Joining the “ETF Report” with host Alexis Christoforous on Yahoo Finance, ETF Trends’ CEO, Tom Lydon, was on hand to talk about where the record amount of ETF flows has been heading over the past couple of quarters, in addition to China’s recent tech stock decline, and the potential for infrastructure.
Finishing the first quarter of 2021 with close to $240 billion in new assets, Lydon explains how that puts the market on pace for a trillion-dollar year in ETFs, which would be record-breaking, following 2020’s $600 billion year.
“Most of the money is going into growth. But, surprisingly, investors are finding opportunity overseas, not just in developed countries, but especially in emerging markets. Those have worked really well when we’ve seen a lower dollar for the last 18 months. However, most recently, we’ve seen the dollar creep up a little bit, with more money starting to come back domestically, especially in large cap growth.”
$NFRA and $PAVE “are two ETFs to take a look at,” @ETFtrends CEO @TomLydon says. “With the support we’re going to see with the infrastructure bill, these might have a long way to run for sure.” https://t.co/Jb7k9tf4PH pic.twitter.com/2PcxcnAL0l
— Yahoo Finance (@YahooFinance) March 31, 2021
China Buying Opportunity?
Turning the attention to the recent decline of Chinese tech stocks, when asked about this being a buying opportunity, Lydon noted both the major hedge with Archegos Capital and political pressure on the SEC might have a side effect in affecting the growth opportunities for Chinese FAANG stocks with the Chinese citizens.
With that in mind, if there’s no plan to diversify overseas, it is a buying opportunity. There are a couple of areas to look at, including the KraneShares Chinese Technology ETF (KWEB) and the Harvest CSI 300 China A-Shares ETF (ASHR), which would help get investors out in front of the line.
Also of note are the infrastructure plays that will become clearer following an infrastructure bill to be proposed by President Biden. As far as which funds to look into, Lydon points out the FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA) and the Global X U.S. Infrastructure Development ETF (PAVE). They have underperformed the general markets. However, the last 6-8 months have been more positive, with more assets coming their way.
Lydon continues, “It’s going to be very interesting to see what the Biden message is and to see what money comes toward these companies. Remember, these are not just domestic plays. These are international companies as well, so it’s a way to diversify your equity portfolio and also diversify your currency risk.”
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