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What’s the buzz?

We spoke to John Hoffman, Invesco’s Head of Exchange Traded Funds and Index Strategies for the Americas, earlier this week, and he explained how the Invesco Dynamic Leisure and Entertainment ETF’s PEJ,
-1.20%
The rebalancing earlier this month led the Smart Beta ETF to kick out the high-end AMC memes stock.

PEJ, referring to the ticker symbol for the ETF Invesco, is also a major reopening operation, with inflation and economic recovery in mind.

Meanwhile, Invesco is also working on two crypto-focused ETFs, according to CoinDesk

You are not AMC Entertain?

The story of PEJ is quite simple but interesting as it arguably highlights some of the benefits of smart beta products.

ETF, which uses factors such as momentum, value and profit growth among others to outperform the overall market, bet on AMC because it no longer meets the designated inclusion criteria by the intelligent clue he replies.

PEJ is indexed to the Dynamic Leisure & Entertainment Intellidex index and is reconstituted quarterly in February, May, August and November.

In this situation, during its quarterly rebalancing, AMC was kicked out of the index and was therefore also removed from the fund. As a result, “you remove emotion from the investment process… and you do it systematically,” Hoffman said.

Todd Rosenbluth of CFRA said the ETF has avoided the dominance of AMC, which a number of funds, briefly including PEJ, have faced, given the surge in asset value which has raised concerns among critics skeptical of the movie channel’s ability to generate revenue and profit. to match its new market value. AMC claims a market capitalization of around $ 22 billion.

Expedia Inc. EXPE Group,
-1.39%
and Yum China Holdings YUMC,
+ 0.43%
replaced AMC in the ETF, Rosenbluth noted.

Hoffman said the EJP is being used as a reopening game in the economic recovery from the pandemic and is attracting strong inflows. It’s up 33% so far this year, which is a good return considering the Dow Jones Industrial Average DJIA,
+ 0.32%
and the S&P 500 SPX index,
+ 0.44%
are up nearly 13% so far in 2021 and the Nasdaq Composite COMP,
+ 0.53%
gained more than 8%. The Russell 2000 RUT Small Cap Index,
-0.71%
is up over 17%.

Hoffman said PEJ’s design resulted in periods of very strong performance at economic inflection points, including during the 2008-09 financial crisis when it increased the stance on financial stocks, spotting the value of bank stock prices beaten.

In 2009, it generated an annual return of 42%, followed by a gain of 42% in 2010, FactSet data shows.

PEJ’s expense ratio is 0.65, which means the fund will cost $ 6.50 per year for every $ 1,000 invested.

Visual of the week

Darren Schuringa, CEO and Founder of ASYMmetric ETFs sent us the accompanying charts to highlight what he described as elevated investor concerns amidst the fervor in equities and the speculative market.

“The current meme stock-feeding frenzy, bitcoin’s rebounds and precipitous pullbacks by some names in tech are putting ETF investors on edge,” he wrote in an email commentary.

“Increased volatility coupled with skyrocketing margin balances are signs of a market peak,” he warned.

On Thursday at noon, stocks were slightly higher and bitcoin BTCUSD,
+ 0.99%
was trying to climb higher after the release of key measures on consumer inflation and unemployment in America.

The good and the bad

Is there still a bitcoin ETF?

No.

However, Invesco has deposited a pair of bitcoin and blockchain related funds.

The supplier has applied to offer the Invesco Galaxy Blockchain Economy ETF and the Invesco Galaxy Crypto Economy ETF, public deposit show.

The offering resembles a number of crypto-adjacent offerings, including those of Amplify Transformational Data Sharing ETF BLOK,
+ 0.30%,
VanEck Vectors digital transformation ETF DAPP,
-0.44%
and Bitwise Crypto Industry Innovators ETF BITQ,
-0.60%.