ETF Watchlist: Week of April 3, 2017

The market closed out a strong first quarter on Friday that saw the S&P 500 rise 5.5%, the Dow Jones Industrial Average gain 4.6% and the Nasdaq soar by 9.8%. It was the market’s best performance since Q4 2015. Tech was the top performing sector with the Technology Select Sector SPDR ETF (XLK) gaining 10.7%. Energy was by far the worst performer with the Energy Select Sector SPDR ETF (XLE) dropping almost 7%.

From here, we settle into a relatively light economic and earnings calendar this week. Monsanto (MON) and Bed Bath & Beyond (BBBY) are the biggest names reporting this week before the Q1 earnings season begins in earnest next week. Auto sales figures come on Monday which should give us an additional piece of data to help measure the health of the consumer space.

This week, I’m watching a handful of ETFs playing on broader market themes. Here are four ETFs that I’ll be keeping an eye on this week.

Amplify Online Retail ETF (IBUY)

Consumer stocks did pretty well in the first quarter, but the retail sector continues to get left behind. Consumer ETFs were up around 5-8% in Q1 but the SPDR S&P Retail ETF (XRT) dropped more than 4%. Traditional brick-and-mortar and mall driven businesses struggled but there’s one area of retail that did well - the online channel.

My favorite play on this area is the Amplify Online Retail ETF, a portfolio of around 40 stocks that derives most of its revenue online. The fund, whose holdings include Netflix (NFLX), Amazon (AMZN), PetMed Express (PETS) and eBay (EBAY), was up almost 9% in Q1. Strong consumer confidence numbers should help people feel comfortable continuing to spend.

The United States Oil ETF (USO)

Will OPEC countries agree to extend their production cut agreement or not? That’s the big question right now in the energy sector. Oil rose by over 5% last week to close back above the key $50 level suggesting there’s optimism that it’ll happen. Oil ETFs such as the United States Oil ETF are likely to move significantly on any news. The decision should come at the OPEC meeting on May 25.

The current production cut agreement hasn’t had as big of an effect as many had hoped. Crude supplies are still high and there’s the added pressure of countries wanting to produce more profitable oil as prices rise. Oil prices are likely to continue bouncing up and down in the run up to the May meeting.

iShares Core MSCI Emerging Markets ETF (IEMG)

No fund experienced better net inflows in the first quarter than this fund. It added nearly $7 billion to its asset base on the heels of a nearly 13% return in the quarter. Emerging markets in general have attracted a lot of interest recently with the Vanguard FTSE Emerging Markets ETF (VWO) also seeing significant inflows. Europe and other developed markets ETFs have seen inflows indicating that investors are perhaps seeing better return opportunities overseas than at home.

Horizons Medical Marijuana Life Sciences ETF (HMMJ)

It seemed inevitable that a marijuana-focused ETF would launch eventually. The day has finally arrived albeit in a limited manner. The Horizons Medical Marijuana Life Sciences ETF is scheduled to begin trading on April 5th on the Toronto Stock Exchange. Sales of marijuana both for medical and recreational use is expected to grow significantly over the next several years as states continue to legalize its use. The fund will target “North American-listed stocks that are involved with medical marijuana bioengineering and production.” Cue the jokes about why the fund didn’t wait until 4/20 to launch.

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