ETF Trends
ETF Trends

Market technician David Chojnacki commented in a brief missive this morning that the S&P 500 Index would be net down on the day thus far (there has been some dip buying all morning in the SPX), if not for Procter and Gamble’s (PG) 3.8% pop today after a positive reception to the company’s quarterly earnings report.

I found this tidbit incredibly insightful in terms of “market breadth” commentary, especially given PG’s tendency to attract “value” players as well as those looking for a competitive yield (3.20%). PG itself carries a 1.22% weighting in the S&P 500 Index, placing it at #10 behind JPM and BRK.B.

Never the less, it is worth noting that PG is having a nice day for itself post earnings and it carries a prominent weighting in several ETFs outside of say SPY and IVV. XLP (SPDR Consumer Staples, Expense Ratio 0.18%) has
the largest weighting to PG (12.75%) and the ETF is up handily today after a brutal losing streak throughout the week on very heavy trading volume and substantial redemption pressure (>$1.1 billion in outflows this week) so at least for today there seems to be some dip buying there.

Other, lesser known ETFs that are sensitive to PG given their weightings include FSTA (Fidelity MSCI Consumer Staples, Expense Ratio 0.12%) which is somewhat new to the marketplace, having debuted in October of 2013.

This ETF has a 11.78% weighting and has attracted a respectable $82 million in AUM since its inception. VDC (Vanguard Consumer Staples, Expense Ratio 0.14%) has an 11.53% weighting to the stock and this ETF has seen substantial huge block trading volume days this week as well, in sympathy with XLP and other Consumer Staples ETFs heading into the PG release. IYK (iShares U.S. Consumer Goods, Expense Ratio 0.46%) also has a substantial weighting to PG at 10.60% to round out the ETFs with the largest weightings.

From what we have observed over time, Consumer Staples ETFs have typically attracted those that are looking for less than average volatility than the overall market and higher than average yield.

The fact that we are seeing large selling activity this week heading into an earnings event from not only a prominent index member, but the #1 market cap weighted member of every aforementioned index product, shows the hesitation that long holders have in this market all of a sudden.

Consumer Staples Select Sector SPDR

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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