This article was written with contributions from Maciej Rabiniak. Maciej is a Research Analyst on the SPDR Americas Research Team.
After three straight weeks of losses, stocks rebounded last week; the S&P 500® Index gained 3.7% and the MSCI ACWI gained 2.7%. US high-yield securities also gained 1.6%, with high-yield spreads narrowing by 44 basis points (bps).1
Significant Change in the UK
Queen Elizabeth II passed away on September 8. As the UK's longest-serving monarch, she reigned for 70 years.
Two days prior to the Queen’s death, Liz Truss became the UK’s new Prime Minister.
Inflation and Central Bank Policy
The European Central Bank’s 75 basis point interest rate increase last week took its benchmark deposit rate to 0.75%.2
US headline Consumer Price Index (CPI) year-over-year inflation data, released on Tuesday, came in at 8.3%, higher than the 8% economists had forecasted.3
Eurozone headline CPI (YoY) inflation data, which economists forecast to be 9.1%, follows on Friday.4
Diplomacy and Headwinds
The 77th session of the United Nations General Assembly began on Tuesday, and will run for the next two weeks.
Bracing for a global economic slowdown to hit demand, OPEC announced it would reduce oil production next month, the cartel's first output cut since the depths of the pandemic.5
Implementation Idea: SPDR® MSCI USA StrategicFactorsSM ETF (QUS)
Uneven economic data points, hawkish monetary policies, and geopolitical tensions will continue to challenge markets and fuel volatility.
While positioning for continued episodic volatility by focusing only on defensive factors may miss some of the upside, a risk-on focus may move portfolios further to the downside. Instead, consider the balanced multi-factor approach of the SPDR® MSCI USA StrategicFactorsSM ETF’s (QUS) to help you navigate choppy waters.
QUS blends low-volatility, quality, and value factors together in one exposure. This focus on high-quality and attractively valued firms has led to greater upside capture than single-factor minimum volatility strategies6 with less downside capture than the broader market7 — aligning QUS for a market facing large up-and-down moves. Beyond positioning for short-term headwinds, QUS offers long-term appeal, ranking in the top quintile of its Morningstar category based on absolute and risk-adjusted returns since its inception.8
Performance Trends Since Inception of QUS
QUS Standard Performance as of August 31, 2022
1 Bloomberg Finance, L.P., as of September 9, 2022. 2 US Bureau of Labor Statistics, as of September 13, 2022. 3 Morningstar, data from May 1, 2015 – August 31, 2022. QUS inception date: April 15, 2015. QUS up-capture ratio versus MSCI USA Gross Return Index = 92%; MSCI USA Minimum Volatility Gross Return Index up-capture ratio versus MSCI USA Gross Return Index = 79%. 4 Bloomberg Finance L.P., as of September 13, 2022. 5 “OPEC Send Fresh Signal of New Output Cuts”, Wall Street Journal, 9/14/2022. 6 Morningstar, data from May 1, 2015 – August 31, 2022. QUS inception date: April 15, 2015. QUS up-capture ratio versus MSCI USA Gross Return Index = 92%; MSCI USA Minimum Volatility Gross Return Index up-capture ratio versus MSCI USA Gross Return Index = 79%. 7 Morningstar, data from May 1, 2015 – August 31, 2022. QUS inception date: April 15, 2015. QUS down-capture ratio versus MSCI USA Gros Return Index = 88%; Russell 1000 Total Return Index down-capture ratio versus MSCI USA Gross Return Index = 100%. 8 Morningstar, data from May 1, 2015 – August 31, 2022. QUS inception date: April 15, 2015. Past performance is not a reliable indicator of future performance. Peer group is based on Morningstar US Large Blend category, oldest share class, which consists of 368 funds.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
The views expressed in this material are the views of the SPDR Research and Strategy team through the period ended September 12, 2022, and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
Investing involves risk including the risk of loss of principal.
While the shares of ETFs are tradable on secondary markets, they may not readily trade in all market conditions and may trade at significant discounts in periods of market stress.
The value style of investing that emphasizes undervalued companies with characteristics for improved valuations, which may never improve and may actually have lower returns than other styles of investing or the overall stock market.
Low volatility funds can exhibit relative low volatility and excess returns compared to the Index over the long term; both portfolio investments and returns may differ from those of the Index. The fund may not experience lower volatility or provide returns in excess of the Index and may provide lower returns in periods of a rapidly rising market. Active stock selection may lead to added risk in exchange for the potential outperformance relative to the Index.
A “quality” style of investing emphasizes companies with high returns, stable earnings, and low financial leverage. This style of investing is subject to the risk that the past performance of these companies does not continue or that the returns on “quality” equity securities are less than returns on other styles of investing or the overall stock market.
Passively managed funds invest by sampling the index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The Prospectus contains a more detailed description of the limited relationship MSCI has with SSGA Funds Management, Inc and any related funds.
Investing in high yield fixed income securities, otherwise known as "junk bonds", is considered speculative and involves greater risk of loss of principal and interest than investing in investment grade fixed income securities. These Lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.
Concentrated investments in a particular sector or industry tend to be more volatile than the overall market and increases risk that events negatively affecting such sectors or industries could reduce returns, potentially causing the value of the Fund’s shares to decrease.
There are risks associated with investing in Real Assets and the Real Assets sector, including real estate, precious metals and natural resources. Investments can be significantly affected by events relating to these industries.
Generally, among asset classes, stocks are more volatile than bonds or short-term instruments. Government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns. U.S. Treasury Bills maintain a stable value if held to maturity, but returns are generally only slightly above the inflation rate.
The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
Standard & Poor's®, S&P® and SPDR® are registered trademarks of Standard & Poor's Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
Distributor: State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, an indirect wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SPDR ETFs. ALPS Distributors, Inc., member FINRA, is the distributor for DIA, MDY and SPY, all unit investment trusts. ALPS Portfolio Solutions Distributor, Inc., member FINRA, is the distributor for Select Sector SPDRs. ALPS Distributors, Inc. and ALPS Portfolio Solutions Distributor, Inc. are not affiliated with State Street Global Advisors Funds Distributors, LLC.
THIS SITE IS INTENDED FOR QUALIFIED INVESTORS ONLY.
No Offer/Local Restrictions
Nothing contained in or on the Site should be construed as a solicitation of an offer to buy or offer, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction. SSGA Intermediary Business offers a number of products and services designed specifically for various categories of investors. Not all products will be available to all investors. The information provided on the Site is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
All persons and entities accessing the Site do so on their own initiative and are responsible for compliance with applicable local laws and regulations. The Site is not directed to any person in any jurisdiction where the publication or availability of the Site is prohibited, by reason of that person's nationality, residence or otherwise. Persons under these restrictions must not access the Site.
Information for Non-U.S. Investors:
The products and services described on this web site are intended to be made available only to persons in the United States or as otherwise qualified and permissible under local law. The information on this web site is only for such persons. Nothing on this web site shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.
Before investing, consider the funds' investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, call 1-866-787-2257, download a prospectus or summary prospectusnow, or talk to your financial advisor. Read it carefully before investing.
Not FDIC Insured * No Bank Guarantee * May Lose Value