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Factor ETFs continue to grow in popularity, finds Invesco

Factor ETFs continue to grow in popularity, finds Invesco

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Institutional and wholesale investors are increasingly turning to ETFs to implement factor strategies, according to research by Invesco.

Georg Elsaesser, Senior Portfolio Manager, Quantitative Strategies at Invesco

Georg Elsaesser, Senior Portfolio Manager, Quantitative Strategies at Invesco.

The fifth Invesco Global Factor Investing Study surveyed 238 different pension funds, insurers, sovereign investors, asset consultants, wealth managers, and private banks globally, collectively managing over $25 trillion in assets under management.

Interviews were conducted in April and May of 2020 against the backdrop of the Covid-19 pandemic and peak volatility.

The research found that two-thirds (67%) of wholesale respondents use ETFs to implement factor strategies, up from 63% in 2019. Those who use ETFs deploy half (50%) of their factor allocation through the vehicle on average.

Wealth managers showed a significant preference for ETFs which accounted for three quarters (74%) of their factor allocation, while private banks attain around a third (35%) of their factor allocation through ETFs.

Looking at institutional investors, 60% of respondents use ETFs to implement factor strategies now, compared to 53% last year. The average allocation deployed through ETFs was relatively lower, however, at 14% of the overall factor portfolio – ETFs accounted for almost a quarter (24%) of defined contribution pension funds’ average factor allocation, 17% for defined benefit schemes, 11% for insurance firms, and 9% for sovereign wealth funds.

Across both institutional and wholesale investors, factor ETFs were used by 77% of respondents from North America, 63% from Asia Pacific, and 45% from EMEA.

Liquidity (77%) was cited by institutional investors as the main advantage of using ETFs, followed by transparency (51%) and tactical factor tilting (47%).

For their wholesale peers, fees (71%) were the dominant factor, followed by ease of use (64%) and then liquidity (52%). The least important for both segments was using ETFs as a single point of access for specific or multiple factors.

Georg Elsaesser Senior Portfolio Manager, Quantitative Strategies at Invesco, said, “For respondents investing in factor strategies based on passive indexing strategies, ETFs are particularly valued for their ease of use and price. For these types of enhanced or ‘smart’ beta applications, investors reported being attracted to transparent, rules-based products.

“ETFs are seen as a good tool for building a portfolio and managing risk, particularly when viewed against the more limited option of market-cap-weighted products. The growing depth of ETF products on offer, including the supply of multi-factor products, was seen as important in helping with this advance, making factor investing more accessible to a wider range of investors and allowing factor strategies to fulfill more diverse portfolio objectives.”

Factor performance

Roughly two-thirds of both institutional (65%) and wholesale (67%) investors reported that their factor allocations met or exceeded their overall performance expectations leading up to the study. According to data from MSCI, as of March 2020, momentum, quality, and low volatility factors generally outperformed the global equity market over the previous 12 months, while value and size factors underperformed.

Despite a third of respondents being disappointed with the performance of their factor portfolios, only 3% of those surveyed indicated that they plan to reduce their allocation to factor strategies over the next 12 months.

Elsaesser said, “Factor strategies have performed as expected, even considering the peculiar conditions and lower returns for some factors over the past couple of years, and sentiment towards factor investing has remained very positive. Factor investing is here to stay and is being increasingly adopted by more investors of every size. It is important to stress that factor investors are long term, whose belief that factor premia results in excess return over the long run underpins a sense of pragmatism in the face of short-term volatility.

“For instance, while the previous decade has been difficult for investors in the value factor, this edition of the study finds that most investors remain committed to the value factor, believing its run of underperformance as a temporary phenomenon”

Factor investing and fixed income

Notably, belief in the applicability of factor investing to fixed income was found to be close to universal, having increased to 95% from around 60% in 2018. Investors cited the potential for a factor approach to bring more transparency to the market overall, as has been the case with equities.

This was also reflected in growing levels of adoption with 40% of investors already using factors in fixed income and more than a third (35%) actively considering introducing it, alluding to the opportunity for product developers.

Factor investing and ESG

Environmental, Social, and Governance (ESG) investing continues to grow in prominence with a majority of institutional (84%) and wholesale (71%) investors now having an ESG policy in place. Similarly, 83% of institutional investors and 69% of wholesale investors are already incorporating or considering incorporating ESG into their factor portfolios.

For North American investors, improving returns ranked alongside controlling risk as the main motivations for incorporating ESG, each cited by 85% of investors from that region. In contrast, stakeholder requirements, cited by just 44% of North American respondents, were top priority for 80% of EMEA investors.

Elsaesser added, “Looking forward it is likely that ETFs will play an important role in the ESG space. More recent ESG adopters often lack experience and face implementation challenges and are eager for simple, cost-effective solutions.

“In addition, ETFs do not necessarily have to be passive only, they can also wrap truly active investment strategies and tailored solutions for instance in order to establish customized ESG integration including enhanced reporting.”

The post Factor ETFs continue to grow in popularity, finds Invesco first appeared on ETF Strategy.

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Hot Biotech Penny Stocks to Watch as Stocks Enter Bear Market 

Are these biotech penny stocks on your watchlist right now?
The post Hot Biotech Penny Stocks to Watch as Stocks Enter Bear Market  appeared first on…

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3 Hot Biotech Penny Stocks to Add to Your Watchlist With the Market Down 

Recently, biotech penny stocks have seen heightened bullish sentiment. Today, the emphasis on biotech stocks comes as the Monkeypox virus is seeing a resurgence in certain areas around the world. Today, the WHO confirmed 80 cases of the virus in 11 countries. And since then, investors have begun looking for biotech stocks that may be able to benefit. 

[Read More] Penny Stocks To Buy Now? Hot Monkeypox Stocks To Watch Today

In addition to this, we are also seeing heightened volatility with penny stocks and blue chips. This means that it is more important than ever to stay on your toes. Understanding what your trading strategy is and how you can best execute it is crucial in these market conditions.

If you are thinking about getting into penny stocks, then make sure to do your research first. There is a lot going on in the stock market, so researching and understanding all you can about penny stocks is essential to your success. With this in mind, let’s take a look at three biotech penny stocks to add to your watchlist right now. 

3 Biotech Penny Stocks to Add to Your Market Crash Watchlist 

  1. Immix Biopharma Inc. (NASDAQ: IMMX
  2. TherapeuticsMD Inc. (NASDAQ: TXMD
  3. Chimeric Inc. (NASDAQ: CMRX

Immix Biopharma Inc. (NASDAQ: IMMX) 

One of the bigger gainers of the day is IMMX stock. At EOD, shares of IMMX stock shot up by over 30%, with a 5% gain in after hours trading. And, in the past five day period, shares of IMMX have climbed by more than 50%.

While we do see many gains with penny stocks without news, today, Immix made an exciting announcement in premarket trading. The company stated that its IMX-110 drug demonstrated improved survival over the current approved drug, Trabectedin. It states that IMX-110 is part of what is expected to be a $6.5 billion market by 2030. 

“We are excited to see continued evidence of IMX-110 anti-tumor activity versus approved therapies. We believe this is a preview of anti-tumor activity to be demonstrated in our 2 clinical trials to be kicked-off in 2022: IMX-110 monotherapy, and IMX-110 in combination with anti-PD-1 tislelizumab.”

The CEO of Immix Bio, Ilya Rachman

Right now, there is quite a lot of bullish sentiment with biotech penny stocks. And, as a clinical stage biopharmaceutical company, Immix is at the center of this. While it is highly volatile IMMX stock could be worth adding to your list of penny stocks to watch. 

TherapeuticsMD Inc. (NASDAQ: TXMD) 

Another gainer of the day on May 20th is TXMD stock, which shot up by over 35%. In the past month, shares of TXMD stock have fallen by around 74%, which makes this gain much more substantial.

[Read More] Penny Stocks To Buy? Warren Buffett’s Bitcoin Bet, 3 Stocks To Watch

Today, the company announced that it received FDA approval for its Supplemental New Drug Application for Annovera. With this approval, the company will be able to produce 7,000 additional rings for the supply chain, which will be made available to customers by the second and third quarter of this year. 

“Today’s approval is an important milestone as it will allow us to more efficiently scale, manufacture, and consistently supply ANNOVERA to meet the increasing demand by women who want procedure-free, long-lasting reversible birth control.” 

The CEO of TherapeuticsMD, Hugh O’Dowd

Back in 2018, Annovera was approved by the FDA as a long-lasting, reversible, procedure-free birth control product. And since then, the company has worked hard to commercialize it as much as possible. With that in mind, do you think TXMD is a worthwhile add to your penny stocks watchlist or not?

Penny_Stocks_to_Watch_TherapeuticsMD

Chimeric Inc. (NASDAQ: CMRX) 

With an over 6.8% gain at EOD on May 20th, CMRX stock is another penny stock that investors are watching right now. In the past five days, we’ve seen a very steady gain with CMRX stock, pushing up by more than 20%, which is no small feat. And, this comes after a six month drop of over 60%.

The main reason for today’s gain with CMRX stock comes as fears surrounding an increase in Monkey Pox cases, are driving up biotech stocks. This includes Chimeric, which recently announced a deal with Emergent, to offer exclusive rights for its smallpox oral antiviral product known as Tembexa. 

And, given that Monkey Pox is a smallpox derivative virus, we see the major correlation between the two. With this new virus situation, there is a large demand increase for this vaccine. And while the fears that are comparing this virus to Covid-19 are somewhat unwarranted, there is a lot to consider. With this in mind, does CMRX deserve a spot on your buy list or not?

Penny_Stocks_to_Watch_Chimeric

Which Penny Stocks Are You Watching Right Now?

Finding the best penny stocks to buy is all about understanding where to look. While it can be difficult given the heightened volatility in the stock market right now, there are some ways to make it easier. The best course of action will always be to have a well-thought-out trading strategy on hand. 

[Read More] What to Know About Buying Penny Stocks on May 20th 

 This can help you to maximize your chance of profitability and increase your odds of not seeing losses. In addition, considering exactly what is going on in the stock market remains paramount to your success as an investor. So, as we continue to traverse this extremely volatile period, which penny stocks are on your watchlist right now?

[reblex id='29520']

The post Hot Biotech Penny Stocks to Watch as Stocks Enter Bear Market  appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

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Spread & Containment

Why I’m Not Worried About the Stock Market Crash

In the long run, the stock market always goes up (but it’s way more complicated than that).

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In the long run, the stock market always goes up (but it's way more complicated than that).

We're not living in 1929. It's important to remember that as we watch the stock market crash and our personal net worth take a big hit.

While that has certainly happened, it's important to note that the stock market isn't the economy. We're not on the cusp of the next Great Depression. Instead, we have a market that's spooked by rising inflation (i.e. stuff costing more) that's also struggling with supply chain issues caused by an unparalleled global pandemic.

Yes, many things cost more including basic needs like food and shelter, as well as near-basic needs likes cars and gas. But, while inflation has been real, that's not the full story of the U.S. economy.

We're also living at a time where the unemployment rate (3.6%) remains near historic low (where it most likely would be if jobs weren't so plentiful allowing some people to sit out of the labor market for a period). The labor picture has for a very rare time in American history titled in favor of workers.

This has led to jobs in the retail and service space which once paid minimum wage while offering minimal benefits to offer $15 an hour or more along with perks like free college tuition. That's not to say that these jobs even pay a living wage (it depends a lot upon where you live) but the situation for workers in these spaces has notably improved.

The economy has its struggles, but it's not a clear picture. High house prices for one person means a home that has gained a lot of value for someone else. And other issues -- like the high cost of gas and the shortage of new as well as used cars -- are tied to relatively short-term problems.

statista

But What About My Investments?

Stock markets crash. That's sometimes an indication of greater economic problems, but the U.S. stock market has never failed to recover its losses -- often in a fairly quick period. That's cold comfort as you see red in your portfolio, but if retirement (or whatever you plan to spend your invested money on) isn't now or in the next year or two, a "crash" is something expected that can be used to your advantage.

The first thing you should do is evaluate why you own the shares that you own. Has something changed about any of those companies because of the pandemic? Not has the share price gone down, but has anything changed about the company's long-term trajectory?

Short-term investors, or perhaps people who panic easily, have used Netflix's (NFLX) - Get Netflix, Inc. Report slight subscriber drop as a sign that the company has peaked. Do you believe that or do you see the streaming leader both returning to growth and better controlling its content costs?

Netflix had explosive growth during the pandemic. Would you have rather it added those customers at a pace that spread things out for Wall Street? Do you see people leaving the service for a rival or to start reading more?

The reality is that many high-quality companies have suffered major declines for reasons that have nothing to do with their business performance. Yes, the pandemic did create some false winner that won't be long-term successes, but that's a small number of companies (and many long-term investors avoided those companies because of that possibility.

Now Is the Time to Buy

The stock market has become a giant Marshalls filled with name brands at huge discounts. It may seem counterintuitive to buy while stocks are crashing, but isn't that the best time to buy? If your BMW dealer has too much inventory and offers a sale, that doesn't change the long-term value of owning a BMW.

And while buying can be a huge opportunity, the reality is that a market crash is not the time to sell (unless you truly believe you have a holding that's not a good long-term investment). Yes, a lot of high-fliers have fallen to earth, but that was true in 2008 as well and history has shown that holding and buying great companies when prices are low is how you get rich.

Daniel Kline is Managing Editor of TheStreet.com

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Consider bullish Take-Two Interactive and Electronic Arts amid tech rout?

Tech stocks have been hit hard this year, with Nasdaq-100 down more than 26% year-to-date. Take-two Interactive Software, Inc. (NASDAQ:TTWO) and Electronic…

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Tech stocks have been hit hard this year, with Nasdaq-100 down more than 26% year-to-date. Take-two Interactive Software, Inc. (NASDAQ:TTWO) and Electronic Arts Inc. (NASDAQ:EA) are showing recoveries.

Take-Two Interactive is a software company that creates games through its signature labels. Just like other tech stocks, Take-Two suffered a pandemic bubble burst. Concerns of a tighter economy also hit the stock. The stock has fallen by 29% YTD, wider than the loss in the Nasdaq-100 composite. However, in five days, Take-Two has registered 16% gains. The stock bottomed at $103 and is going higher.

Conversely, Electronic Arts is an American video games publisher. Although the stock also suffered from a pandemic bubble burst, the impact was less minimal. The stock has also overcome the policy tightening quite well. The stock has lost less than 2% YTD. The stock is up almost 9% in five days and 6% in a month.

In their quarterly results, Take-Two reported fourth quarter EPS of $0.95. The earnings were lower than $1.88 per share in the prior year, but higher than $0.62 per share estimates. Electronic Arts reported $0.80 per share earnings, an increase from $0.26 per share in the prior year. The earnings were higher than estimates of $0.63.

 Take-Two and Electronic Arts technical analysis

Source – TradingView

Technically, Electronic Arts has overcome a hard macroeconomic well. The stock has maintained slow but sure gains. On the other hand, Take-Two has suffered the most but is recovering well after robust earnings-beat. We recommend EA ahead of Take-Two. EA can be bought after a retracement at or close back to $128. Take-Two may face resistance at the current level, and investors should buy lower.

Summary

Take-Two Interactive and Electronic Arts posted earnings beat. Electronic Arts ranks ahead since it has maintained gains. The stock can be bought on a retracement.

The post Consider bullish Take-Two Interactive and Electronic Arts amid tech rout? appeared first on Invezz.

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