Displaying items by tag: s&p

Wednesday, 14 May 2025 09:58

AI Is Shaping the Utility ETF Sector

Once seen as a slow-moving defensive play, the utilities sector has surged in 2024, outperforming all other S&P 500 sectors thanks to its unexpected ties to artificial intelligence. With companies like Constellation Energy and Vistra powering AI data centers through nuclear energy, utilities are benefiting from tech-fueled demand growth typically reserved for Silicon Valley. 

 

This shift has pushed the sector up nearly 26% year-to-date and attracted strong inflows, even outperforming on both market-cap and equal-weighted bases. Traditionally valued for their consistent demand, pricing power, and dividends, utility stocks are now getting a second look from growth-focused investors. 

 

Actively managed funds like the Virtus Reaves Utilities ETF (UTES) have capitalized on this shift, delivering over 40% returns by overweighting AI-aligned holdings. Meanwhile, traditional utility ETFs such as XLU, VPU, and IDU remain popular options.


Finsum: AI could continue to reshape what investors expect from the utility sector.

Published in Wealth Management
Wednesday, 14 May 2025 09:30

What does the economy mean for small caps?

Although it's common to think small-cap stocks suffer most during recessions, the data tells a more nuanced story. Analysis of developed markets shows that in 64% of years when GDP declined, small caps actually outperformed large caps—a rate even higher than their typical performance advantage. 

 

This finding challenges the belief that economic slowdowns always disadvantage smaller firms. One reason may be that financial markets are inherently forward-looking, often pricing in future recovery well before it's visible in economic data. 

 

As a result, the size premium—where small caps outperform—can still emerge during downturns. Ultimately, small-cap strength isn't strictly tied to GDP trends, underscoring the importance of long-term diversification over short-term predictions.


Finsum: This is much different than the interest rate driven volatility several years ago, this could be a great time to capitalize 

Published in Wealth Management
Friday, 28 February 2025 08:36

A Low Cost ETF Outpacing the S&P

After leading the stock market in 2024, the communications sector is once again the top performer in 2025. Despite the dominance of tech giants like Nvidia and Palantir, communications continues to excel, largely driven by Meta Platforms and Alphabet, which make up nearly half of the sector. 

 

The Vanguard Communication Services ETF offers investors an affordable way to gain exposure to these companies, though its holdings are heavily concentrated. 

 

Alphabet and Meta thrive on high-margin advertising models, unlike media and telecom firms that require heavy capital investments. Both companies are aggressively investing in AI and cloud infrastructure, yet their valuations remain attractive compared to other mega-cap tech stocks. 


Finsum: As long as these two firms continue their strong performance, the communications sector—and funds tracking it—could potentially keep outpacing the broader market.

Published in Wealth Management
Thursday, 30 January 2025 03:27

Three Indices Tracking the Goldilocks Mid-Caps

Mid-cap stocks are tracked by multiple indexes, with the S&P Mid-Cap 400 being the most commonly referenced, alongside the Russell Midcap and Wilshire US Mid-Cap Index. These indexes serve as benchmarks for investors seeking exposure to mid-sized companies, which typically have market capitalizations between $2 billion and $10 billion, as defined by FINRA. 

 

For investors looking to track mid-cap performance, popular ETFs include the iShares Core S&P Mid-Cap ETF (IJH), Vanguard Mid-Cap Index ETF (VO), and iShares Russell Mid-Cap ETF (IWR). IJH follows the S&P MidCap 400 Index, holding companies like Williams Sonoma and Interactive Brokers, with a strong weighting in industrials and financials. 

 

Vanguard’s VO, which mirrors the CRSP US Mid Cap Index, includes firms such as Welltower and Palantir Technologies, while IWR, aligned with the Russell MidCap Index, features holdings like Applovin and Williams Inc.


Finsum: Mid-cap investments offer a middle ground between the stability of large caps and the growth potential of small caps, making them an attractive option for investors aiming to diversify their portfolios.

Published in Wealth Management
Tuesday, 21 January 2025 06:07

Inflation Slowed but Still Lurking

In a striking twist, the Biden administration’s final week coincided with the best stock market performance since Trump’s re-election, fueled by a bond market rally following unexpectedly mild inflation data. The S&P 500 surged nearly 3%, just shy of the 6000 mark, while the Dow posted its strongest week in months, aided by a sharp decline in 10-year Treasury yields. 

 

Despite this upbeat sendoff, Biden’s term closes with a mixed economic legacy: robust job creation and stock market gains were offset by a historic drop in real disposable income and surging national debt. The inflation respite behind the rally may not indicate lasting relief, as core inflation remains stubbornly stalled near 3.3%. 

 

Rising crude oil and gasoline prices threaten to reignite inflationary pressures, potentially complicating the Federal Reserve’s path toward rate cuts. As the market shifts focus to Trump’s fiscal policy, investors brace for more stimulative measures that could push long-term Treasury yields past 5%, setting the stage for new challenges in both equity and bond markets.


Finsum: The most recent Fed minutes suggest a strong concern over taming inflation in the new administration so keep those inflation strategies handy. 

Published in Wealth Management
Page 1 of 6

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top