ETF Watchlist: Week of November 6, 2017

You may have heard of this thing called bitcoin. It’s become pretty popular. So popular, in fact, that the price of bitcoin is up more than 660% year-to-date.

It’s almost hard to believe that bitcoin started the year at less than $1,000. It’s currently around $7,350 as I write this. Bitcoin has been about as polarizing a financial instrument as you’ll find. For every market watcher who slaps a $1 million price target on bitcoin, there’s another that claims bitcoin is a fraud that’s destined to crash and burn.

There is no bitcoin ETF on the market today, but it hasn’t been for a lack of trying. Courtesy of Eric Balchunas, here’s where each of the proposed cryptocurrency ETFs stand.

The Winklevoss Bitcoin ETF (COIN) is the original attempted entry into the space. It was originally denied, but the SEC is currently reconsidering whether or not to approve it. The Bitcoin Investment Trust (GBTC), which trades over-the-counter with the ticker GBTC, withdrew its application to be listed on one of the major exchanges. Those ETFs that plan on using bitcoin futures instead of actual bitcoin have withdrawn their applications because, well, bitcoin futures don’t exist yet (although now it looks like they’ll launch by the end of the year). I’d guess we’ll have one (or more) bitcoin ETFs sometime in 2018, although which one will debut first is anyone’s guess. The two new entries to the list, the Blockchain ETFs (which I’ll discuss below), were filed just this past week. These should get approved with little issue and may be a better means of accessing the crypto space.

Whether you think bitcoin and other digital currencies will be around long-term, the ETF industry will capitalize on the current trend sooner or later. Once the first domino falls, I’d expect a number of other providers to quickly file for their own cryptocurrency ETFs.

With that said, here are your four ETFs to watch in the coming week.

iShares National Muni Bond ETF (MUB)

The recently released tax reform bill has a lot of analysts looking for potential winners and losers. One of the less talked about plays is muni bonds. It’s easy to assume that the benefits of munis would take a hit as tax rates drop. But keep in mind that the top personal income tax rate would remain well north of 30%, meaning munis should still remain attractive for high earners. Munis could be an interesting sector to watch if traders turn negative in the short-term. The National Muni Bond ETF is the largest in the space with over $9 billion in assets.

Others: SPDR Barclays Capital Municipal Bond ETF (TFI), SPDR Barclays Short Term Municipal Bond ETF (SHM), Vanguard Tax-Exempt Bond Index ETF (VTEB)

SPDR S&P Retail ETF (XRT)

Amazon (AMZN) has another big quarter, but will that come at the expense of other retailers? We’ll have a better idea this week as names, such as CVS Health (CVS), JCPenney’s (JCP), Macy’s (M), Michael Kors (KORS) and Kohl’s (KSS) all report this week. Expectations are fairly low, so beating estimates might not be too tough. Also, keep an eye out for upcoming holiday season forecasts.

Others: VanEck Vectors Retail ETF (RTH), Amplify Online Retail ETF (IBUY), Consumer Discretionary Select Sector SPDR ETF (XLY)

iShares Edge MSCI Minimum Volatility USA ETF (USMV)

Low volatility ETFs may seem like a conservative way to invest in stocks, but what happens when equities are in the least volatile market in history? The answer is that their benefit gets diminished. In 2017, there’s actually very little value to be had at all in the group. This year, minimum volatility ETFs are not only underperforming the S&P 500, but they’re doing so with GREATER risk. If the markets starting correcting, low volatility ETFs could prove their worth again. Until then, there’s not much benefit here.

Others: PowerShares S&P 500 Low Volatility ETF (SPLV), PowerShares S&P MidCap Low Volatility ETF (XMLV), PowerShares S&P SmallCap Low Volatility ETF (XSLV), PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD)

Amplify Blockchain Leaders ETF (no ticker)

Blockchain, in case you’re not familiar, is the technology that allows digital currencies, such as bitcoin and ethereum, to function, but it has a number of other potential applications as well. That makes blockchain one of the hottest emerging technologies in the world right now. Two different companies this week announced that they will launch ETFs that focus on companies engaged in the development of blockchain.

Others: Reality Shares Nasdaq Blockchain Economy ETF (no ticker)

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