Vaccine = Rally in Retail? | 16 August 2020

With news of vaccine progress, we take a look at Retail, an oft-ignored sector battered by the pandemic. Retail shows signs of recovery but still falls short of 2019 pre-pandemic levels. But how much of this positive movement is durable and how much is pent-up demand?

While many brands have already filed for bankruptcy protection, and every fund looks for diversification, Amazon is a leading name.

Can we gain exposure to Retail without Amazon ? Through our Portformer search, we identify the standout XRT, which has minimal exposure to AMZN compared to 4,960 strategy possibilities. 

Another outstanding option is FTXD, which beats all potential replacements and delivers broad exposure to brick and mortar. eBay and Amazon comprise about 15% allocation of the fund. 

We look to this week’s announcements as Walmart and Target are scheduled to report earnings.

What We’re Reading

• AI and Big Data: Can They Guide Investors Through the Pandemic  – Brief CFA post that discussed how AI and other technology will benefit investment professionals and advisors in identifying signals early.
• Americas ETF Market is Bigger Than Ever as Traders Dump Mutual Funds – Bloomberg article on how ETFs have grown significantly through 2020 and present efficient choices for advisor and investors.
• COVID-19 Expected to Shrink the Asset Management Industry by Almost $2 Trillion – Brief article with Cerulli Associates data that reflects the shrinking of assets in US and European markets from the pandemic and future growth expected from Asia.
• 60-40 Portfolio is Dead – Article from research firm that projects low real returns for the US equity and fixed income markets leading to a review of the validity of 60/40 portfolio.
• Lipper Flows – Investors Withdraw $7.2 billion from Equity Funds and ETFs – Lipper Weekly FundFlows Report reflects that major outflows were general equity funds and major beneficiaries were gold and international equity funds.
• The Deal Hasn’t Closed But Schwab is Already Dissecting TD-Ameritrade – Schwab has announced plans to integrate parts of the TD Ameritrade trading platform in anticipation of the merger approval while Veo remains an open question.
• Wirehouse Upgrade Advisor Workstations during the Pandemic – The wirehouse firms continue innovating aggressively to make their advisor tech stack more competitive with independent advisor solutions.
• Lessons from Past Market Recoveries – Detailed summary from Fidelity on lessons learned for all investors from earlier market corrections and recoveries.
• Wells Fargo and Dimensional Show Big ETF Holdouts Are Buckling – Bloomberg article which discussed how Wells Fargo and DFA have overcome internal resistance to establishing ETFs to fence in extensive outflows from their funds.

Connect with Us

Hop on a quick, scheduled 15 min Zoom call with us and explore some new ideas about how to engage your clients and families. 

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Have a great week!

Best,

John DiBenedetto and the Portformer Team