This podcast discusses 15 ETFs to watch in 2024, including small caps, international, value, cannabis, active, and Bitcoin ETFs. They delve into their performance, strategic approaches, and potential future prospects. They also explore the ESG ETF outperforming the S&P 500 and discuss the RSP and Jep Q ETFs for diversification and higher returns. Additionally, they touch on tech companies, a treasury futures strategy ETF, and the potential launch of a spot Ethereum ETF in 2024.
The PASER US small cap cash cows 100 ETF (CALF) has gained attention and strong performance, outperforming the Russell 2000 and S&P, indicating potential comeback of small caps.
ProShares Bitcoin Futures Strategy ETF (BITO) faces concerns about future performance due to underperformance compared to spot Bitcoin and roll costs associated with maintaining exposure to Bitcoin futures, but may still be used for hedging purposes.
MDIV offers a unique income investing approach by diversifying income sources across various asset classes, reducing risk and providing a 6% yield.
Global X MSCI Argentina ETF (ARGT) presents an opportunity to invest in Argentina's business-friendly leader and benefit from potential pro-business policies, although uncertainty exists regarding whether these promises will be implemented.
Deep dives
PASER US small cap cash cows 100 ETF
The PASER US small cap cash cows 100 ETF, with ticker CALF, has been gaining attention due to its significant inflows and strong performance. It has made the outliers list three times, indicating increased investor interest. The ETF focuses on cash flow yield in small cap stocks and has doubled the performance of the Russell 2000, outperforming the S&P. With consistent cash inflows and high-profile holders, it has defied the odds and may continue to perform well if small caps make a comeback.
ProShares Bitcoin Futures Strategy ETF
The ProShares Bitcoin Futures Strategy ETF, with ticker BITO, is noteworthy due to the upcoming approval of a spot Bitcoin ETF. BITO has done well so far, but there are concerns about its future performance. It has underperformed spot Bitcoin due to roll costs associated with maintaining exposure to Bitcoin futures. However, it may still be used by market makers for hedging purposes. BITO's performance will depend on its ability to compete with upcoming spot products and mitigate roll costs.
First Trust Multi-Asset Income ETF
MDIV provides a unique approach to income investing by diversifying income sources across various asset classes. The ETF holds high-yield bonds, REITs, preferred stocks, dividend stocks, and MLPs. By diversifying income sources, MDIV aims to reduce risk and provide a 6% yield. Although less popular than some other income ETFs, MDIV offers potential for steady income generation and can be considered a quality-focused ETF within the income space.
Global X MSCI Argentina ETF
The Global X MSCI Argentina ETF, with ticker ARGT, presents a potential opportunity to invest in Argentina's business-friendly leader and benefit from potential pro-business policies. With the recent election of Javier Milei, an anarcho-capitalist, there is optimism for a shift towards more business-friendly policies in Argentina. This has caused ARGT to show strong performance and increased volume. However, there is uncertainty regarding whether these promises will translate into actual action. Nonetheless, ARGT offers an interesting opportunity to witness the effects of political change on a single-country emerging market ETF.
Arrow Reverse Cap Weighted ETF
The Arrow Reverse Cap Weighted ETF offers a unique approach to investing by reverse cap weighting the S&P 500. Instead of overweighting the largest stocks, this ETF gives more weight to smaller companies in the index. By focusing on smaller caps, the ETF aims to potentially capture outperformance if smaller companies outperform large-cap stocks or catch up to their larger counterparts. Although it has relatively low assets under management, it offers potential for those targeting a value-oriented approach in the market.
Simplify Short-Term Treasury Futures Strategy ETF
The Simplify Short-Term Treasury Futures Strategy ETF provides an opportunity to potentially benefit from falling interest rates. With active management and the use of treasury futures, this ETF targets a leveraged approach that can generate results if rates decline. Its unique strategy may appeal to investors seeking to capitalize on rate movements. Additionally, Simplify as a firm has gained recognition for its alternative investment offerings, attracting institutional investors and showcasing potential for further growth in the alternative ETF space.
Bitwise Ethereum Futures ETF
The Bitwise Ethereum Futures ETF, with ticker AETH, faces possible closure in the crowded Ethereum futures ETF market. Despite launching with significant interest, AETH offers similar exposure to other competing funds. When a spot Ethereum ETF gets approved, it is likely that some Ethereum futures ETFs will become obsolete. Given its high expense ratio and lack of differentiation, AETH may be vulnerable to closure unless it can establish a unique positioning or distinguish itself from competitors in the space.
Swap Money Market Fund
SWVXX is a money market fund offered by Schwab that has seen a massive influx of assets, exceeding $97 billion in one year. This money market fund's success is notable, as money market funds have traditionally been less appealing during periods of low interest rates. The growth of SWVXX can be attributed to its status as the default option for investors on Schwab and TD Ameritrade platforms, as they eliminated commission-free access to money market mutual funds. With attractive yields and substantial asset growth, SWVXX stands out as a standout performer in the money market fund space.
Exchange-traded funds tracking areas that lagged megacap US stocks—such as small caps, international, value and cannabis—are among the 24 ETFs that Bloomberg Intelligence says represent themes that could drive the market in 2024. Other big themes include the mini-boom in active and the race for the first spot Bitcoin ETF.
On this episode, Eric and Joel take a tour of BI’s list of ETFs to watch for the year ahead. They’re joined by BI’s James Seyffart and Athanasios Psarofagis to go through the 15 US ETFs on the list.
