When you write an ETF column for Mondays at a firm as creative as VettaFi, and it happens to be Halloween: You write about a Halloween-themed ETF piece. While there are currently no ETFs with a Halloween theme–what are asset managers waiting for–some of the more topical funds in 2022 have tickers that could easily put on a mask and be scary.
Advisors and end clients owning the Vanguard S&P 500 ETF (VOO) are not saying “Boo!” this year. Similar to years past, VOO has been a go-to product for gaining large-cap equity exposure pulling in $39 billion year-to-date through October 26. Indeed, in the past 120 months, VOO has had net outflows in just eight. The ETF charges a modest 0.03% expense ratio and traded 5.5 million shares on a daily basis in the past month.
While approximately 100 ETFs have headed to the ETF graveyard thus far in 2022, one that is not about to “RIP” is the Invesco S&P 500 Equal Weight ETF (RSP). RSP manages $30 billion in assets aided by $3.6 billion of net inflows this year. Advisors have looked to RSP to provide more diversified exposure to large-cap stocks.
Indeed, RSP has less than 0.30% of assets in all stocks, unlike VOO, which has 5%-plus positions in mega-caps Apple and Microsoft. Diversification helped during a year when mega-caps were not the market leaders. Year-to-date through October 26, RSP’s 14.4% loss was narrower than VOO’s 19.1%.
Energy equity investments have been a rare bright spot in a challenging market in 2022. Indeed, the Energy Select Sector SPDR (XLE) was up 65%, significantly outperforming the broader S&P 500 Index. But it is hard to turn XLE into something scary.
However, its energy equity ETF peer, the Alerian MLP ETF (AMLP), can easily be shifted into “VAMP” for Vampire. AMLP was up a strong 33% as of late October and pulled in $565 million of net inflows after bleeding bleeding $259 million in 2021.
Relative to the more industry-diversified XLE, the midstream-focused AMLP sports a higher dividend yield. VettaFi is indeed the index provider for AMLP, though that should not be scary for readers as I have no additional knowledge on the fund’s construction than I do S&P Index-based XLE.
Overall, the ETF industry has been a treat, not a trick, for investors this year. Approximately $450 billion flowed into ETFs thus far in 2022, in the middle of a bear market for U.S. and international equities and the worst year for bond strategies in decades. While advisors and investors continue to run screaming from many mutual funds, ETFs have become the product of choice for strategic and tactical investments.
Here’s hoping you end up with the candy of your choice in your jack-o-lantern. I’m on the hunt for Reese’s Dark Chocolate Peanut Butter Cups.
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