00:00 Speaker A
Still overall ETF volume continues to rise and there may be more opportunities ahead as we kick off the second quarter. Todd Son, Strategas Securities, Chief ETF and technical strategist joins me now for for this week’s ETF report brought to you by Pimpco. Todd, walk us through what areas you have seen over this past week, past month get hit the hardest.
00:23 Todd Sohn
So I I think it’s interesting, you’ve had volatility rise, you’ve had geopolitical volatility rise and that has resulted in as you mentioned, a nine-month low for equity ETF inflows. uh well below a six-month average, well below a 12-month average. restraint from investors is on the rise. I like that because you’re cooling off of sentiment.
00:46 Todd Sohn
Um you are seeing flows out of tech to a pinch and you’re also seeing some money come out of areas like financials too. I think this is all necessary but painful to some extent.
00:54 Speaker A
Now, you said him within this note as well that this is sort of similar to what we saw last year. of course around this time now. Let’s remind our viewers, this is just ahead of the Liberation day. Can’t even believe that it’s been almost a year. So what do you make of that similar sort of move that you’ve seen?
01:21 Todd Sohn
Yeah. We if you think about the backdrop, 23 and 24 were strong years. And then we got very aggressive on the sentiment front via flows and investor surveys and then the liberation day, the tariffs were the catalyst to what caused the correction. We rebounded great. And then now it’s a similar environment where folks were very bullish and now you just have this kind of war event to wipe out sentiment. So I would expect sentiment to be cooling, equity flows to cool off and there really be a little bit of hecy, right? Is it all clear or not?
01:50 Todd Sohn
And I like that because it allows you to rebuild and and rally in the back half of the year.
01:54 Speaker A
Sort of to get back into this market.
01:55 Todd Sohn
Exactly.
01:57 Speaker A
And now, and one thing that you did see is Industrials lead sector flow since November, I believe. So what do you make of that? And also is that a risk moving into the second quarter given that we’ve seen this strength within the sector?
02:14 Todd Sohn
Right. So there’s no doubt Industrials have been leadership. This is a broad sector, right? You have machinery in uh defense, professional services and whatnot. I look at sector flows as a temperature barometer. It’s got very, very hot. So I’m worried about the tactical risk for Industrials in the second quarter that maybe you could get a little bit more volatility, a prolonged pull back.
02:44 Todd Sohn
I would use it opportunistically. Uh just be mindful that if you’re there in a tactical sense, I would be mindful that you’re not alone. It’s a very consensus long here. So just stay patient on the industrials.
02:57 Speaker A
What’s the timeline look like for for the type of investors that you’re watching right now?
03:00 Todd Sohn
I would say it’s 3 to six months, quarter to quarter, right? You know, longer term we still like the sector, but in the very over the next three to six months when for some of our clients that matters, that’s the risk.
03:16 Speaker A
Yeah. All right, so let’s take your mindset into the second quarter. What are some ETFs that you’re looking at that people might might not know?
03:25 Todd Sohn
Yeah. So one of the exercises we like to do is say, okay, you have the core of your portfolio, S&P 500, we know it’s large cap growth, it’s AI dominant. How can you complement it, right? So we’re looking at risk managed strategies, Buffer ETFs because they protect on the downside. We are looking at low wall ETFs in case volatility remains high, you want to have the low wall exposure. And then we’re also looking at thematic sectors, tech, financials, utilities, especially in the actively managed space to help complement that S&P exposure.
03:57 Speaker A
Yeah, and now some of those particular names, there was one that stood out to me, this Invesco Bloomberg financial data providers ETF. It actually is sort of betting on the exchanges that are looking to get into prediction markets. Exactly. So why is that now the time maybe to consider that in Q2?
04:15 Todd Sohn
So prediction markets are clearly getting big, whether they are having regulatory issues or not, we’ll see. But it’s a question from our from our clients. How do we get exposure to this? And so FDIQ, which is from Invesco uh takes all the exchanges, right? CME, CBOE, ICE and ones abroad to packages them up into an ETF very niche financial thematic ETF and that’s the way because those companies are getting into prediction markets. They want to be there whether you like them or not, it’s clearly an important uh factor.
04:54 Todd Sohn
Yeah. And so we look at it as another way to say, hey, you have financials but it’s mostly banks. get the more thematic exposure from financial via the exchanges.
05:03 Speaker A
Interesting. Any other one or two top picks?
05:05 Todd Sohn
I would take a look at TTQ from Tro. That’s actively managed tech exposure because tech is going through a speed bump now.
05:11 Speaker A
Oh, okay. Lots to watch out for the beginning of Q2. Let to stay tuned. Thanks so much, Todd. Appreciate your time.