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May 28 2021

 

1. The value rotation continues…

BlackRock Inc.’s iShares MSCI USA Momentum Factor ETF (ticker MTUM) will see 68% of its portfolio holdings change to hold the market’s top performers over the past year, according to Wells Fargo estimates. The rebalancing of the quant strategy, due Thursday this week, will push the weighting of financial stocks to almost one-third of the portfolio vs less than 2% currently. The technology sector will slide to 17% from 40%.

It comes as the rolling one-year performance of the value factor – which bets on cheap-looking shares and against expensive peers – is near its strongest since the global financial crisis. It will be interesting to see if the scale of their rebalance is mirrored across broader quant ETFs…

Source: Bloomberg, MSCI, and Wells Fargo Securities, LLC

2. How important is iron ore to Australia’s economy… Very important!

Australia’s iron ore exports are currently c. 4-times the value of Australia’s total food and beverage exports!

Source: Macquarie

3. It’s tough (and expensive) to get stuff…

Supplier delivery times get longer and container shipping costs soar to highest on record.