39;s Companies, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/low#NYSE">LOW</a>)</li>
<li>United Technologies Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/utx#NYSE">UTX</a>)</li>
</ul>
<h3>Nelson Peltz&rsquo;s Trian Partners</h3>
Notable Q3 Buys/Increases:
<ul>
<li>Procter &amp; Gamble Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pg#NYSE">PG</a>)</li>
<li>MONDELEZ INTERNATIONAL INC (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mdlz#NASDAQ">MDLZ</a>)</li>
<li>Legg Mason Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lm#NYSE">LM</a>)</li>
<li>General Electric Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ge#NYSE">GE</a>)</li>
</ul>
Notable Q3 Sells/Decreases:
<ul>
<li>PPG Industries, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ppg#NYSE">PPG</a>)</li>
<li>Wendys Co (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/wen#NASDAQ">WEN</a>)</li>
<li>Bank of New York Mellon Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bk#NYSE">BK</a>)</li>
</ul>
Related Links:
<a href="https://www.benzinga.com/news/19/08/14278097/q2-13f-roundup-how-buffett-einhorn-ackman-and-others-adjusted-their-portfolios">Q2 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolios </a>
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Small-cap stocks and exchange traded funds are lagging their large-cap counterparts this. A comparison of the iShares Russell 2000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>) and the large-cap iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>) confirms as much.
<h3>What&#39;s Happened</h3>
Entering Wednesday, IWB was 17.2% year to date, outpacing the small-cap IWM by 510 basis points. However, the large/small gap has been particularly noticeable in recent months. Over the past 90 days, IWB is up 1.6% while IWM is lower by 2.7%, a chasm that&#39;s prompting some market observers to speculate that weakness in small-cap stocks is portending a broader market slump, or worse, a recession.
The small-cap slump is potentially more concerning when considering smaller companies are usually more domestically focused, meaning they offer some insulation <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/08/14288757/dont-ignore-this-low-volatility-etf">from trade wars</a>.
<h3>Why It&#39;s Important</h3>
As is to be expected, IWB and IWM have different sector exposures and the increasingly one-side rival between the two ETFs may be best explained by highlighting one of the most obvious sector differentials.
IWM&#39;s largest sector weight <a href="https://www.ishares.com/us/products/239710/?referrer=tickerSearch">is financial services</a> at nearly 18%, making the ETF vulnerable to declining net interest margins at the hands of lower interest rates. The large-cap IWB allocates less than 13% of its weight to financials, that ETF&#39;s third-largest sector exposure. IWB&#39;s top sector weight is technology at 22.27%.
&ldquo;While many factors impact size performance, sector exposures tell a big part of the story. A detailed look at industry weights helps explain recent small-cap underperformance,&rdquo; said FTSE Russell Managing Director Alec Young <a href="https://www.ftserussell.com/">in a recent note</a>.
&ldquo;It&rsquo;s no secret technology has been strongly outperforming the financial sector as a flattening yield curve and unprecedented declines in interest rates squeeze bank profits. The small cap benchmark sports for a hefty 27% financial industry weight vs. only 21% for its large-cap counterpart. What&rsquo;s more, large caps also have greater exposure to technology performance leadership with a 22% weight versus only 13% for the Russell 2000 Index.&rdquo;
<h3>What&#39;s Next</h3>
While the sector weights in IWB and IWM aren&#39;t going to change dramatically anytime soon, the aforementioned points may be mostly baked into the funds.
&ldquo;The financial sector has had a very strong correlation with the direction of US treasury yields for several years and has begun to perk up as rates have stabilized,&rdquo; said Young. &ldquo;As for technology, the sector&rsquo;s valuation premium is now well above its historical average reflecting structural growth tailwinds that are now widely appreciated. All this means that it may be time to re-evaluate small cap allocations.&rdquo;
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What's Ailing Small-Caps? A Sector Differential Solves The Mystery

Growth stocks and the related exchange traded funds took their lumps in May, but year to date, the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) is higher by 18.40 percent, an advantage of 530 basis points over the iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>).
IWF is beating the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>) by 270 basis points.
<h3>What To Know</h3>
Growth stocks, including those residing in ETFs like IWF, usually command higher multiples than value equivalents or the broader market. Hence, the growth designation. Those premiums are usually persistent, but growth&#39;s outperformance of value is lengthy by historical standards, though some of that outperformance is attributable to growth often topping value following recessions.
&ldquo;Growth&rsquo;s recent out-performance conforms to the post-crisis norm,&rdquo; <a href="https://www.blackrockblog.com/2019/06/07/growth-premium-steady/">said BlackRock in a recent note</a>. &ldquo;Focusing on price returns, since 2010 growth has outperformed value by an average of approximately 350 bps a year. The outperformance has not only been meaningful, it has been consistent. During the past five years value has only outperformed meaningfully on one occasion, 2016.&rdquo;
Over the past three years, IWF is up 58.10 percent while IWD, the value ETF, is higher by 29.90 percent.
<h3>Why It&#39;s Important</h3>
As is often discussed with growth ETFs, the technology sector is a prime determinant of the growth factor&#39;s returns. IWF allocates over a third of its weight to technology stocks compared to 21.45 percent in the Russell 1000 Index.
&ldquo;As others have noted, a large part of growth&rsquo;s winning streak can be attributed to stellar earnings growth, particularly from technology companies,&rdquo; said BlackRock. &ldquo;That said, multiple expansion, i.e. paying more for a dollar of earnings, has played a part as well. Since the 2011 market bottom, the trailing price-to-earnings (P/E) ratio for the Russell 1000 Growth Index is up roughly 65%. In contrast, the value index&rsquo;s P/E ratio has expanded by a more modest 40%.&rdquo;
With the overweight in technology stocks, IWF&#39;s annualized volatility over the past three years was 14.40 percent, but that was just 180 basis points higher than the same metric on the Russell 1000 Index.
<h3>What&#39;s Next</h3>
For growth investors or those considering IWF, the good news is, on valuation, growth is not expensive relative to historical norms. It simply looks pricey relative to value because value is trading well below its usual multiples.
&ldquo;But while growth stocks are not particularly cheap, it is not obvious that they are expensive,&rdquo; said BlackRock. &ldquo;Valuations are slightly below the long-term average. In other words, the fact that growth looks stretched relative to value is not a function of growth being particularly rich but value being very cheap.&rdquo;
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Few stocks have been immune from the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/10/12488010/dow-falls-1-300-points-in-48-hours-as-market-rout-conti">broad market&#39;s two-day tumble</a>. Among the punished are companies with direct exposure to the exchange traded funds industry.
This week, shares of BlackRock Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>), the world&#39;s largest assets manager and ETF issuer&nbsp;and WisdomTree Investments, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/wetf#NASDAQ">WETF</a>), the only publicly traded pure play ETF sponsor, are among the ETF-related stocks getting drubbed.
<h3>What Happened</h3>
Shares of BlackRock are lower by 11.91 percent this week. Invesco Ltd. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ivz#NYSE">IVZ</a>), the fourth-largest U.S. ETF issuer, has seen its shares tumble 13.57 percent over the same span.
&ldquo;Increased volatility has led to an increase in U.S.-domiciled ETF outflows at BLK and IVZ, although it appears that WETF has had break-even flows in the U.S. This exhibit excludes non-U.S. Domiciled ETF flows,&rdquo; said Keefe, Bruyette &amp; Woods analysts Robert Lee and Pell Bermingham in a note out Thursday.
Shares of BlackRock, the owner of the iShares ETF brand, slid 7 percent Wednesday. The KBW analysts offer some insight into the impact of ETF outflows on the stock.
&ldquo;Simplistically, if we assume the average fee rate on equity ETFs is about 26bp with a 70% incremental margin, then (all else equal) -$100bn of outflows would impact EPS about -$0.85 (our current 2019 EPS forecast is $29.56),&rdquo; the analysts said. &ldquo;However, this would also be highly dependent upon the mix. For example, if the outflows were predominately in lower fee core products where average fee rates are below 10bps the impact would be significantly less.&rdquo;
<h3>Why It&#39;s Important</h3>
For the week ended Oct. 10, five of the 10 worst ETFs in terms of lost assets are iShares funds, more than any other issuer. The iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>), the iShares iBoxx USD High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>) and the iShares Core U.S. Aggregate Bond Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>) are among the offending funds.
To be fair, BlackRock&#39;s iShares is the largest ETF issuer in terms of number of funds and three of its funds were also among the top asset gatherers for the week ended Oct. 10.
&ldquo;In this context, the -7% decline in BLK yesterday to the extent it was exacerbated by concerns over ETF outflows, may be overdone,&rdquo; said the KBW analysts.
KBW has an Outperform rating on BlackRock and Market Perform ratings on Invesco and WisdomTree.
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Bonds

WETF

How Market Volatility Is Affecting Some ETF Issuers

&quot;The key to making money in stocks is not to get scared out of them.&quot; -Peter Lynch
The term investing refers to risking one&#39;s capital with the hope of generating future returns. Not everyone commits their capital with the same objective, which often varies with age, risk tolerance, personal needs, the time period, investable surplus and even temperament.
It is only by adopting a carefully thought-out strategy that an investor can generate maximum returns while assuming minimum risk.
Fundamentally, investing approaches can be categorized into growth and value investing. Let&#39;s delve&nbsp;into these two approaches by looking at what each means, the pros and cons associated with each&nbsp;and how one compares against the other.
<h3>Value Investing: Hunting Bargains</h3>
<a href="https://www.benzinga.com/investing/guide-to-value-investing/">Value investing </a> is an approach where an investor roots for an underperforming stock in which they see&nbsp;future appreciation potential.
The late Benjamin Graham, who is known as one of the fathers of value investing along with David Dodd, put forth a concept called intrinsic value, which is justified by a company&#39;s assets, earnings, dividends and financial strength.
Intrinsic value&nbsp;is the perceived value of a company calculated using fundamental analysis by taking into account all tangible and intangible factors,<a href="https://www.investopedia.com/terms/i/intrinsicvalue.asp">&nbsp;according to Investopedia</a>.
In simple terms, value investing is a strategy of investing in stocks that trade at less than their intrinsic value or those which trade at a discounted valuation.
See Also: <a href="https://www.benzinga.com/investing/guide-to-value-investing/">A Guide To Value Investing</a>
Altria Group Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mo#NYSE">MO</a>), with a trailing-twelve month P/E of 10.39, can be described as a value stock. The stock is trading down about 16 percent year-to-date as of July 31.
Value investors typically look for a margin of safety&nbsp;and therefore pick stocks trading at a bigger discount than the intrinsic value provides.
Graham&#39;s logic for the intrinsic value focus is that it will keep investors from being swayed by extreme emotions running through the markets.
The following are the criteria that were outlined by Graham for screening value stocks:
<ul>
<li>Companies with atings (based on S&amp;P) of B+ or better.</li>
<li>Total debt to current asset ratio of less than 1.1.</li>
<li>Current ratio of over 1.5.</li>
<li>Positive earnings growth during the past five years.</li>
<li>Price/earnings ratio of 9 or less.&nbsp;</li>
<li>Price/book value of less than 1.2.</li>
<li>Dividend-paying companies.</li>
</ul>
How Intrinsic Value Is Calculated
<ul>
<li>
The discounted cash flow method, which discounts all expected future cash flows at an appropriate&nbsp;rate to arrive at the net present value.
</li>
<li>Multiples valuation, which takes the trailing 12-month EPS multiplied by expected P/E, or EBITDA multiplied by current EV/EBITDA ratio, or sales multiplied by the P/sales ratio.</li>
<li>The dividend discount model, which discounts&nbsp;back all the future dividend payments of a company.</li>
</ul>
<h3>Growth Investing: Betting On The Future</h3>
Growth investing, as the name implies, lends a growth focus, as investors scout&nbsp;high-growth companies that generate above-average growth relative to the industry in which they operate. This approach doesn&#39;t shun expensive stocks&nbsp;and recommends buying them if they&nbsp;have superlative growth potential.
The accent here is on the equity with the highest growth potential, rather than on valuation metrics that delineate&nbsp;a stock as cheap or expensive.
Amazon.com, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), which went public in 1997 at $18 per share, is now close to $1,800 over a 20-year period. This represents an appreciation of about 10,000 percent.
<img alt="amzn.png" src="/files/u101977/amzn.png" style="height:286px; width:800px" />
Although <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/07/12089661/amazons-q2-was-a-show-of-power-morgan-stanley-says"> Amazon&#39;s </a> valuation is astronomical, it is still considered a growth stock given the attractive opportunity presented by e-commerce and the cloud. Amazon Web Services has been generating revenue growth at a year-over-year clip of 40-plus&nbsp;percent.
The company&#39;s subscription services, which comprise annual and monthly fees associated with Amazon Prime membership &mdash;&nbsp;as well as audiobook, e-book, digital video, digital music&nbsp;and other non-AWS subscription services &mdash; also offer&nbsp;high growth potential. Excluding forex, subscription services clocked in revenue growth of 55 percent in the most recent quarter.
See Also: <a href=" https://www.benzinga.com/analyst-ratings/analyst-color/18/07/12091149/which-is-the-better-buy-netflix-or-chinas-fast-growing-">Which Is The Better Buy: Netflix Or China&#39;s Fast-Growing Iqiyi?</a>
Screening Growth Stocks
Several criteria exist for selecting a growth stock, and some basic screening criteria are listed below:
<ul>
<li>Zero in on a sector showing sustainable growth; tech stocks usually qualify.</li>
<li>Look for industries and sectors with&nbsp;high barriers to entry.</li>
<li>Consistently rising sales.</li>
<li>Strong historical earnings growth: over 15-percent growth over the past three years.</li>
<li>Earnings growth outperforming the market as a whole.</li>
<li>Robust profit margins.</li>
<li>Improving return on equity.</li>
<li>Strong stock performance.</li>
</ul>
<h3>Growth Vs. Value Investing</h3>
The growth vs. value debate has been raging on for some time now, although there hasn&#39;t been a clear verdict in favor of either of the investment themes.
Value stocks outperformed growth stocks over a 90-year period beginning in 1926 by 17 percent to 12.6 percent, <a href="https://www.fool.com/investing/2016/06/19/growth-stocks-vs-value-stocks-over-the-long-term-y.aspx">The Motley Fool quoted</a> Bank of America Merrill Lynch Chief Investment Strategist Michael Hartnett as saying. Value stocks outperformed growth stocks in about three out of every five years, he said.
Yet growth stocks have outperformed value stocks in most years since 2006.
<img alt="306651_cyclicality.png" src="/files/u101977/306651_cyclicality.png" style="height:474px; width:750px" />
The success of either of these strategies is contingent on certain factors such as the stage of the economic cycle, the interest rate environment, credit costs and market cycles.&nbsp;
Growth stocks do well when economic growth is decelerating, as investors seek out high-growth companies with predictable earnings streams.
On the contrary, value stocks tend to outperform when the economy is growing.
Value stocks are generally thought to be a better bet in a rising interest rate environment. &quot;Value stocks have outperformed in 14 of the last 17 rate-tightening periods,&quot; <a href="https://www.cnbc.com/2015/12/09/bet-on-value-stocks-in-2016-as-interest-rates-rise-traders.html">CNBC</a> quoted Patrick O&#39;Shaughnessy of O&#39;Shaughnessy Asset Management as saying.
Value stocks have strong existing cash flows, and the cash flow certainty drives investors toward them when interest rates rise. Growth stocks are valued on future earnings, making investors skeptical of their investment worthiness in a rising rate environment.
A bullish market is supportive of growth stocks, while value stocks fare better in a bearish market&nbsp;as risk averse investors flock to bargains.
See Also: <a href="https://www.benzinga.com/investing/best-long-term-investments/">Best Long-Term Investments</a>
<h3>Relative 1-Year Performance Of Growth Vs. Value Stocks</h3>
The iShares Russell 1000 Index (ETF) (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>) has gained about 9.1 percent over the past year compared to the 18.4-percent advance by the iShares Russell 1000 Growth Index (ETF) (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>).
This has been the story over the past decade, with growth stocks outperforming their value counterparts, marking one of the longest periods of outperformance by growth stocks.
This dynamic could change going forward, if <a href="https://www.marketwatch.com/story/the-stock-market-just-experienced-the-most-seismic-shift-from-growth-to-value-since-lehman-brothers-says-nomura-2018-07-31"> comments </a> by Charlie McElligott, head of cross-asset strategy at Nomura, are to be believed.
The three-day move in&nbsp;U.S. value/growth suggest&nbsp;the market may be rotating out of growth stocks and into value stocks in a big way &mdash;&nbsp;the biggest since the rotation that happened after the collapse of Lehman in September&nbsp;2008, McElligott was quoted as saying by MarketWatch.
<h3>Final Thoughts</h3>
Since both value and growth investing have their own merits and demerits, investors should look to include both value and growth stocks in their portfolio, as such a strategy will help generate returns irrespective of how the factors impacting the two investment styles pan out.

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What Is Growth Investing And Value Investing?

Index provider FTSE Russell finalizes its annual index reconstitution today, making for brisk trading activity as well as some changes for some well-known exchange traded funds.
Each year on the final Friday of June, &ldquo;stocks are added or deleted to the Russell 1000 large cap and Russell 2000 small cap, prompting fund managers to adjust their portfolios to reflect new weightings,&rdquo; <a href="https://www.reuters.com/article/us-usa-stocks-russell/tech-healthcare-to-get-bumped-up-in-russell-index-remake-idUSKBN1JH32B">reports Reuters</a>.
<h3>What Happened</h3>
The iShares Russell 2000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), the largest small-cap ETF, tracks the aforementioned Russell 2000 Index. As of June 20, the technology and health care sectors combined for nearly <a href="https://www.ishares.com/us/products/239710/?referrer=tickerSearch">35 percent of IWM&#39;s weight</a>, representing two of the ETF&#39;s top three sector allocations.
That could change because small-cap health care and technology stocks have been primary drivers of this year&#39;s small-cap resurgence, one that has seen IWM gain about 12 percent.
<h3>Why It&#39;s Important</h3>
Stocks graduating from the Russell 2000 Index could find their way to the Russell 1000 Index, which is tracked by the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>). IWB is already heavy on technology and health care names with those sectors representing 25.61 percent and 13.38 percent, respectively, of the fund&#39;s weight.
The iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>) devotes 14.51 percent of its weight to health care stocks and 9.25 percent to technology names.
As a growth ETF, it&#39;s not surprising the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) has a substantial tech weight at 40.12 percent. IWF&#39;s health care allocation is 12.44 percent.
The additions and deletions can sometimes add volatility to these funds, as TD Ameritrade Chief Market Strategist JJ Kinahan noted.
&ldquo;You may see somewhat odd movement in ETFs like IWN; it would be similar to what you should&rsquo;ve been aware of on an options expiration or last week with the quadruple witch,&quot; he said. &quot;You have large amounts of orders coming in and out, so it wouldn&rsquo;t surprise me if there was some added volatility.&rdquo;
<h3>What&#39;s Next</h3>
The Russell reconstitution promises to bring increased volume Friday.
&ldquo;Last year&rsquo;s reconstitution is estimated to have resulted in total turnover of $50 billion,&rdquo; according to Reuters. Estimates for this year range from $54 billion to $62 billion in increased volume thanks to the Russell reconstitution.
IWB and the small-cap IWM have a combined $70.24 billion in assets under management.
Related Links:
<a href="https://www.benzinga.com/markets/cryptocurrency/18/06/11911289/a-new-blockchain-etf-focuses-on-china">A New Blockchain ETF For China.</a>
<a href="https://www.benzinga.com/fintech/18/06/11904665/fintech-is-where-its-at-for-financial-etfs">A Fabulous FinTech ETF.</a>

Interview

Russell 1000 ETFs To Increase In Health Care, Tech Exposure

With the S&amp;P 500 off about 8 percent to start the year, advisors and investors may be left thinking that an early case of election year volatility is afoot. Conventional wisdom dictates that stocks can struggle in presidential election years and that those struggles can be more pronounced in open elections, or years in which an incumbent is not defending the White House. That is the case this year.
Investors&#39; treatment of exchange-traded funds to start 2016 indicates a desire for safe-haven assets. Five of this year&#39;s top 10 asset gathering funds are bond funds. Just three are equity ETFs, two of which are the Utilities SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) and the iShares MSCI USA Minimum Volatility (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)). Conversely, all of 10 of this year&#39;s worst ETFs in terms of lost assets are equity funds.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/general/education/16/02/6216210/how-do-stock-markets-perform-during-a-presidential-election-year">How Do Stock Markets Perform During A Presidential Election Year?</a></bzrelatedlink>
<h3>Historical Performance Recap</h3>
There is some good news. According to a study by index provider <a href="http://ftse.com/">FTSE Russell</a>, the last year of presidential terms, particularly those of two-term presidents, of which President Obama is one, can be kind to stocks.
&ldquo;The Russell 1000 Index, reflecting US large cap stocks, and the Russell 2000 Index, reflecting US small cap stocks, have had positive returns in nearly every fourth year of a US presidential term since Ronald Reagan first took office in 1980. The only exceptions were in the midst of the global financial crisis in 2008 for the Russell 1000 Index and Russell 2000 Index (US large- and small-cap stocks, respectively) and in 1984 for the Russell 2000 Index (US small cap US stocks),&rdquo; according to the index provider. 
Investors can access those indexes via the iShares Russell 1000 Index (ETF) (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>) and the iShares Russell 2000 Index (ETF) (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>), among other ETFs.
While 2008, the last year in President George W. Bush&#39;s second term, was brutal for stocks, the Russell 1000 and the Russell 2000 performed admirably during other presidential election years. In addition to 2008, the only other presidential election year included in the FTSE Russell in which the Russell 2000 closed lower was 1984. Since 1984, the only presidential election year in which the Russell 1000 finished lower was 2008.
&ldquo;Historical index analysis suggests that, while past performance is no guarantee of future results, US markets may get caught up in the optimism that an election brings, be it the promise of something new or the continuation of something good,&rdquo; said FTSE Russell senior index research analyst Mat Lystra.
Image Credit: <a href="https://pixabay.com/en/capitol-washington-dc-architecture-22546/">Public Domain</a>

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USMV

Election Year Might Not Be So Bad For Equity ETFs

Exchange traded products listed in the United States, including exchange traded funds, added just $2.4 billion in new assets last month, according to ETF research firm <a href="http://etfgi.com/news/detail/newsid/600">ETGI</a>.&nbsp;

	Still, net U.S. ETF inflows through the first eight months of the year were $127.5 billion and the U.S. ETF industry is now home to $2.03 trillion in combined assets under management, underscoring not only the industry&#39;s rapid growth, but investors&#39; growing preference for passively managed products.

	It is something to think about the next time a pundit says &ldquo;It&#39;s a stock picker&#39;s market,&rdquo; advice that endorses active investing, but the reality is 2015 is shaping up to be another year of mediocre performance for active managers. Data from <a href="http://us.spindices.com/">S&amp;P Dow Jones Indices&#39;</a> newly released U.S.&nbsp;S&amp;P Indices Versus Active Funds (SPIVA&reg;) Scorecard confirm as much.

	For the 12 months ended July 31, nearly two-thirds of active large-cap managers failed to beat their benchmark, according to S&amp;P Dow Jones Indices. The good news, sort of, for active managers and the investors that stick with this methodology is that the 65.3 percent failure rate of large-cap managers for the year ended July 31 is better than five- and 10-year laggard rates of 81 percent and 80 percent, respectively.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5829553/proshares-adds-to-dividend-growth-lineup-with-europe-etf">ProShares Adds To Dividend Growth Lineup With Europe ETF</a>

	It is not a leap of faith to infer from that data that, most of the time, investors would be better with low-cost, passive index product, including index ETFs such as the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), iShares Russell 1000 ETF (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>) or the Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="/stock/vti#NYSE">VTI</a>). In the case of the Vanguard Total Stock Market ETF, that fund charges a scant 0.05 percent per year, or just $5 per $10,000 invested.

	Those thinking that inefficiencies found with small caps would lead to active management being the superior choice would be wrong. For the year ended July 31, 59 percent of active small-cap managers lagged the S&amp;P SmallCap 600. However, that is better than the five- and 10-year laggard rates, which averages 80 percent, according to S&amp;P data.

	&ldquo;It is commonly believed that active management works best in inefficient markets, such as small-cap or emerging markets. This argument is disputed by the findings of this SPIVA report. The majority of small-cap active managers consistently underperformed the benchmark in both the 10-year period and each rolling five-year period since 2002,&rdquo; said S&amp;P.

	The iShares Core S&amp;P Small-Cap ETF (NYSE: <a class="ticker" href="/stock/ijr#NYSE">IJR</a>), which charges just 0.12 percent per year, has returned nearly 92 percent over the past five years.

	To be fair to active managers, there are some areas of strength, namely in the mid-cap space. For the 12 months ended July 31, just 48.2 percent of active mid-cap managers failed to beat the S&amp;P MidCap 400 Index. But, and there&#39;s always a &ldquo;but,&rdquo; 78 percent of active managers failed to beat the S&amp;P MidCap 400 over five years and 87 percent failed to beat that benchmark over 10 years, according to S&amp;P data.

	Perhaps that is why the iShares Core S&amp;P Mid-Cap ETF (NYSE: <a class="ticker" href="/stock/ijh#NYSE">IJH</a>) and the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) have $40 billion in combined assets under management.

	&ldquo;With the exception of emerging market equity funds, funds invested in global, international, and international small-cap equity categories fared better or at par with their respective benchmarks over a one-year period,&rdquo; adds S&amp;P. &ldquo;Over the 10-year horizon, managers across all international equity categories were outperformed by their benchmarks.&rdquo;

	Though there are some standouts among actively managed bond funds, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5764416/gundlachs-first-etf-is-a-smash-hit-tops-1-billion-in-assets">including some new ETFs</a>, fixed income is a veritable wasteland of slack performance by active managers. Over the past decade, 93 percent of managers running active long-term government bond funds lagged their benchmarks while just 7 percent of active junk bond managers beat their benchmarks, according to S&amp;P data.

Active Management Mediocrity Continues

Exchange traded funds that are weighted by constituents' market capitalization dominate the world of equity-based ETFs. These ETFs are easy to understand and, in many cases, cost effective.

	That does not mean cap-weighted ETFs always offer the best returns and investors have increasingly sought alternatives to traditional cap-weighted fare.

	Recent news from Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares, the fourth-largest U.S. ETF sponsor, that its suite of fundamentally-weighted ETFs back by Research Affiliates indices crossed <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3738909/powershares-fundamental-etfs-top-5b-in-assets">$5 billion in assets under management</a> highlights the notion that investors are embracing new ways of thinking about ETFs.

	Fundamental ETFs come with some advantages, as S&amp;P Capital IQ points out.

	"Unlike a mutual fund where management only reveals part of its strategy, the rules for these ETFs are known to investors, offering transparency. Further the re-weightings are periodic, offering investors a lower cost alternative than a mutual fund as is described below. These ETFs allow investors to add exposure to stocks based on characteristics that appeal most to them, rather than hold the whole market," said S&amp;P Capital IQ in a new research note.

	The research firm has an Overweight rating on the nearly $2.2 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>). PRF, which turns eight in December, tracks the FTSE RAFI US 1000 Index. That index ranks stocks based on book value, cash flow, sales and dividends.

	PRF holds 1,018 stocks, not 1,000 has a direct competitor in the form of the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>). One of the knocks on fundamentally-weighted ETFs is that they are pricier than their cap-weighted peers. PRF's annual expense ratio is 0.39 percent, not alarmingly higher, but still well above the 0.15 percent charged by IWB. That means an ETF such as PRF must consistently outperform its cheaper rivals to win the battle for investors' dollars.

	The data show PRF is winning. For the year-to-date period ending June 30, PRF's index was ahead of the Russell 1000 by nearly 300 basis points and over the past year, the margin was nearly 575 basis points, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=PRF">according to PowerShares data</a>.

	PRF's top sector weights are 22.4 percent to financial services and almost 12 percent to energy. Top-10 holdings include Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>) and Verizon (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>).

	S&amp;P Capital IQ also has an Overweight rating on the WisdomTree LargeCap Dividend Fund (NYSE: <a class="ticker" href="/stock/dln#NYSE">DLN</a>). Unlike some of its rivals that focus on <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/04/3526701/these-etfs-could-benefit-from-apple-dividend-growth">stocks' dividend increase streaks</a>, DLN's "index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year."

	There are times when DLN's methodology subjects investors to some lag relative to ETFs that focus on dividend increase streaks. For example, the SPDR S&amp;P Dividend ETF (NYSE: <a class="ticker" href="/stock/sdy#NYSE">SDY</a>), which only includes stocks that have raised dividends for 25 consecutive years, is outpacing DLN this year.

	However, over the past three years, DLN is ahead of SDY by 700 basis points. DLN is also slightly cheaper with an annual expense ratio of 0.28 percent compared to 0.35 percent for SDY.

	DLN is diverse at the sector level with six groups – staples, technology, financials, health care, energy and industrials – receiving weights ranging from 15.4 percent at the top to 10.8 percent. Top-10 holdings include Exxon, AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) and Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>).

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

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PowerShares Exchange Traded Fund FTSE RAFI US 1000 Portfolio

S&P Bullish on 2 Fundamentally-Weighted ETFs

Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares, the fourth-largest U.S. ETF issuer, announced Tuesday the PowerShares Fundamental suite of ETFs recently passed the $5 billion assets under management, underscoring the rising popularity of ETFs that use alternative methodologies to weighting by market capitalization.

	"Invesco PowerShares has been focused on providing investors with the broadest and most diverse family of ‘smart beta' ETFs since the firm was founded," said Andrew Schlossberg, head of global ETFs. "Invesco PowerShares pioneered Fundamentals Weighted ETFs introducing the first broad-based US 1000 portfolio back in 2005, followed by international portfolios in 2007, and the first fixed-income portfolio in 2010."

	PowerShares lists fundamentally-weighted ETFs in the U.S., Canada and Europe. Those funds are based on the Research Affiliates Fundamental Index methodology that includes the use of book value, cash flow, sales and dividends, to select and weight index members.

	Alternative weighting methodologies have proven increasingly popular with investors with non-market cap-weighted ETFs accounting for 42 percent of inflows to equity-based ETFs through the first four months of this year, according to BlackRock.

	More importantly, some of the PowerShares RAFI ETFs have <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3587943/two-top-ideas-among-fundamentally-weighted-etfs">outpaced their cap-weighted rivals</a>. For example, the PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) is up 15.2 percent year-to-date compared to a 12.4 percent gain for the iShares Russell 1000 Index Fund (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>). PRF, which debuted in late 2005, has over $2 billion in assets.

	The $646.7 million PowerShares FTSE RAFI US 1500 Small-Mid Portfolio (NASDAQ: <a class="ticker" href="/stock/prfz#NASDAQ">PRFZ</a>) has outperformed assorted small- and mid-cap ETFs this year with a gain of 17.3 percent. PRF and PRFZ are considered the flagship funds in the PowerShares RAFI suite.

	PRF and PRFZ "have established five-year and since inception track records that demonstrated their effectiveness over varying market cycles. We believe the PowerShares Fundamental ETFs provide investors an important alternative to passive cap-weighted strategies, and also represent great value compared to actively managed portfolios when relative performance and fees are considered," said John Feyerer, head of product strategy &amp; research at Invesco PowerShares, in a statement.

	Other popular ETFs in the suite include the PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: <a class="ticker" href="/stock/pxh#NYSE">PXH</a>), which has nearly $323 million in AUM, and the PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>). PXF has $543.3 million in AUM.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

PRFZ

PowerShares FTSE RAFI Developed Markets ex-US Portfolio

PowerShares Exchange-Traded Fund Trust II PowerShares FTSE RAFI Emerging Markets Portfolio

PowerShares Fundamental ETFs Top $5B in Assets

Through the first four months of 2013, global exchange traded products inflows totaled $79 billion with a fair amount of that total going to traditional, market capitalization-weighted products. However, alternative weighting methodologies are gaining traction with investors.

	Non-Market Cap weighted funds have captured 42 percent of Equity ETP flows YTD, more than two times their share of Equity assets. Key drivers in this category are Dividend Income with flows of $3.4bn in April - a new record monthly high - and $10.9bn YTD as well as Minimum Volatility with $2.5bn in April and $6.5bn YTD, <a href="http://www.benzinga.com/markets/bonds/13/05/3553630/bond-etf-inflows-surge-in-april#ixzz2TEMZb4NB">according to BlackRock</a>.

	Prying investors, both professionals and retail, away from cap-weighted ETFs can be tricky business. That much is proven by the fact that at this point, <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/04/3543131/equal-weight-etf-trounces-traditional-s-p-500-peers">it is widely known that the</a> Guggenheim S&amp;P 500 Equal Weight ETF (NYSE: <a class="ticker" href="/stock/rsp#NYSE">RSP</a>) has easily outpaced the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) over long time horizons. Yet, SPY has $139.6 billion in assets under management compared to $3.91 billion for RSP.

	However, RSP merely stands as one example of a non-cap weighted ETF. There are others that use more intricate, fundamental weighting methodologies that have recently delivered solid returns. Here are some of the top ideas from the world of fundamentally-weighted ETFs.

	PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>) 
	The PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio is not quite a Japan ETF, but with Japanese stocks soaring this year, this ETF offers a nice advantage with a 22.4 percent weight to the world's third-largest economy.

	That is the good news. The potentially bad news is PXF, which has $543.7 million in AUM, has significant eurozone exposure through a combined 27 percent allocation to France, Germany, Italy and Spain. Perhaps another selling point with PXF is that the ETF offers exposure to <a href="http://www.benzinga.com/markets/bonds/13/02/3326834/mixed-etf-performances-for-some-aaa-rated-countries">four AAA-rated countries</a> those being Germany, Canada, Australia and Switzerland.

	PXF tracks the FTSE RAFI Developed Markets ex-U.S. Index, which selects constituents based on book value, cash flow, sales and dividends. Stocks are then weighted by their fundamental scores and the result is a top-10 lineup that includes BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>), Royal Dutch Shell (NYSE: RDS-A) and Vodafone (NYSE: <a class="ticker" href="/stock/vod#NYSE">VOD</a>). BP is the ETF's largest holding with an allocation of just 1.91 percent. PXF, which has an annual expense ratio of 0.45 percent, is up 8.8 percent year-to-date.

	PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) 
	The PowerShares FTSE RAFI US 1000 Portfolio competes with the cap-weighted iShares Russell 1000 Index Fund (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>), a massive $7.6 billion ETF that has surged 15.5 percent year-to-date. That would imply challenging IWB is difficult. Well, PRF is no slouch with over $1.8 billion in AUM and a return of 17.3 percent this year.

	PRF tracks the FTSE RAFI US 1000 Index, which like the index tracked by PXF, weighs and scores constituents based on book value, cash flow, sales and dividends. That is an important factor for investors to consider because year-to-date, over the past year, the past three years and past five years, the FTSE RAFI US 1000 Index has outperformed the Russell 1000 and the S&amp;P 500, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=PRF">according to PowerShares data</a>.

	Eight of PRF's top-10 holdings are Dow components with Citigroup (NYSE: <a class="ticker" href="/stock/c#NYSE">C</a>) and Wells Fargo (NYSE: <a class="ticker" href="/stock/wfc#NYSE">WFC</a>) the outliers. Financial services is by far the largest sector weight at 21.5 percent, but energy, technology, staples, discretionary, industrials and health care all receive double-digit allocations. Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>) and AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) are the only stocks in PRF with weights above two percent. PRF has annual fees of 0.39 percent.

Two Top Ideas Among Fundamentally-Weighted ETFs

Top 10 U.S. Large & All Cap Sector ETFs

Russell 1000 Ishares ETF


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