{"id":2984,"date":"2022-10-25T21:32:49","date_gmt":"2022-10-25T21:32:49","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2984"},"modified":"2022-10-25T21:32:49","modified_gmt":"2022-10-25T21:32:49","slug":"3rd-quarter-us-benchmark-etf-update","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/3rd-quarter-us-benchmark-etf-update\/","title":{"rendered":"3rd Quarter US Benchmark ETF Update"},"content":{"rendered":"

The third quarter was a tale of two halves.\u00a0 The market staged what turned out to be a bear market rally throughout July and the first two weeks of August.\u00a0 Then it was as if somebody blew a whistle.\u00a0 The next six weeks saw the bear return with a vengeance.\u00a0<\/span><\/p>\n

The ETF reports on ValuEngine for ETFs that follow market benchmarks provide a side benefit in writing market analyses.\u00a0 They are a window to implicit forecasts for the 3-, 6- and 12-month forecasts that the VE models are making for each benchmark\u2019s ETF portfolio.\u00a0 This is because the ratings and projections combine bottom-up constituent analysis with analyses of the historical price movements of the ETF in different market environments.\u00a0\u00a0\u00a0<\/span><\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
Free Two Week Trial to all 5,000 plus equities and ETFs covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n

The benchmark indexes and ETFs chosen for this feature are:<\/span><\/p>\n

    \n
  1. The S&P 500 Index representing US Large Cap, the ETF is iShares\u2019 <\/span>SPY<\/b>;<\/span><\/li>\n
  2. The S&P 400 MidCap Index representing US MidCap; the ETF is SPDR\u2019s<\/span> MDY<\/b>;<\/span><\/li>\n
  3. The Russell 2000 Index representing US Small Cap; the ETF is iShares\u2019 <\/span>IWM<\/b><\/li>\n
  4. The Russell 1000 Large Cap Growth Index; the ETF is iShares\u2019 <\/span>IWF<\/b>;<\/span><\/li>\n
  5. The Russell 1000 Large Cap Value Index; the ETF is iShares\u2019 <\/span>IWD<\/b>;<\/span><\/li>\n
  6. The Nasdaq-100, constructed as an index using the top 100 non-financial stocks with primary listing on the Nasdaq, is now regarded as the premier US Big Tech Index; the ETF is Invesco <\/span>QQQ<\/b>.\u00a0<\/span><\/li>\n<\/ol>\n

    The Following chart tracks the dichotomy of price returns between the first half of the quarter and the second half.\u00a0<\/span><\/p>\n

    Current ValuEngine reports on these stocks or ETFS can be viewed <\/b>HERE<\/b><\/a><\/h5>\n\n\n\n\n\n\n\n
    <\/td>\nIWD<\/b><\/td>\nIWF<\/b><\/td>\nIWM<\/b><\/td>\nMDY<\/b><\/td>\nQQQ<\/b><\/td>\nSPY<\/b><\/td>\n<\/tr>\n
    Market Index Being Tracked<\/span><\/td>\nRussell Large Cap Value<\/span><\/td>\nRussell Large Cap Growth<\/span><\/td>\nRussell 2000 Small Cap<\/span><\/td>\nS&P Midcap<\/span><\/td>\nNasdaq 100\u00a0<\/span><\/td>\nS&P 500<\/span><\/td>\n<\/tr>\n
    July 1- Aug. 15<\/span><\/td>\n9.33%<\/span><\/td>\n16.48%<\/span><\/td>\n17.30%<\/b><\/td>\n14.13%<\/span><\/td>\n18.05%<\/span><\/td>\n12.49%<\/span><\/td>\n<\/tr>\n
    Aug. 15- Sep. 30<\/span><\/td>\n-15.61%<\/b><\/td>\n-18.28%<\/span><\/td>\n-17.95%<\/span><\/td>\n-16.51%<\/span><\/td>\n-19.57%<\/span><\/td>\n-16.87%<\/span><\/td>\n<\/tr>\n
    Entire 3rd Quarter<\/b><\/td>\n-7.35%\u00a0<\/span><\/td>\n-4.80%<\/span><\/td>\n-3.79%<\/b><\/td>\n-4.10%<\/span><\/td>\n-5.27%<\/span><\/td>\n-6.31%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Somewhat surprisingly, small cap stocks and mid cap stocks as represented by their respective ETFs held up during the quarter better than the four indexes representing various segments of large cap stocks.\u00a0 The ETF for small cap stocks, <\/span>IWM<\/b>, was also the most robust during the rally period and held onto more of its gains during the August 15 \u2013 September 30 market collapse than any of the other five ETFs that registered the smallest losses for the quarter.\u00a0 In contrast, large-cap value stocks, as measured by <\/span>IWD,<\/b> lagged the other five ETFs by quite a bit during the July through mid-August rally. Thus, even though <\/span>IWD <\/b>had the least severe loss during the rest of the 3<\/span>rd<\/span> quarter, it wound up as the biggest loser for the full quarter. On balance, large-cap value was not the place to be during the 3<\/span>rd<\/span> quarter of 2022.\u00a0 Similarly, even though <\/span>QQQ <\/b>suffered the worst carnage in the second half of the 3<\/span>rd<\/span> quarter, the fact that it had previously led the group on the way up resulted in a lower decline in the 3<\/span>rd<\/span> quarter for <\/span>QQQ <\/b>than <\/span>SPY.<\/b><\/p>\n

    That\u2019s what happened in the 3<\/span>rd<\/span> quarter.\u00a0 What could happen next?\u00a0 For pondering that question, let\u2019s look at the data summary table below.\u00a0 All data are as of Oct. 14, 2022.\u00a0<\/span><\/p>\n

     <\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    <\/td>\nIWD<\/b><\/td>\nIWF<\/b><\/td>\nIWM<\/b><\/td>\nMDY<\/b><\/td>\nQQQ<\/b><\/td>\nSPY<\/b><\/td>\n<\/tr>\n
    Market Index Being Tracked<\/span><\/td>\nRussell Large Cap Value<\/b><\/td>\nRussell Large Cap Growth<\/b><\/td>\nRussell 2000 Small Cap<\/b><\/td>\nS&P Midcap<\/b><\/td>\nNasdaq 100\u00a0<\/b><\/td>\nS&P 500<\/b><\/td>\n<\/tr>\n
    ValuEngine Rating<\/b><\/td>\n2<\/b><\/td>\n4<\/b><\/td>\n3<\/b><\/td>\n2<\/b><\/td>\n4<\/b><\/td>\n3<\/b><\/td>\n<\/tr>\n
    VE Forecast 3-mo. Price Return<\/b><\/td>\n2.07%<\/span><\/td>\n2.65%<\/b><\/td>\n1.36%<\/span><\/td>\n1.64%<\/span><\/td>\n2.38%<\/span><\/td>\n2.4%<\/span><\/td>\n<\/tr>\n
    VE Forecast 6-Mo. Price Return<\/b><\/td>\n4.65%<\/span><\/td>\n5.57%<\/b><\/td>\n3.06%<\/span><\/td>\n3.70%<\/span><\/td>\n5.17%<\/span><\/td>\n5.17%<\/span><\/td>\n<\/tr>\n
    VE Forecast 1-yr. Price Return<\/b><\/td>\n-2.87%<\/span><\/td>\n0.27%<\/b><\/td>\n-1.81%<\/span><\/td>\n-2.80%<\/span><\/td>\n-0.01%<\/span><\/td>\n-1.44%<\/span><\/td>\n<\/tr>\n
    Historic 3 mo. Price Return<\/span><\/td>\n-3.51%<\/span><\/td>\n-6.92%<\/span><\/td>\n-1.62%<\/span><\/td>\n-0.69%<\/b><\/td>\n-9.05%<\/span><\/td>\n-5.37%<\/span><\/td>\n<\/tr>\n
    Historic 6 mo. Price Return<\/span><\/td>\n-16.49%<\/span><\/td>\n-20.94%<\/span><\/td>\n-16.16%<\/span><\/td>\n-14.51%<\/b><\/td>\n-22.96%<\/span><\/td>\n-18.31%<\/span><\/td>\n<\/tr>\n
    Year-to-Date Return<\/span><\/td>\n-15.01%<\/b><\/td>\n-29.91%<\/span><\/td>\n-22.19%<\/span><\/td>\n-18.1%<\/span><\/td>\n-32.1%<\/span><\/td>\n-22.06%<\/span><\/td>\n<\/tr>\n
    Historic 1-Yr. Price Return\u00a0<\/span><\/td>\n-14.67%<\/b><\/td>\n-26.83%<\/span><\/td>\n-26.15%<\/span><\/td>\n-18.18%<\/span><\/td>\n-28.88%<\/span><\/td>\n-19.18%<\/span><\/td>\n<\/tr>\n
    Historic 5-Yr Ann. Price Return<\/span><\/td>\n5.17%<\/span><\/td>\n12.69%<\/span><\/td>\n5.45%<\/span><\/td>\n6.83%<\/span><\/td>\n14.33%<\/b><\/td>\n9.36%<\/span><\/td>\n<\/tr>\n
    Volatility<\/span><\/td>\n18.1%<\/span><\/td>\n19.8%<\/span><\/td>\n23.0%<\/span><\/td>\n21.5%<\/span><\/td>\n20.6%<\/span><\/td>\n17.7%<\/b><\/td>\n<\/tr>\n
    Sharpe Ratio\u00a0<\/span><\/td>\n0.29<\/span><\/td>\n0.64<\/span><\/td>\n0.24<\/span><\/td>\n0.32<\/span><\/td>\n0.70<\/b><\/td>\n0.53<\/span><\/td>\n<\/tr>\n
    Beta<\/span><\/td>\n0.97<\/span><\/td>\n1.08<\/span><\/td>\n1.17<\/span><\/td>\n1.14<\/span><\/td>\n1.10<\/span><\/td>\n1.00<\/b><\/td>\n<\/tr>\n
    # of Stocks<\/span><\/td>\n853<\/span><\/td>\n518<\/span><\/td>\n1970<\/span><\/td>\n400<\/span><\/td>\n100<\/span><\/td>\n502<\/span><\/td>\n<\/tr>\n
    Undervalued by VE %<\/span><\/td>\n62%<\/span><\/td>\n63%<\/span><\/td>\n73%<\/b><\/td>\n62%<\/span><\/td>\n57%<\/span><\/td>\n58%<\/span><\/td>\n<\/tr>\n
    P\/B Ratio<\/span><\/td>\n2.3<\/span><\/td>\n9.8<\/span><\/td>\n2.0<\/b><\/td>\n2.3<\/span><\/td>\n6.5<\/span><\/td>\n3.9<\/span><\/td>\n<\/tr>\n
    P\/E Ratio<\/span><\/td>\n14.8<\/span><\/td>\n27.7<\/span><\/td>\n27.8<\/span><\/td>\n13.0\u00a0<\/b><\/td>\n24.4<\/span><\/td>\n18.8<\/span><\/td>\n<\/tr>\n
    Div. Yield<\/span><\/td>\n2.7%<\/b><\/td>\n0.9%<\/span><\/td>\n1.5%<\/span><\/td>\n1.4%<\/span><\/td>\n0.8%<\/span><\/td>\n1.7%<\/span><\/td>\n<\/tr>\n
    Expense Ratio<\/span><\/td>\n0.18%<\/span><\/td>\n0.18%<\/span><\/td>\n0.19%<\/span><\/td>\n0.22%<\/span><\/td>\n0.20%<\/span><\/td>\n0.09%<\/b><\/td>\n<\/tr>\n
    Largest Holding Pct.<\/span><\/td>\nJ & J <\/span>(JNJ)<\/b><\/p>\n

    2.5%<\/span><\/p>\n

    \u00a0<\/span>VE2<\/b><\/td>\n

    		Apple <\/span>(AAPL) <\/b>12.7% <\/span>VE3<\/b><\/td>\nShockwave <\/span>(SWAV)<\/b><\/p>\n

    0.4%,\u00a0<\/span><\/p>\n

    VE4<\/b><\/td>\n

    		Carlisle <\/span>(CSL)<\/b>,<\/span><\/p>\n

    0.8%, <\/span>VE3<\/b><\/td>\n

    		Apple <\/span>(AAPL)<\/b>\u00a0<\/span><\/p>\n

    13.7% <\/span>VE3<\/b><\/td>\n

    		Apple <\/span>(AAPL)<\/b><\/p>\n

    7.0%<\/b><\/p>\n

    VE3<\/b><\/td>\n<\/tr>\n

    Index Provider<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nS&P Dow Jones<\/span><\/td>\nNasdaq<\/span><\/td>\nS&P Dow Jones<\/span><\/td>\n<\/tr>\n
    Index<\/span><\/p>\n

    Scheme<\/span><\/td>\n

    		Mkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting\u00a0<\/span><\/td>\n<\/tr>\n
    ETF Sponsor<\/span><\/td>\n iShares by Blackrock<\/span><\/td>\n iShares by Blackrock<\/span><\/td>\n iShares by Blackrock<\/span><\/td>\nSPDRs by SSgA<\/span><\/td>\nInvesco<\/span><\/td>\nSPDRs by SSgA<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


    \n<\/b>Current ValuEngine reports on these stocks or ETFS can be viewed <\/b>HERE<\/b><\/a><\/p>\n

    In order to frame our forecasts, let\u2019s look at the ValuEngine rankings that summarize our models\u2019 views on the expected price appreciation of <\/span>SPY<\/b>, the SPDR (\u201cspider\u201d) based on the S&P 500 Index.\u00a0 Given its bellwether status as the market\u2019s proxy, a rating of <\/span>3<\/b> (neutral) is the norm for SPY.\u00a0 The ValuEngine market forecasts for <\/span>SPY<\/b> \u2013 and thus the S&P 500 – will vary from negative to positive depending on our models\u2019 assessments of the current environment.\u00a0\u00a0<\/span><\/p>\n

    Focusing on the S&P 500 column in the three rows in the table above that contains our forecasts, our models expect the market to navigate the next three to six months in positive territory.\u00a0 After that, however, between mid-April and mid-October, our models forecast that the S&P 500 will relinquish those price gains and a bit more.\u00a0\u00a0<\/span><\/p>\n

    Are there segments of the market for which the ValuEngine models have a more positive outlook?\u00a0 Yes, the two large cap growth-oriented ETFs, Russell Large Cap Growth, <\/span>IWF<\/b>, and Nasdaq-100, <\/span>QQQ <\/b>both get ValuEngine\u2019s second-highest rating of <\/span>4<\/b> (attractive) for upcoming performance.\u00a0 Of the two, <\/span>IWF <\/b>gets our highest forecast targets across the board and is the only one of the six benchmark ETFs to have a positive forecast target for one-year-ahead performance.\u00a0\u00a0<\/span><\/p>\n

    Financial Advisory Services based on ValuEngine research available: \u00a0 <\/b>www.ValuEngineCapital.com<\/b><\/a><\/h5>\n

    In contrast, the S&P MidCap ETF, <\/span>MDY<\/b>, held up best during the past three-month and six-month declines but is not expected to perform as well as the other benchmark ETFs going forward.\u00a0 Its rating is <\/span>2<\/b> (below average) and its return targets for the next 3-, 6-, and 12-month periods are our second lowest across the board.\u00a0 <\/span>IWD<\/b>, the Russell 1000 Value ETF, also rated <\/span>2, <\/b>receives our lowest return targets.\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

    On a valuation basis, the small cap segment ETF, <\/span>IWM<\/b>, looks unusually attractive on a price-to-book ratio basis.\u00a0 It also has the highest percentage of undervalued companies, 73%, according to our valuation models.\u00a0 Moreover, three of the stocks in its top ten weightings are rated <\/span>4 <\/b>(attractive)<\/span> by ValuEngine. These include Shockwave Medical <\/span>(SWAV)<\/b>; Chart Industries (<\/span>GTLS<\/b>); and Karuna Therapeutic (<\/span>KRTX<\/b>).\u00a0\u00a0<\/span><\/p>\n

    In general, a little over 62% of ValuEngine stocks are deemed undervalued by our valuation model as compared with just below 40% at the beginning of the year. Therefore a 22% decline in <\/span>SPY <\/b>has been enough to transform a market with more than 60% overvalued to one that has the same proportion of stocks now undervalued relative to intrinsic value.\u00a0 <\/span>This can be thought of as analogous from a market being overbought to one that is now oversold.<\/b>\u00a0 This interpretation would be consistent with the positive three- and six-month forecasts for <\/span>SPY <\/b>and the other benchmark ETFs.\u00a0\u00a0<\/span><\/p>\n

    Will this optimistic forecast be enough for buy-and-hold investors to recapture a significant percentage of account balance declines already caused by the current bear market?\u00a0 As per usual, only time can tell.\u00a0 The best we can say is that our signals have now shifted to being guardedly optimistic for the next six months.<\/span><\/p>\n

    By Herbert Blank<\/b><\/h5>\n
    Senior Quantitative Analyst, ValuEngine Inc<\/b><\/h5>\n
    www.ValuEngine.com<\/b><\/a><\/h5>\n
    support@ValuEngine.com<\/b><\/h5>\n
    _______________________________________________<\/b><\/h5>\n
    All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 600 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
    Financial Advisory Services based on ValuEngine research available through <\/b>ValuEngine Capital Management, LLC<\/b><\/a><\/h5>\n
    Free Two Week Trial to all 5,000 plus equities covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n
    Subscribers log in <\/b>HERE<\/b><\/a><\/h5>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    The third quarter was a tale of two halves.\u00a0 The market staged what turned out to be a bear market rally throughout July and the first two weeks of August.\u00a0 Then it was as if somebody blew a whistle.\u00a0 The next six weeks saw the bear return with a vengeance.\u00a0 The ETF reports on ValuEngine … Read more<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[2077,1761,1719,1731,1845,1928,1834,1833,1617,2011,1688,1510,1938,2080,2079,1726,2081,2078,28,1656,1659,63],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2984"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2984"}],"version-history":[{"count":1,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2984\/revisions"}],"predecessor-version":[{"id":2985,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2984\/revisions\/2985"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2984"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}