This column assumes that ETFs are the primary investment tool for the reader.

Please see my weekly market summation for a review of the macro-economic environment and general macro-level market trends.

Investment thesis: the macro-averages are now in a bullish posture; it’s a good time to take a new position. But be careful; defensive sectors are starting to rise, indicating traders are a bit more cautious.

Let’s start by looking at last week’s market activity, beginning with the treasury market:

TLT 5-day

The treasury market moved lower on Monday and then traded sideways for the rest of the week. Volatility was higher on late Tuesday and Wednesday as the market digested the whipsaw activity regarding additional fiscal measures. Also note the sharp sell-off and subsequent rally on Friday, likely due to additional fiscal talk.

SPY 5-day

SPY trended higher for the entire week as shown by the central tendency line in blue. t took the index an entire day to recover from Tuesday’s sell-off, but it did recover.

IWM 5-minute

I noted in my weekly round-up that smaller-caps led the market higher this week. Notice that IWM had a very strong move higher earlier in the week. This explains why small caps did so well last week.

Let’s pull the lens back to the 2-week time frame:

IEF 2-week

During the last two weeks, the treasury market has clearly trended lower, as shown by the 200-minute EMA (in magenta). The ETF has gapped lower twice and then consolidated sideways.

QQQ 2-week

While larger caps are higher, their respective charts are messier. QQQ – which has led the markets higher for most of the post-lockdown rally – is struggling. It’s also been prone to sharper, higher-volume sell-offs.

IJH 2-week

In contrast, smaller caps have stronger charts. Mid-caps have a solid uptrend

Investment Thesis

Improving macro-economic indicators together with falling COVID-19 cases bode well for Global X MSCI Pakistan ETF (NYSEARCA: PAK). This upward trajectory in the economy is largely due to the reforms instituted by the incumbent government. Considering the current scenario coupled with other material events, PAK ETF is expected to perform better than its regional rivals.


Global X MSCI Pakistan ETF at the time of writing this article is trading at NAV of $27.87 per share with a Price-to-Earnings ratio of 8.82x and Price-to-Book Value ratio of 1.04x. In its recent performance, the ETF rose by 16.49 percent within the last three months.

Source: PAK ETF

Source: PAK ETF

On the risk side, the fund has the following risk stats:

Correlation of Pakistan Stock market with PAK ETF

As the above graph shows, this ETF has an extremely high correlation with the performance of the Pakistan Stock Market ((KSE-100 index)). The reason is that the major constituents of the KSE-100 index are also part of the holdings of this ETF. However, the breakdown in the correlation largely occurs due to foreign exchange movements.

Further, the following sectors are part of the KSE-100 index but they are not included in the holdings of PAK ETF.

  1. Tobacco
  2. Refinery
  3. Transport
  4. Telecommunications and Technology
  5. Chemical
  6. Food and Personal care products

The above sectors are not included because the companies that belong to these sectors have lower liquidity and market capitalization. Therefore, any activity or excitement in the share prices of the constituents of these sectors will also lower the correlation between the KSE-100 index and PAK ETF.

Correlation of Pakistan Stock market with the economy of Pakistan

Apart from the small percentage, the majority of the companies that are part of this ETF derive their demand from the economy of Pakistan. Therefore,

By Alps Funds


  • As optimism builds for a second round of U.S. fiscal stimulus due to resurgent COVID-19 cases globally, the ALPS Clean Energy ETF (ACES) soared nearly 10% last week with gains from each of its 7 pure-play clean energy segments. ACES was driven higher by double digit gains from its Solar (+17.46%), Fuel Cell (+15.40%), and Biomass/ Biofuel (+12.39%) segments.
  • ACES Solar names were buoyed by positive analyst sentiment, a potential Democratic election sweep, and positive sentiment on China’s preliminary new clean energy goals, which will be finalized in Q1 2021. Four of the 6 ACES Solar names climbed over 15% on the week, led by Sunpower (SPWR, 1.43% weight) rallying over 27%.


  • Within the Fuel Cell segment, Ballard Power (BLDP, 3.86% weight*) shot up over 12% last week after it announced it will be expanding manufacturing capacity of its fuel cell components by 6x by early 2021. Plug Power (PLUG, 5.39% weight*), the other ACES Fuel Cell name, was up over 21% last week after analysts upgraded the stock on its growth opportunities within fuel cell powered forklifts and heavy duty trucks.


  • At its Battery Day a few weeks ago, Tesla (TSLA, 4.49% weight*) highlighted how fast lithium-ion battery costs are declining for use in Elective Vehicles (EVs). Solar equipment suppliers, such as Enphase Energy (ENPH, 5.87% weight*), and solar equipment installers, such as SunPower and Sunrun (RUN, 6.57% weight*), are benefitting from falling battery storage costs as they all roll out fully integrated solar systems with battery storage.

Weekly ALPS ETF Spotlight 1

  • The levelized cost

While investors may like the safety and security of large caps, particularly in today’s uncertain market environment with Covid-19 and a forthcoming presidential election, small caps are starting to show signs of life. What exactly is causing small cap ETFs to heat up right?

“Wall Street has been experiencing a roller-coaster ride over the past few weeks as election uncertainty and lack of additional stimulus continue to weigh on investor sentiments,” a Yahoo! Finance article noted. “Against this backdrop, small caps are clearly outperforming. This is especially true, as the Russell 2000 Index has risen 11.4% over the past three months compared to gains of 6.9% for the S&P 500, 7.8% for the Nasdaq Composite Index and 7.3% for the Dow Jones.”

One of the reasons the article cited was growing optimism from investors.

“Though the latest economic data has been mixed, Americans have become optimistic about the economy with their confidence rising to the highest level in September since the coronavirus pandemic began,” the article added.

If investors still believe that strength could be ahead for small caps, one fund to take a look at is the Vanguard Small-Cap Value Index Fund ETF Shares (NYSEArca: VBR). VBR seeks to track the performance of a benchmark index that measures the investment return of small-capitalization value stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Value Index, a broadly diversified index of value stocks of small U.S. companies.


^MSACWISCAP data by YCharts

A Small Cap Fund with a Multi-Factor Approach

In today’s market that’s brimming with uncertainty surrounding the coronavirus outbreak, it can also help investors to use factor investing to filter out the best opportunities. Nowadays, the focus has been quality and value amid the market uncertainty caused by

The iShares Russell Top 200 ETF (IWL) was launched on 09/22/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $831.13 million, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.


When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.59%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector–about 31.30% of the portfolio. Healthcare and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 7.63% of total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

The top 10 holdings account for about 32.61% of total assets under management.

Performance and Risk

IWL seeks to match the performance of the Russell