Global equities tumbled as interest rates soared behind continued elevated readings of inflation and hawkish central bank rhetoric. Yields on the U.S. two-year and the U.S. ten-year note both spiked higher. Many market participants viewed the U.S. Federal Reserve (the “Fed”) as likely to raise rates by 75 bps in June following their announced 50 bps increase in May. A narrative increasingly took hold among some investors that the Fed may be ‘losing control’, as higher interest rates, regardless of the pace or magnitude of their rise, could prove ineffective in fighting scarcity driven inflationary pressures that have resulted from supply chain disruptions, geopolitical events, and renewed COVID-19 lockdowns in China. The year-to-date loss for the S&P 500 marks the index’s worst start to a calendar year since 1939, while the year-to-date decline for the Nasdaq Composite marks its worst four-month start since the index was created in 1971.1
The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) declined 20.84% during the month of April compared to the S&P 500 Index, which fell 8.72% during the same period. Year to date, the BUZZ Index trails the S&P 500 with returns of -34.16% and -12.92%, respectively, as of the end of April.
Technology and Meme-Stocks Hit Hardest
The BUZZ Index suffered its worst period of performance between scheduled rebalance dates since the Index was first launched in December 2015, falling nearly 25% during the recent period between selection dates (April 13, 2022 to May 12, 2022). The losses were more than double those of the S&P 500 Index and over eight percentage points worse than the NASDAQ Composite Index over the same period. Only five stocks within the BUZZ Index posted positive returns during the recent period between selection dates with United Airlines Holdings (UAL) contributing just 7 bps of positive performance to the Index.
| Top BUZZ Index Contributors: April 13, 2022 – May 12, 2022 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| United Airlines Holdings Inc | UAL | 0.16 | 0.07 |
| ZIM Integrated Shipping Services | ZIM | 0.74 | 0.04 |
| Coca-Cola Co/The | KO | 0.15 | 0.01 |
| Norwegian Cruise Line Holdings | NCLH | 0.14 | 0.01 |
| McDonald’s Corp | MCD | 0.14 | 0.01 |
| Exxon Mobil Corp | XOM | 1.09 | 0.00 |
| Cisco Systems Inc | CSCO | 0.11 | 0.00 |
| General Electric Co | GE | 0.11 | 0.00 |
| Chevron Corp | CVX | 1.14 | 0.00 |
| AT&T Inc | T | 1.26 | 0.00 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
The top detractors to performance featured a range of stocks from the consumer and technology sectors and included many thematic related equities. Shares of online Upstart Holdings Inc. (UPST), which uses artificial intelligence to originate loans for banks, fell a stunning 63% during the period after the company’s latest quarterly earnings and projections disappointed investors. Several stocks that are well-known for discussions across the Reddit community, were also featured in the top detractors to BUZZ Index performance with GameStop Corp. (GME), AMC Entertainment Holdings (AMC) and Palantir Technologies (PLTR) all contributing notably to the BUZZ Index’s negative returns.
| Bottom BUZZ Index Contributors: April 13, 2022 – May 12, 2022 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Upstart Holdings Inc | UPST | 1.91 | -1.35 |
| GameStop Corp | GME | 3.19 | -1.29 |
| AMC Entertainment Holdings Inc | AMC | 2.93 | -1.21 |
| Palantir Technologies Inc | PLTR | 2.69 | -1.21 |
| Amazon.com Inc | AMZN | 2.87 | -0.92 |
| Tesla Inc | TSLA | 3.12 | -0.88 |
| Coinbase Global Inc | COIN | 1.16 | -0.84 |
| NVIDIA Corp | NVDA | 2.87 | -0.79 |
| ROBLOX Corp | RBLX | 1.35 | -0.73 |
| Affirm Holdings Inc | AFRM | 1.23 | -0.71 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
BUZZ Index May 2022 Rebalance Highlights
Carvana
Six months ago, many of the high-flyer momentum stocks in the market were surging, trading near all-time highs, and exhibiting elevated levels of positive investor sentiment. This year, many of those stocks have endured a jarring correction in their valuations, completely giving up all their gains since the March 2020 COVID-19 crash. Carvana (CVNA), the online used car-shopping platform, experienced an incredible run from its COVID-19 lows, with its stock rising over ten-fold, fueled by soaring used car prices and changing consumer behaviors which preferred online purchasing over visiting physical dealerships. Like many of its e-commerce peers, CVNA has been crushed this year in the market downturn. Concerns have mounted relating to the company’s mounting debt levels as it pursued an aggressive growth strategy while paying high prices for its growing inventory of vehicles. After entering the BUZZ Index for the first time in August 2020, CVNA exited the Index the following month only to re-enter the BUZZ Index in October 2020. CVNA’s second stint in the Index was short-lived yet again lasting just one month and has since remained out of the Index. However, positive investor sentiment jumped this month as the stock has fallen nearly 90% from its peak and reaching a new 52 week low, as investors may view the drop to be overdone and shares of CVNA representing value and primed for a bounce. This month, CVNA is the biggest new entrant featured in the BUZZ Index with a 1.13% weight.
Carvana Stock Price | April 28, 2017 – May 16, 2022
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Lyft
When most of the world began the shift to returning to pre-pandemic life, many assumed the travel and leisure industry would rebound as well. While travel activity has picked up significantly over the past few months, many of the stocks featured in that segment of the market have faced a host of new headwinds. Lyft (LYFT), a popular ride-sharing company that competes with UBER (UBER), experienced a rebound in rider demand; however, increased driver turnover and rising costs have weighed negatively on the company’s margins. Surging gasoline prices served to reduce the appeal of the platform for the company’s drivers, and as a result, LYFT has provided costly incentives to mitigate the effects and retain the services of their driver community. Despite posting strong results in its latest earnings, the company announced that further spending would be required on driver retention, news that sent the stock down over 30%. Investor sentiment on LYFT has been rising in recent weeks as investors appear to view the beaten down stock as presenting better value. This month, LYFT enters the BUZZ Index with a 0.89% weight.
For more on rebalance results and a full breakdown of index constituents added and removed for the month, view the BUZZ Index reconstitution report.
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Originally published by VanEck on May 24, 2022.
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Important Disclosures
1 Source: Dow Jones Market Data.
Company data is the source for all particular company information quoted.
Definitions: The S&P 500 is a stock market index of 500 of the largest companies listed on stock exchanges in the United States. The Nasdaq Composite Index is a stock market index that consists of the stocks that are listed on the Nasdaq stock exchange. S&P Banks Select Industry Index comprises stocks in the S&P Total Market Index that are classified in the GICS asset management & custody banks, diversified banks, regional banks, other diversified financial services and thrifts & mortgage finance sub-industries.
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