Bitcoin flew by $60,000 and is approaching all-time highs. This was a 4% climb in less than a day. Speculation is what pushed the world’s most prominent cryptocurrency higher, as it seems it seems regulators will be approving the first bitcoin exchange-traded fund. While there hasn’t been anything official, the ETF is set to launch at the NYSE on Tuesday, and investors are expecting the SEC to not object. Investors like Mikkel Morch, executive director at ARK36, are putting $65k price target on bitcoin. The rally wasn’t widespread in all crypto as both XRP and ADA slumped. Regulation is still one of the largest risks as central banks and governments around the globe are weary to embrace. Jon Cunliffe Dpubbt BoE Governor said crypto could spark a 2008 sized financial crisis.

FINSUM: Chinese regulators were the biggest threat to crypto earlier this year, but it appears the U.S. is moving more progressive on crypto regulation moving forward.

(Washington)

The SEC’s Investor Advocate has pointed out that Reg BI is under threat. Some of the developments in the market have meant that Reg BI may be rendered useless. In particular, the increasing use of “nudges” in trading inevitably rubs against the fundamental meaning of Reg BI. If trading platforms for retail investors are constantly using “nudges”, or encouragements to trade, how much does that constitute a recommendation? That is the esoteric question that the SEC must address. According to the SEC’s Investor Advocate, Rick Fleming, “In my view, it appears that the use of certain DEPs, by gamifying securities trading for retail customers, could significantly influence these retail customers’ investment decisions in ways that were not fully contemplated when the commission adopted Reg BI with its important distinction between solicited and unsolicited trading.

FINSUM: Reg BI is only a couple years old and it is already antiquated!

(Washington)

Advisors have been paying very close attention to Reg BI. This is especially true because the Biden administration looks poised to make a number of changes to the rule, including defining “fiduciary” and bolstering enforcement. However, that appears to not be all as the SEC may be set to make an addition to Reg BI: a new section covering the gamification of trading. The SEC’s Investor Advocate, Rick Fleming, says that “N]ow it seems that most if not all of the on-line discount brokers are influencing investor behavior with digital engagement practices, which further blurs the line between providing investment advice and traditional brokerage service … At some point, if the Commission fails to brighten the distinction between advisors and brokers, it will make little sense to regulate the two with such distinct regulatory models.”.

FINSUM: Critical changes to definitions, much heavier enforcement looming, and now a pandora’s box on gamification. And this might be just the beginning.

(New York)

Wall Street is about to start posting 3rd quarter earnings and market participants are expecting another big round of postings. Driving most of those earnings is robust growth in the overall economy, which drove the same blockbuster Q2 reports. Some of the highest expectations are in the banking sector as JPMorgan Chase & Co., Bank of America Corp., PNC Financial Services Group Inc., and U.S. Bancorp are looking to lead the pack. This is driven by micro factors in their companies but also macro factors that benefit financials as interest rates look to rise and the Fed begins tapering. Outside financials, large caps like UnitedHealth Group Inc. are also looking to post very high earnings with solid financials and its valuable brand Optum is driving earnings. The delta variant may have hamstrung some companies from the great Q2, but large-cap companies could be robust enough to withstand the covid resurgence.

FINSUM: Additionally, look to energy companies to post solid Q3 numbers as high prices helped bottom lines for these large-cap juggernauts.

The post-pandemic stable recovery is starting to teeter, and threats to the portfolio are starting to creep in. Investors are now actively turning bearish and moving into cyclical value plays, while others remain optimistic that growth stocks are still the best option. The question isn’t about the future but rather what exposure has the least risk and the best upside in the current environment. The O’Shares Global Internet Giants Index ETF (OGIG) may be an opportunity to invest in growth at a great value.

Riding the Growth-Value Line

OGIG is a rules-based ETF that tracks both quality/value characteristics in internet companies. These companies need to include a majority share of their revenue from either internet commerce or technology services that underpin e-commerce. Internet companies are an obvious signal for growth and OGIG’s biggest holdings include Amazon, Google, and Microsoft from the US; and Tencent, Alibaba Group, and Shopify* from abroad. In addition to growth, the fund optimizes on the most important driver of value: revenue. Over the last three years, revenue is one of the best predictors of returns. As the first quartile of technology stocks nearly doubled the annualized return of the quartile below. Part of what makes this fund so attractive is that the revenue is a prop against future headwinds, but more on that later.

Since the onset of the pandemic, stocks have performed well. The S&P 500** has had a pure return of 94.4% since bottoming out on March 20, 2020 through 9/15/2020, but OGIG has drastically outpaced it. Growing at 153% since that same date, OGIG even dwarfs competitors like the Nasdaq 100 by over 20 percentage points. The primary reason for that is the revenue value factor. This drives a 20% discount in relative price-to-sales ratio compared to the Nasdaq 100 vs. the 3-year average. The other driver is exposure to the fastest-growing technology companies globally in emerging markets, China, and Canada.

The Future Landscape

Investors are worried about the spreading delta variant, weak economic growth, and future inflation, but all of these risks are of little concern for OGIG. E-commerce is driving the success of OGIG, which would only be fueled by a pick-up in the delta variant and has institutionalized itself in the American economy in a return to normal. Weak economic growth is a concern for non-revenue generating companies, but robust revenue generators outpace competitors in tough economic times. Meanwhile it’s the hyper-growth prospects that are concerned about future inflation as they have no current revenue. And besides, the latest inflation data suggests Powell is right about inflation being transitory.

Finally, regulation in China started to spike in July, but the lion’s share of that regulation is already passed. Historically, China has been quick to redact any policies that are a hindrance to its future growth. In fact, China’s regulation is actually providing a solid landscape for the fast-growing tech sector with more assurances moving forward.

Grow and protect with the O’Shares Global Internet Giant ETF.

- This is sponsored content by O’Shares ETFs -

[*] Click here to view the funds top 10 holdings.

[**] Definitions:

S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

NASDAQ-100 Total Return Index: The NASDAQ-100 Index is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ. No security can have more than a 24% weighting. The index was developed with a base value of 125 as of February 1, 1985. Prior to December 21,1998 the Nasdaq 100 was a cap-weighted index.

Relative Price/Sales Ratio (P/S): The price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues.

Before you invest in O’Shares ETF Investments Funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest.

There are risks involved with investing including the possible loss of principal. Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. A Fund's emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities. Past performance does not guarantee future results. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns. The market price of Shares can be at, below, or above NAV. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 PM Eastern time (when NAV is normally determined), and do not represent the returns you would receive if you traded Shares at other times. O’Shares ETF Investments Funds are distributed by Foreside Fund Services, LLC. Foreside Fund Services, LLC is not affiliated with O’Shares ETF Investments or any of its affiliates.

View the standardized performance for OGIG. Expense ratio: 0.48%

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost.

Please note that very strong performance may be due to unusually favorable conditions that are likely not sustainable.