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Large Cap ETFs have performed the best in 2019

ETF investing
From John Jagerson:
With few exceptions, most Exchange Traded Funds (ETFs) have done very well so far in 2019. For investors who took advantage of the opportunity in ETFs that follow the S&P 500 or similar large-cap stock indexes, this has rung especially true.

What ETFs have done the best?

As I mentioned, ETFs that track large capitalization stocks like the S&P 500 or Dow Jones Industrial Average have done the best so far in 2019. The ETF that experienced the most growth in total investors was the Vanguard S&P 500 ETF (VOO) that saw investors place another $6.5 billion in the fund over the last 4 months.
Tracking right behind large-cap stock ETFs were those that invest in the stocks of emerging markets (EM) like Brazil, Russia, China and India. This is a little surprising, because investors are still concerned about trade disputes and tariff wars between the U.S. and China. But because EM funds are considered riskier than large cap funds, investors like the fact that they have been rising together. The correlation between risky and "safe" stock funds indicates that there is more strength behind the bull market than if large cap funds had been rising alone.
Adding a little more confidence to the rally is the group of ETFs representing corporate bonds. The outperformance of this group is a little less surprising than EM because investors have been very attracted to the relatively high dividends paid by these ETFs. For example, if you include the value of its dividends, the iShares High Yield Corporate Bond ETF (HYG) is up almost 8.5% this year, which is very good for a bond fund. For comparison, the Bloomberg Barclay's Aggregate Index, which tracks the performance of corporate bonds in the U.S. is only up 2.5% for the year.

The outlook for the top performers in 2019

A preference for large-cap stock and corporate bond ETFs is easier to understand if you know what the U.S. Federal Reserve (the Fed) has been promising about interest rates. If you have been shopping for a mortgage, you probably already know that rates have declined since the end of 2018 and are currently near the same level they were in January of last year.
If interest rates are low, investors tend to favor "income" over growth. Dividends are more valuable while rates are low, and the Fed has promised to resist raising rates again in 2019. Large cap stocks and corporate bonds are sources of income, so investors have favored those funds.
Because economic growth is a little slow right now and the Fed has promised (more or less) not to raise rates again this year, I expect these trends to continue. We may not get another 17% worth of gains in a 90-day period, but I think the preference for income will help large-cap and corporate bond funds outperform.

Which ETFs have done the worst?

The big bullish move in stocks in 2019 indicates that investors were willing to take on more risk and may have oversold the stock market at the end of 2018. Even though funds with large dividends performed well, investors haven't seemed very worried about adding "safety" funds to their portfolio.
For example, if investors start to panic, they will buy funds that track things like gold or U.S. Treasury bonds. These assets don't pay much, if any, income and they aren't usually expected to grow; however, they are usually safer than stocks in a bad market.
The largest ETF that tracks gold-bullion, the SPDR Gold Shares ETF (GLD), is down nearly -1% for the year so far. The largest ETF that tracks long-term U.S. Treasury bonds, the iShares 20+Year Treasury Bond ETF (TLT), is only up a measly +0.67% for the year.
The healthcare sector is another group that tends to do better in a slow market and has been performing poorly this year. In this case, the negative returns from ETFs that track healthcare stocks is more likely the result of political uncertainty around the "Medicare-for-all" ideas promoted by 2020 Democratic presidential candidates than a bullish market.

The outlook for the worst performers in 2019

The poor performance in safety assets like gold and U.S. Treasury bonds tells us something about the market's bias in 2019. If interest rates are low and economic growth is still positive, investors are likely to avoid the most conservative investments. I expect that this trend will continue, as long as there aren't any major economic disruptions later this year. For example, if growth in China and India were to drop suddenly, the safety sectors could get a lot more interest from investors.

Looking ahead

The current trends among ETFs seem likely to continue if economic growth remains positive overall. I have some concerns about whether that situation can be sustained into 2020, but, for 2019, the trends we have seen so far seem likely to continue. Investors should continue to prefer stock funds and higher-risk corporate bonds funds while interest rates remain low.

The Vanguard S&P500 ETF (VOO) rose $0.42 (+0.16%) in after-hours trading Wednesday. Year-to-date, VOO has gained 8.16%. VOO currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 157 ETFs in the Large Cap Blend ETFs category.
This article is brought to you courtesy of Investopedia.
NYSE:VOO May 8, 2019 5:58pm

Could the S&P 500 headed for a 20% fall?

s&p 500
From Mark Kolakowski:
NYSE:SPY May 8, 2019 5:54pm

The Dow Jones Industrial Average finished even on Wednesday as US-China trade war concerns remain

us-china investing
From Emily McCormick:

Stocks ended little changed Wednesday as investors considered whether the U.S. and China would come to an agreement to resolve a more than year-long trade dispute before new tariffs are set to take effect Friday.

NYSE:DIA May 8, 2019 5:52pm

Pharmaceutical companies will now be required to disclose price of drugs in TV ads

From Joe Williams:

Pharmaceutical firms will now be required to disclose the list price of treatments if the cost is higher than $35 per monthly prescription, according to a new rule finalized on Wednesday by the Trump administration.

NYSE:XPH May 8, 2019 3:18pm

An ETF to keep on radar after biotech stocks beat earnings estimates

business graphic
From Sweta Jaiswal : President Trump's latest move to raise the tariffs to 25% from 10% on $200 billion of Chinese goods might have 'trumped' hopes of many investors waiting for a truce between the two largest economies. However, amid this political conundrum, the biotech industry has kept its promise for solid returns so far. The rally in some major biotechnology indexes reflects the same. In this context, the NASDAQ Biotechnology Index has returned 11.5% year to date.
NASDAQ:IBB May 8, 2019 3:10pm

The Renaissance IPO ETF recently hit a 52-Week high, will rally continue?

From Sweta Killa: For investors seeking momentum, Renaissance IPO ETF (IPO - Free Report) is probably on radar now. The fund just hit a 52-week high, and is up 46.5% from its 52-week low price of $21.63 per share.
NYSE:IPO May 8, 2019 2:55pm

The energy sector is down 18% from its 52-week high, nears bear market territory

From Tom DiChristopher : Energy stocks are on the cusp of falling into a bear market after a sudden escalation in the U.S.-China trade dispute dragged the stock market lower on Tuesday.
NYSE:XLE May 8, 2019 1:32pm

The Dow Jones Industrial Average rebounds on talk of possible US-China trade deal

From Yun Li : Stocks tried to rebound from a deep sell-off this week as investors still remain on edge about an escalating trade war between the U.S. and China.
NYSE:DIA May 8, 2019 12:58pm

The VXX jumps 16%, is volatility here to stay?

s&p 500
From Steve Smith: The rally from the December S&P 500 bottom has so far been one of the strongest and quickest, compared to previous recovery periods going back to the 1950s. This trend in stocks has not only broken historical patterns, which have often seen a test of the initial low before a new uptrend has been formed. But also emboldened people to once again pile into selling volatility on the notion stock will continue to calmly grind higher.
NYSE:VXX May 7, 2019 6:11pm

Tesla says the world will experience shortages of copper

copper
From Frank Holmes:

The world is on a path to vast shortages in copper, nickel, lithium and other important minerals that are necessary to build the batteries in electric vehicles. So says Tesla's global supply manager, according to Reuters.

NYSE:CPER May 7, 2019 6:09pm

Why did the Dow Jones Industrial Average drop 470 points today?

china flag
From Fred Imbert & Yun Li: Stocks fell sharply on Tuesday after a top U.S. trade official indicated that higher tariffs on Chinese goods are coming later this week, disappointing traders who hoped President Donald Trump's weekend tweet threat was just a negotiation tactic.
NYSE:DIA May 7, 2019 6:05pm

Oppenheimer says the semiconductor sector could see a huge surge higher in 2019

From Keris Lahiff : Semis stocks are slumping for a second day in a row, but one technical analyst sees a big reason to buy the dip in chips.
NYSE:SMH May 7, 2019 2:15pm

Analyst predicts gold prices rising to $3,000-$4,000

gold bar closeup
From Sarah Abu-Shaaban:  (Kitco News) - Amidst market pessimism, one expert sees gold prices climbing to record heights of $3,000-$4,000 an ounce in the future."When gold launches higher, they're all going to be winners," said Daniel Oliver, founder and managing director of Myrmikan Capital, referring to gold investors.
NYSE:GDX May 7, 2019 1:49pm

Has the price of Silver finally bottomed?

From Chris Vermeulen: The upside price move in early 2016 setup a very strong expectation that further upside price moves were about to result in an upside price explosion in metals.  Remember, 2016 was a very big US Presidential election year. 2020, being the next big US Presidential election year, is only about 7 months away and the rancor has already started in the news cycles.
NYSE:SLV May 7, 2019 12:38pm

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