Overall, ETFs has net outflows of about $1.4 billion last week, marking the third week of the year when investors pulled money out of the industry. Concerns over the spread of the Delta variant of COVID-19 and the potential for a slower recovery took a toll on investors’ sentiment.
As such, U.S.-led equity ETFs pulled out more than $6.5 billion in capital last week compared to inflows of $3.6 billion and $1.5 billion for international equities and U.S. fixed income, respectively, per
etf.com
.
However, rounds of upbeat earnings and continued Q2 optimism bolstered risk-off trade later in the week, pushing the three major indices to new highs at the end of the week. In particular, strong earnings from social media companies like Twitter
TWTR
and Snapchat
SNAP
bolstered investors’ mood. Earnings from
20.6%
of the S&P 500 companies reported so far are up 117.6% on 18.9% revenues with 90.3% beating EPS estimates and 85.4% beating revenue estimates. This reflects strong momentum on the revenue front both in terms of growth and the beat percentage
Overall, combining the actual results for the index members that have reported with estimates for the still-to-come companies, total S&P 500 earnings are expected to be up 71.3% from the same period last year on 19.4% higher revenues, with the growth rate steadily going up as companies report better-than-expected results (read:
A Spread of Top S&P 500 ETFs to Tap Solid Q2 Earnings Growth
).
Despite the outflows, some U.S. equity ETFs topped the creation list last week on earnings optimism. We have highlighted five of them that took charge and can continue to be investors’ darlings even if the pandemic rages on:
iShares Core S&P 500 ETF
IVV
This fund topped asset flow creation, gathering more than $1.9 billion in capital. It tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, communications and financials sectors being the top five with a double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in an average daily volume of 4 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard S&P 500 ETF
VOO
VOO has accumulated more than $1.8 billion, taking its total AUM to $241.3 billion. It also tracks the S&P 500 Index and holds 507 stocks in its basket with information technology, healthcare, consumer discretionary, financials and communication services being the top five, with a double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in an average daily volume of 3.5 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Consumer Staples Select Sector SPDR Fund
XLP
This ETF targets the consumer staples sector and saw inflows of $1 billion last week. It is the most popular consumer staples ETF with AUM of $12.3 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in a heavy volume of 9.4 million shares a day. In total, the fund holds about 32 securities in its basket. From an industry perspective, beverages takes the largest share at 25.4% while household products, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read:
Upbeat Coca-Cola Earnings Boosts These ETFs
).
iShares Edge MSCI USA Quality Factor ETF
QUAL
This product has gathered $989 million in its asset base. With AUM of $23.7 billion, it provides exposure to large and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index and holds 125 stocks in its basket. The ETF charges 15 bps in annual fees and trades in an average daily volume of 1 million shares.
Health Care Select Sector SPDR Fund
XLV
This ETF has accumulated nearly $682 million in capital last week and offers exposure to the broad healthcare space. It follows the Health Care Select Sector Index, holding 64 stocks in its basket. The fund has AUM of $31.2 billion and trades in a heavy volume of around 9 million shares. Pharma, and healthcare equipment and supplies accounts for 27.7% share each from a sector look, while healthcare providers and services, and biotech round off the next spots with a double-digit exposure each. The product has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read:
Healthcare ETFs in Focus as Q2 Earnings Unfold
).
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