By Mark DeCambre
Happy Thursday! We’ve reverted back to our usual ETF Wrap format this week. But in case you missed it, we offered up special edition explaining the pros and cons of bitcoin ETFs. Read up that here.
This week we discuss a pair of new Invesco ESG funds that kicked off on Thursday and we talk about understanding what’s in your ETF.
Send tips, or feedback, and find me on Twitter at @mdecambre to tell us what we need to be jumping on. Sign up here for ETF Wrap .
|Top 5 gainers of the past week||%Return|
|United States Natural Gas Fund LP /zigman2/quotes/205527422/composite UNG||9.7|
|KraneShares Global Carbon ETF /zigman2/quotes/219806069/composite KRBN||4.0|
|iShares US Transportation ETF /zigman2/quotes/204736489/composite IYT||3.7|
|Consumer Discretionary Select Sector SPDR Fund /zigman2/quotes/200844504/composite XLY|
|First Trust NASDAQ Clean Edge Green Energy Index Fund /zigman2/quotes/205893823/composite QCLN|
|Source: FactSet, through Wednesday, Oct. 27, excluding ETNs and leveraged products . Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greate r|
…and the bad
|Top 5 decliners of the past week||% Return|
|KraneShares CSI China Internet ETF /zigman2/quotes/205873167/composite KWEB||-6.5|
|AdvisorShares Pure US Cannabis ETF /zigman2/quotes/220307682/composite MSOS||-6.0|
|Emerging Markets Internet & Ecommerce ETF /zigman2/quotes/205406984/composite EMQQ||-4.4|
|ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ||-4.1|
|NorthShore Global Uranium Mining ETF /zigman2/quotes/215396693/composite URNM||-3.8|
What’s inside your ETF
The need for investors to dig into what makes up their exchange-traded funds has been a major focus for CFRA’s Todd Rosenbluth, and it’s an important practice.
In his most recent, research report, Rosenbluth noted that some funds that are described as holding information technology stocks aren’t always as tech-focused as an investor might appreciate, especially since some companies are classified as technology that are actually communication services, such as Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL +1.59% or consumer discretionary, such as Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +2.13% .
Rosenbluth says that the QQQ, for example, tracks the 100 largest nonfinancialcompanies on the Nasdaq but only 49% of assets are in companies classified as tech stocks based on commonly used classification standards, with 19% and 18%,respectively, in communication services and consumer discretionary, and a smidgen in healthcare.
That isn’t a bad thing, but that should inform the investment strategies of those looking for pure plays, notes the CFRA analyst, in a research report.
The analyst recommends that investors explore large growth-oriented ETFs, if getting exposure to large-cap tech is the aim, as an alternative. He points to funds Vanguard Growth ETF /zigman2/quotes/209170287/composite VUG +1.21% and iShares S&P 500 Growth ETF /zigman2/quotes/208542267/composite IVW +1.06% .
“It is easy to think you know what is inside an ETF, given they often track well-known benchmarks and are labeled with common terms,” Rosenbluth wrote.
“However, CFRA believes investors need to look closely so they position their portfolios to fit their objectives,” he writes.
Visual of the week
So, we’ve finally got a bitcoin ETF. However, the NYDIG chart above illustrates one of the bigger criticisms of a futures-based bitcoin ETF. The ProShares Bitcoin Strategy ETF /zigman2/quotes/230440344/composite BITO +1.77% , which made its debut last Tuesday, already is underperforming bitcoin /zigman2/quotes/31322028/realtime BTCUSD +1.60% . As a reminder, futures are derivatives investments that offer exposure to an underlying asset and often diverge slightly from that underlying asset because investors use them to bet on future prices.