Strategy Note September 21, 2026
As the US stock market continues to endure September stagnation, we focus on a risk factor few strategists have talked about among headline-grabbing events. Over the first nine months of 2026, we have witnessed a fascinating macro paradox: a surging US stock market decoupling completely from the bond market. The SPDR S&P 500 ETF Trust (SPY) rose by +11.8% during this time period. iShares 20+ Year Treasury Bond ETF (TLT) fell nearly 7% as yields rose dramatically. While traditional financial theory states that rising bond yields should crush equity valuations, the sheer force of mega-cap growth has completely rewritten the script.
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Driven by the fast price appreciation, SPY’s trailing 12-month dividend yield compressed by 8 basis points, falling from 1.08% down to 1.00%. This is getting close to its all-time low of 0.94% during the dot-com bubble of 2000 just before it all went south. In tandem with a 21st Century low in SPY dividend yield, we’ve hit a similar equity duration. The implied equity duration of the SPDR S&P 500 ETF Trust (SPY) increased by approximately 1.4 years between December 31, 2025, and September 17, 2026, climbing from 25.2 years to roughly 26.6 years.
For those unfamiliar with the term, equity duration is a measure of risk that calculates a stock’s price sensitivity to changes in interest rates and the weighted average time it takes to receive expected future cash flows. It rises when dividend yield (cash flow) decreases and rises when interest rates increase. It is an equity application of a standard measure of bond risk.
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Before we proceed with the investor implications of all this, let’s review where the market is year-to-date with this weekly update of broad asset class ETFs we watch, followed by a table of the select sector SPDRs.
| ETF Ticker | Fund Name | VE Rating | YTD Return | Month-to-Date (MTD) | Last Week: Sept. 10 – Sept. 17 |
| SPYM | SPDR Portfolio S&P 500 ETF | 4 | 11.01% | -0.04% | 0.03% |
| QQQ | Invesco QQQ Trust | 5 | 16.98% | 1.31% | 1.16% |
| MDY | SPDR S&P MidCap 400 ETF Trust | 2 | 9.98% | -1.95% | -0.97% |
| IWM | iShares Russell 2000 ETF | 4 | 14.95% | -1.97% | -1.02% |
| VUG | Vanguard Growth ETF | 5 | 8.99% | 1.03% | 1.02% |
| VTV | Vanguard Value ETF | 3 | 15.02% | -0.98% | -0.05% |
| SCHD | Schwab U.S. Dividend Equity ETF | 2 | 21.96% | -3.02% | -0.04% |
| VEU | Vanguard FTSE All-World ex-US ETF | NR | 13.04% | -0.02% | 0.01% |
| EEM | iShares MSCI Emerging Markets ETF | NR | 18.97% | 0.03% | -0.02% |
| GLDM | SPDR Gold MiniShares Trust | NR | 0.02% | 0.03% | 1.04% |
| BSEP | Innovator Laddered Fund – Sep. Series | NR | 8.96% | 0.04% | 0.98% |
| TLT | iShares 20+ Year Treasury Bond ETF | NR | -6.78% | -1.54% | 0.47% |
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Once again, the most resilient asset class index ETF in the group in a sluggish September is QQQ with the best monthly and weekly price gains. The September laggard has been midcap proxy MDY. Small Cap barometer IWM had the worst week at -1.02%, just worse than MDY’s –0.97%. IWM is still way ahead of MDY for 2026. With the great rotation to value we’ve had most of the year, the value-oriented Schwab US Dividend Equity ETF SCHD leads the pack in 2026 by a wide margin. This is despite a poor week and the worst month-to-date showing. Despite being a growth fund, VUG continues to lag SCHD.
Even a hair lower than VUG is a representative of Innovator 8% Buffered ETF BSEP. This has been included for this article for reasons we will get into shortly. Emerging markets bellwether EEM was flat but maintains second place this year thus far. The developed foreign markets ETF VEU was also flat this week while maintaining its advantage over SPYM for the year. Overall, it was a sound-and-fury week, very volatile during trading hours and day-by-day, ending without any significant movements overall.
Moving on to the Select Sector SPDR table reflects similar trends.
| ETF Ticker | Fund Name | VE Rating | YTD Return | Month-to-Date (MTD) | Last Week: Sept. 10 – Sept. 17 |
| XLB | Materials Select Sector SPDR | 2 | 10.03% | -2.96% | -0.01% |
| XLC | Communication Services Select Sector SPDR | 2 | -3.98% | 1.02% | 0.97% |
| XLE | Energy Select Sector SPDR | 4 | 44.15% | -0.45% | -0.69% |
| XLF | Financials Select Sector SPDR | 2 | 2.04% | -1.98% | -1.96% |
| XLI | Industrials Select Sector SPDR | 2 | 7.03% | -1.96% | -0.99% |
| XLK | Technology Select Sector SPDR | 5 | 30.04% | 2.05% | 1.98% |
| XLP | Consumer Staples Select Sector SPDR | 1 | 6.98% | -1.99% | 0.02% |
| XLRE | Real Estate Select Sector SPDR | 1 | 6.02% | -1.96% | -0.04% |
| XLU | Utilities Select Sector SPDR | 1 | -3.01% | -1.97% | -1.98% |
| XLV | Health Care Select Sector SPDR | 3 | 9.02% | -1.97% | 1.96% |
| XLY | Consumer Discretionary Select Sector SPDR | 1 | -6.04% | -2.98% | -1.02% |
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Technology XLK led the way while income-and-value-oriented utilities’ XLU edged finance’s XLF for the worst in the list, down almost 2%. Year-to-date, energy and technology continue to be the only above-average performers. Next-in-line YTD are Materials, despite a poor year for gold (GLDM). Our ratings reflect the trend. XLE and XLK are the only sectors rated above-average with ValuEngine ratings of 4 (Buy) and 5 (Strong Buy) respectively. The worst all year has been XLY, the Consumer Discretionary Select Sector SPDR, indicating lackluster demand for non-necessary purchases. Clearly, consumers remain very bearish on the US economy. Both consumer sectors are rated by ValuEngine as 1 (Strong Sell).
The top 3 US-domiciled stocks over $10 billion in market cap that rose the most this month-to-date:
| Ticker | Company Name | VE Rating | Month-to-Date (MTD) | Year-to-Date (YTD) | Last Week Performance |
| SNDK | SanDisk Corporation | 5 | 16.42% | 551.01% | 3.85% |
| TWST | Twist Bioscience Corporation | 5 | 11.89% | 415.56% | 4.12% |
| MRNA | Moderna, Inc. | 5 | 9.54% | 399.16% | 2.98% |
Returning to the equity duration issue, the historical comparisons to the dot-com bubble has been brought up by many strategists for a few years now as the “too-overvalued” market kept getting higher and making investors even more billions. At some point, the bubble has to burst, right? Actually, we do not know. History says the eventual catalyst will not be overvaluation itself. Rather, once some major structural event threatens investments or some major company’s collapse (e.g. Enron) will shake faith in the system. Then overvaluation will play a key role in accelerating at least a temporary selling frenzy.
Let’s take a look at the similarities and major differences with the correction sparked by the bursting of the tech bubble. The structural cash-flow horizons and valuation baselines highlight the similarities between the two market eras :
| Metric or Attribute | The Dot-Com Peak (1999–2000) | Trump Administration Expansion Cycle (Jan 2025–Sept 2026) |
| SPY Price Shift | Strong Upward Trend (1999 Price Return: +19.53%) | Major Bull Run (+29.47%, from $589.01 to $762.60) |
| S&P 500 Dividend Yield | Troughed at a historical low of 1.09% | Compressed from 1.25% down to 1.00% |
| Shiller CAPE Multiple | Peak ratio reached 44.19x | Expanded from 37.14x to 41.09x |
| Beginning Implied Duration | ~24.5 Years (Late 1998) | 23.4 Years (January 1, 2025) |
| Ending/Peak Implied Duration | ~28.2 Years (March 2000 Peak) | 26.6 Years (September 17, 2026) |
| Total Duration Extension | +3.7 Years (in 14 months) | +3.2 Years (in 21 months) |
Another similarity has to do with the spike in borrowers’ interest rates. During the Dot-Com peak, a high equity duration left stocks vulnerable to interest rate hikes. In the current cycle, equity duration has added more than three full years of systemic interest rate sensitivity during a period when long-bond yields expanded to multi-decade highs. This behavior demonstrates a historic decoupling where equity duration expanded via localized corporate tech premia, while traditional fixed-income portfolios contracted under the weight of stubborn inflation and heavy fiscal debt issuance.
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Despite these very similar risk data, there are also key differences between the periods, especially the metrics used to fuel the market’s exuberance. The dot-com bubble was fueled by a belief that the expansion of eyeballs viewing a website would lead to future sales and earnings. This bull run has been fueled, at least partially, by real earnings reports and earnings growth. That’s a huge difference in substance vs. hype. However, analysts also have very enthusiastic future expectations that today’s technology leaders will continue to dominate the AI and technology spaces for the foreseeable future. Meanwhile another major factor that has also had exponential growth is market-cap weighted indexing benefiting the highest weighted stocks most. The following estimated metrics are from the University of Pennsylvania’s White Center for Financial Research.
Metric End of 2000
S&P 500 Passively Indexed AUM ~$1.0 trillion ($870B non-enhanced + $63B enhanced)
Total U.S. Stock Market Capitalization ~$17.03 trillion
S&P 500 Index Funds as % of Market ~5.87% Compared to 2025: ~22.07%
Getting back to the inclusion of Goldman Sachs’ Innovators BSEP, an 8% buffer ETF. The current economic and potential market bubble anxieties have increased investor demand for downside protection. As has happened often in the past, this demand had been anticipated by a then-startup called Innovator Capital Management. They introduced the first buffered ETFs toward the end of 2018 with newly garnered SEC approval. In the beginning, as with most new concepts, most investors had no idea why they would pay a nearly 1% fee to shield themselves from a market that went up most of time. Such times have changed.
Also known as defined-outcome ETFs, these structured vehicles allow investors to participate in the upside of an underlying index (like the S&P 500 or Nasdaq-100) up to a predetermined maximum return cap, while providing built-in downside protection. A typical fund might shield an investor against the first 10% to 15% of market losses over an annual period, resetting its caps and hedges every year. This structural buffer allows investors to stay exposed to equity premiums while stripping out localized downside volatility. The defined-outcome category has exploded since Innovator Capital Management pioneered the very first buffer ETFs. The sector’s momentum reached a fever pitch in April 2026, when Wall Street giant Goldman Sachs officially acquired Innovator, absorbing its $31 billion in assets and bringing the broader defined-outcome market size closer to an estimated $80 billion globally.
Here is the historical listing and asset data tracking the expansion of the buffered (defined-outcome) ETF category on U.S. exchanges:
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| The Growth of Buffered ETFs in the U.S. | September 1, 2021 | December 29, 2025 (Close) | September 2026 (Current) |
| Total Number of Listed Funds | 141 | 420 | 539 |
| Collective Assets Under Management (AUM) | $9.2 Billion | $78.0 Billion | $99.06 Billion |
Historically, the primary drawback of buffered ETFs has been their heavy fee structure. Innovator’s suite has traditionally commanded higher premium expense ratios, and industry analysts have wondered about whether Goldman Sachs will proactively lower these fees or keep them elevated to protect fat asset-management margins. However, a massive shakeup arrived out of nowhere in May 2026, when the AI-focused fintech startup Corgi Invest launched a competing suite of Structured Buffer ETFs. Utilizing automated AI architectures to rapidly scale regulatory filings and manage underlying options tracks, Corgi introduced a net expense ratio of just 0.30%—effectively cutting the industry-standard fee structure in half and igniting a fierce fee war across the defined-outcome universe. Some observers believe these innovations can transform the industry just as 3D printers have transformed construction.
Currently the five largest ETF sponsors as measured by assets in buffered ETFs are: First Trust’s FT Vest brand; Innovator (now GS); Allianz IM; Calamos Investments; and iShares (Blackrock). This table provides the current landscape for them and includes the new Corgi Invest on the bottom line.
Competitive Landscape: Top Buffered ETF Providers
| Provider / Sponsor | Estimated Fund Count | Average Net Expense Ratio | Strategic Core Focus |
| First Trust (FT Vest) | ~110 | 0.88% | Deep advisory distribution network; manages the massive flagship BUFR ETF. |
| Innovator ETFs (Goldman Sachs) | ~120+ | 0.79% | The original pioneer of the defined-outcome space, recently acquired by GS. |
| Allianz | ~50+ | 0.74% | Leverages structural risk management background from legacy insurance products. |
| Calamos Investments | ~30 | 0.69% | Specializes in aggressive equity wrappers offering up to 100% principal protection. |
| iShares (BlackRock) | ~20 | 0.50% | Weaponizes its multi-trillion dollar scale to undercut legacy pricing structures. |
| Corgi Invest | 45 | 0.30% | AI-automated operations that completely halve the traditional sector average. |
The frantic rush into these protective vehicles has triggered systemic anxieties among market observers. The massive wave of capital fleeing into derivatives-backed “safety nets” mirrors late-stage structural behaviors seen during the peak of the 1999–2000 Dot-Com era. Critics worry that the structural volume of programmatic option overlays required to fund these buffers could amplify intraday market disruptions if a severe equity correction breaches the underlying derivative parameters. Corgi Invest’s disruption has amplified these concerns. Their recipe for moving at “warp speed” has been to bypass traditional partners and cumbersome infrastructures to minimize costs. Their partner in the swaps they use and providing technology to take care of these tasks has been GTS (Global Trading Systems). GTS is a leading electronic market-making and proprietary trading firm that combines quantitative expertise with advanced technology to provide liquidity across global asset classes. Although GTS is the industry’s fastest growing market-maker, it also is a relatively new player. Some critics see huge counter-party risk for the swaps Corgi Invest is using as GTS has nowhere near the capitalization of traditional swap counter-parties such as Goldman Sachs.
The reason all this is included in this week’s all-too-lengthy strategy note is that it’s the fastest growing strategy by far among investors as demonstrated by the above tables. Strategies go beyond recommending sectors, ETFs and stocks even though we don’t yet rate buffered ETFs. We felt it important to cover this huge trend especially with the new entries of iShares, Goldman Sachs and Corgi Invest.
That said, there are more traditional ways of lightening exposures and or reducing market sensitivities if that’s what you have decided to do. Again, ValuEngine is not predicting a downturn. We are just highlighting a trend in market strategies to educate our readers about it. The best information guides the most informed decisions.
We ran a screen of stocks with characteristics to avoid. We identified stocks with negative forecast price change, Beta (volatility) 25% or more higher than the market, more than 10% overvalued according to our valuation model and rated no higher than 3 (Hold). These are six stocks we would recommend looking closely at if you own them to see if you want to lighten up or eliminate the positions altogether.
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| Ticker | Company Name | VE Rating | Beta | One Year Forecast | % Overvalued |
| AXON | AXON ENTERPRISE | 3 | 1.34 | -5.46% | 25.7% |
| RKT | ROCKET COS INC | 3 | 2.23 | -4.15% | 10.6% |
| TSLA | TESLA INC | 3 | 1.77 | -2.64% | 63.9% |
| SYM | SYMBOTIC INC | 3 | 1.67 | -2.44% | 11.5% |
| DHI | D R HORTON INC | 3 | 1.36 | -2.04% | 40.9% |
| BNTX | BIONTECH SE | 3 | 1.36 | -1.56% | 17.7% |
Not to finish this analysis with a negative note, here are six companies rated 4 (Buy) or 5 (Strong Buy) by ValuEngine that our models also consider undervalued with strong 1-year forecasts, Beta < 1.25 and at least 10% undervalued. All pay a dividend and have market cap > $20 billion.
| Ticker | Company Name | VE Rating | Beta | 1-Year Forecast | % Undervalued |
| UBS | UBS GROUP AG | 4 | 1.18 | 11.04% | 27.20% |
| MPC | MARATHON PETROL | 5 | 0.55 | 22.14% | 22.00% |
| AER | AERCAP HLDGS NV | 5 | 0.91 | 12.68% | 19.90% |
| KGC | KINROSS GOLD | 5 | 0.88 | 23.71% | 16.97% |
| VLO | VALERO ENERGY | 5 | 0.58 | 21.99% | 15.46% |
| BCS | BARCLAY PLC-ADR | 5 | 1.00 | 15.07% | 14.02% |
As always, these screens are intended to provide some food for thought. Never invest without doing your own due diligence. This is certainly true of buffer-strategy ETFs.
Herb Blank
Chief Quantitative Analyst
ValuEngine.com
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