Market Commentary — November 22, 2021
The NASDAQ hit a record high last week, while other benchmarks ended mixed. Growth stocks outpaced value names, which is one of the factors lifting the tech-heavy NASDAQ into record territory. Strong economic data and corporate earnings were offset by inflation fears, ongoing supply chain constraints, and a return of COVID in Austria and Germany.
Also adding to the sentiment mix was uncertainty surrounding the reappointment of Fed Chair Jerome Powell. The other main candidate is Fed Governor Lael Brainard, one of the most “dovish” Fed officials. The possibility of Brainard as a replacement weighed on financials, lowering interest rate expectations (slimming bank margins) and potentially creating more stringent bank regulations.
ETFs attracted $10B inflows last week according to ETF.com. The U.S.-listed ETF industry gained nearly $10.4 billion in assets from Nov. 12 to Nov. 18. U.S.-listed ETFs have gained $772.4 billion in assets year-to-date, and now hold $7.1 trillion in assets under management.
Quant-investing heavyweight Dimensional Fund Advisors is launching its first four fixed income ETFs next week, with plans to add another 10 stock ETFs. That will boost DFA’s ETF lineup to 23 in total and on the cusp of being one of the top 10 ETF issues.
Demand for ESG (environmental, social, and governance) funds remained strong in October. Funds with sustainability mandates incorporated into their prospectuses, as measured by Morningstar, had $4.9 billion of inflows, bringing their trailing 12-month intake to $75 billion—a 36.6% organic growth rate.
We will be taking next Monday off for the newsletter in observance of the Thanksgiving weekend. Hope you all have a nice Thanksgiving and have much to be thankful for!
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