Some investors are betting on the housing market to lead the U.S. economy out of recession. Record-low interest rates have spurred demand.
This week, the National Association of Home Builders announced a record high homebuilding confidence index. Along with low interest rates, spurts of refinancing and relocation from urban areas drive this confidence.
XHB is up almost 10% (+9.9%) over the last 6 months and a white hot 117.3% since the market low in March, while ITB, the iShares Home Construction ETF, reached +12.5% and 134.4% for the same periods. For those looking for lower risk, broader market exposure, and reduced costs, SCHM presents an opportunity.
Unlike many of today’s sectors with momentum, P/Es for homebuilders are in realistic territory. Low interest rates and all-time high lumber prices buoy demand, while the specter of a potential infrastructure initiative after the election has kept the party lights on high.
What We’re Reading
- Push to Convert Mutual Funds into ETFs is Quietly Gathering Pace – Bloomberg article which lays out mutual fund companies have started to convert them directly into ETFs to retain assets.
- 60-40 Market Regime – Paper from Investments and Wealth Institute on how the regime for 60-40 portfolios has a new look.
- Gold Fever in 2020 Means Exchange-Traded Funds – Bloomberg article which spells out the boost revenue for ETF issuers with massive flows into precious metals funds.
- Rethink the 40 in 60/40 Portfolios ? – Nuveen fixed income strategist on how advisors need to rethink their fixed income allocations of client portfolios.
- The Flying V-shaped Recoveries – Excellent blog post from Ritholz Wealth team on how long portfolios need to recover from major drawdowns.
- Navigating the New Reg BI World – Informative article from Colony Group CEO on how RIAs will need to respond to the changes in the new Reg BI environment.
- Using Artificial Intelligence to Sell Mutual Funds in 3 Phases – Blog post from capital markets consultant on how AI has become a game-changer for firms’ data and content library in evaluating funds.
- How to Prepare Your Portfolio for a Weaker Dollar – Barron’s article with investment pros guidance on how to respond to the weakening of the U.S. dollar and further decline.
- Living with Risk – The COVID-19 Iceberg – CFA Institute article on how investors will need to live with ongoing health response to the pandemic and how it impacts investing.
Our Top Posts
- I’m Merging Passiv.AI with Astrocyte Research. Here’s Why.
- [White Paper] Active Management Is in Trouble (Again)
- Portformer Performance During Market Correction
- Coronavirus Twitter Influencer Analysis
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.
Have a great week!
John DiBenedetto and the Portformer Team