Big-money investors have dumped stocks for 4 straight weeks, even as major indexes hover near record highs

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US stocks have hit record highs in the past weeks – with the S&P 500 breaching 4,000 for the first time – as President Biden’s unprecedented stimulus plan has spurred renewed economic optimism.

Yet Bank of America revealed in a recent note that its institutional clients have been net sellers of shares over the past four weeks.

Communication-services stocks have been at the center of the trend, seeing several weeks of near-record outflows from all BofA client funds as the 10-year Treasury yield has climbed to more than one-year highs. The sector does, however, remain overweighted by actively managed funds.

Only two sectors saw inflows from BofA client portfolios overall: industrials and materials.

Meanwhile, private clients were buyers for the sixth week, though inflows have recently decelerated.

Buybacks by corporate clients have also slowed. The bank did note that the resurgence in buybacks in the first quarter could imply a new record for S&P 500 gross buybacks in 2021.

As for exchange-traded funds, the bank saw big buyers of equity ETFs year-to-date, especially broad market ETFs, which have seen inflows slow down every week for a month.

Growth ETFs saw outflows for the first time in four weeks.

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A Cathie Wood ETF bought about 800,000 shares in a Serena Williams-backed SPAC that just entered a $1.6 billion deal

Cathie Wood
Cathie Wood.


Cathie Wood’s ARK Autonomous Technology & Robotics exchange-traded fund recently bought shares in a special-purpose acquisition company that counts tennis champion Serena Williams as a board member.

The ARKQ ETF snapped up 800,494 shares in Jaws Spitfire Acquisition Corp, according to data available on ARK Invest’s website. The fund counts Tesla, JD.com, Baidu, and Alphabet among its top ten holdings.

Miami-based Jaws is led by chairman Barry Sternlicht and CEO Matthew Walters. The SPAC recently entered a merger deal with digital manufacturing firm Velo3D to take it public, valuing the combined company at $1.6 billion.

Wood and the red-hot SPAC market have been caught up in a bit of a rough patch. Blank-check companies have already raised $96 billion across 296 IPOs so far in 2021, according to SPACInsider.com. Blank-check stocks tumbled on Thursday after Reuters reported the Securities and Exchange Commission has begun an inquiry into Wall Street’s SPAC frenzy and seeking voluntary information on dealings.

But 93% of SPACs that went public this week are trading below their $10 IPO price, Dealogic data compiled by Reuters showed. That is 14 out of 15 SPACs trading below par value.

Wood is known for her innovative investments in disruptive stocks. But her flagship $22.9 billion Innovation ETF is currently sitting on a 8% year-to-date loss after a broader pullback in high-growth stocks across multiple sectors. Meanwhile, the ARKQ ETF that bought into Jaws is up 4.6% year-to-date.

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Investors pull $15 billion from bond funds as rising yields contribute to the biggest weekly outflows in a year

us cash
Rising yields have led to bond-fund outflows.

  • Weekly outflows from bond funds hit $15 billion, the highest amount in about a year, says tracker EPFR.
  • Rising Treasury yields have spurred flight from bond funds while bolstering equity funds.
  • The 10-year Treasury yield spiked beyond 1.6% on Friday.
  • See more stories on Insider’s business page.

A climb in long-dated Treasury yields stoked by US growth expectations has contributed to investors yanking more than $15 billion from bond funds this week, the largest outflow in a year, according to figures released Friday.

Borrowing costs are stepping higher as implied by the 10-year Treasury yield which is tied to a range of loan programs. The pickup in borrowing costs has put pressure on equities, particularly highly valued tech stocks, in recent sessions including on Friday. The 10-year yield was pushed up to 1.639%, its highest in more than a year and the Nasdaq Composite dropped 1.5%.

Yields have increased as investors price in a potential rise in inflation as the US economy recovers from the impact of the COVID-19 pandemic that threw it and other economies into recession last year.

Concerns about US bond yields was a factor in chasing more than $15 billion from bond funds during the week ended March 10, said EPFR, a subsidiary of Informa that provides data on fund flows and asset allocation. The latest outflow was the largest in nearly a year, it said in a note Friday. Bank of America, meanwhile, tallied bond outflows of $15.4 billion.

This week’s bond auctions included the sale of $38 billion in 10-year Treasuries. This week also marked the signing by President Joe Biden of a massive fiscal package under which $1,400 checks will be sent to most Americans.

“While the specter of another wave of US Treasuries hitting the market contributed to the growing angst about global borrowing costs,” wrote Cameron Brandt, director of research at EPFR, “the $1.9 trillion worth of stimulus they will be issued to finance added fresh fuel to the global reflation narrative.”

He said that narrative has “lit a fire” under equity flows. Equity funds tracked by EPFR raked in more than $20 billion for a fifth straight week. That keeps stock-fund inflows on track for a new quarterly record as year-to-date flows “moved within striking distance of the $240 billion mark,” said Brandt.

Brandt also said weekly bond outflows were spurred by the liquidation of funds linked to Greensill Capital, a UK-based supply chain finance company that filed for bankruptcy protection earlier this week.

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The world’s biggest crypto fund manager is hiring 9 ETF-related specialists, in anticipation of approval of the first US crypto ETF

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Michael Sonnenshein, managing director of Grayscale Investments.

  • Grayscale Investments is hiring an ETF team, in a sign it expects the US to approve crypto exchange-traded funds.
  • The digital asset manager doesn’t currently have an active filing with the SEC for a crypto-related ETF.
  • Canada has already approved three cryptocurrency ETFs that trade on the Toronto stock exchange.
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Grayscale Investments, the largest digital currency asset manager, has posted nine ETF-related job ads on LinkedIn, in a sign it expects the Securities and Exchange Commission to approve the first US crypto ETF.

Crypto ETFs have been hotly debated in the US ever since the Winklevoss twins’ filing of their bitcoin ETF with the SEC was rejected in 2017. The SEC has so far been arguing that the crypto market is too volatile, lacks sufficient surveillance, and is easily manipulated.

The US regulator is now considering ETF applications from WisdomTree, NYDIG, VanEck, and Valkyrie Digital Assets. Grayscale has filed to launch an ETF in the past, but it does not currently have an active filing with the SEC for a bitcoin, or crypto-related ETF. However, it could push its $35 billion Bitcoin Trust, the largest of its kind, into an ETF.

“We’re not able to provide further detail aside from the fact that we are continuously exploring new opportunities, such as an ETF, in response to customer demand,” Michael Sonnenshein, Grayscale’s CEO and managing director, told Bloomberg. “We were the first to provide exposure to a digital asset through a regulated wrapper, and our goal is to ensure that we lead the market in whatever future product we bring forward as well.”

Grayscale’s new roles require between three and five years experience in financial positions involving exchange-traded funds. The job postings as seen on LinkedIn currently include an ETF market-maker relationship manager, an ETF finance reporting manager, ETF finance support manager, ETF creation and redemption specialist, ETF authorized participant relationship manager, ETF product development specialist, a compliance officer, and two sales director positions.

Regulated ETFs aren’t too far away, as Canada approved three publicly-traded bitcoin ETFs within the last month that trade on the Toronto Stock Exchange.

Ark Invest’s Cathie Wood told CNBC in February she expects the US to greenlight a bitcoin ETF, as she’s confident in President Joe Biden’s pick for SEC chairman, Gary Gensler, who is seen as a positive for cryptocurrencies. The Senate banking committee on Thursday voted in favour of sending Gensler‘s nomination to the floor for confirmation.

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Barstool Sports founder Dave Portnoy just released a video backing a new ETF designed to track Reddit-driven social-media buzz

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  • A new ETF designed to track social-media sentiment on platforms like Reddit and Twitter is launching on the New York Stock Exchange on Thursday under the ticker “BUZZ.”
  • Barstool Sports founder Dave Portnoy posted a video on Twitter promoting the ETF on Tuesday.
  • “There is a new ETF launching that I’m a part of, that I’m putting my reputation behind,” Portnoy said in the video.
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In a video posted to Twitter on Tuesday, Barstool Sports founder Dave Portnoy promoted a new exchange-traded-fund that is set to launch on the New York Stock Exchange this Thursday.

The VanEck Vectors Social Sentiment ETF tracks social media sentiment on various platforms like Reddit, StockTwits, and Twitter to fuel its holdings. The ETF will trade under the ticker symbol “BUZZ.”

“There is a new ETF launching that I’m a part of, that I’m putting my reputation behind,” Portnoy explained in the video. Portnoy added that he was “approached by these guys who built an algorithm” that “lingered” and “did its thing” for a number of years.

That algorithm is the BUZZ NextGen AI US Sentiment Leaders Index developed by Periscope Capital in 2015.

But after COVID-19, “the amount of chatter on the internet about stocks exploded,” Portnoy said, adding that he was approached after Penn National Gaming, a casino company that Portnoy partnered with to launch its online sports betting app, “showed up in their ranking.”  

The ETF utilizes alternative data about stocks scraped from social media posts, news articles, and blog posts that are then filtered through an analytical system that helps determines whether the sentiment in either positive or negative. From their, the top ranked 75 US stocks with a market capitalization of more than $5 billion are included in the ETF, which is rebalanced monthly.

“BUZZ empowers individual investors to potentially benefit from the predictive insights gained by measuring the collective convictions about stocks, ultimately building the benchmark for social sentiment,” VanEck managing director Ed Lopez said in a press release. 

In an emailed statement to Insider, VanEck added: “David Portnoy is a shareholder of BUZZ Holdings, ULC, the parent company of the BUZZ NextGen AI US Sentiment Leaders Index. He represents the Index and has no affiliation with VanEck. He does not provide investment advice on behalf of VanEck. There is no affiliation with VanEck and Barstool Sports.”

From criticizing Warren Buffett’s decision to sell airline stocks amid the pandemic, to his recent interview with Robinhood CEO Vlad Tenev, Portnoy continues to make waves in the investment world as he periodically broadcasts to his millions of followers the moves he is making in the stock market. 

A similar social media insight ETF from Sprott Asset Management that was based on a different social media sentiment index launched in 2016, but closed three years later after failing to attract enough assets.

The environment for a social media ETF may be better today than it was then, after millions of new investors flooded the stock market amid the COVID-19 pandemic, and following the outsized influence of forums like Reddit’s WallStreetBets, which helped sparked an epic short-squeeze in shares of GameStop earlier this year. 

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

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A complete guide to Cathie Wood’s mind-blowing success, her firm’s investing strategies, and the stock picks she’s betting on for the future

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood has earned cult-like status on Wall Street due to her firm’s investing outperformance.
  • Her firm’s ETFs are attracting inflows that rival industry legends like Vanguard and BlackRock.
  • Insider is covering every angle of her career, investing strategies, and market outlook. 
  • Visit the Business section of Insider for more stories.

Cathie Wood emerged as the breakout star investor during one of the most chaotic years in Wall Street history. 

While her career dates back to 1981, 2020 was the year when her performance and fund inflows earned her a cult-like following in the industry. 

The $24.5 billion ARK Innovation ETF, her flagship exchange-traded fund, rose 150% last year, thanks partly to Tesla’s 730% gain. Her other funds that cover the fintech, genomic, and internet industries all landed on the list of the 10 best-performing ETFs of 2020. 

Retail and professional investors alike took notice of Wood’s performance: Last year, Ark’s family of ETFs grew at the fastest proportional growth rate of any ETF or mutual-fund manager in a Morningstar database that goes back to 2000.

Ark ETFs continue to command the industry’s attention in 2021 by attracting new investor money at a pace that rivals stalwarts like BlackRock’s iShares and Vanguard. Even her less-popular index funds are in the top 10% of flows year-to-date, according to Bloomberg data.  

Following Wood’s rapid rise over the past few years, there are questions about whether, and for how much longer, she can sustain her outperformance. The recent sell-off in high-growth stocks triggered a record one-day outflow of $465 million from her flagship innovation ETF. But in a sign of her staying power, investors poured a near-record $464 million back into the fund on the final trading day of February, Bloomberg data shows.

Insider will continue covering every angle of her cult-like status, from her ascendancy to the biggest investing bets she is making and the corners of the market she’s exploring next. 

Subscribe now to read Insider’s full coverage of Cathie Wood.  

Inside her meteoric rise: Cathie Wood made a career betting on the future. Insiders reveal how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Inside Ark Invest’s workplace, and what it’s like to work for Wood: Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.

Inside her stock-picking process: Cathie Wood’s firm built 3 of the world’s best ETFs, which all doubled in value within 3 years. She told us her 3-part process for spotting underappreciated technologies before they explode.

Why she was unfazed by the bond-induced sell-off in stocks: Cathie Wood breaks down why she was ‘very comfortable’ as the stock market got rocked by last week’s bond sell-off – and shares her outlook for what happens after the tech rout

Her views on the biggest market events of 2021 so far: Cathie Wood and her analysts discuss why Tesla’s $1.5 billion bitcoin purchase could trigger a wave of corporate investments, the fallout of the GameStop-AMC phenomenon, and their bullish views on the Chinese stock behind Clubhouse

Ark Invest’s 2021 outlook: Cathie Wood’s ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

The investment case for TeslaArk Invest, Tesla’s biggest bull, broke down its thesis on the electric-car maker ahead of its inclusion in the S&P 500

Her stock picks that crushed the market in 2020: We’re very surprised we didn’t underperform in the 4th quarter’: Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020

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The co-manager of an $800 million ETF says bitcoin will hit $250,000 within the next 3 years

Bitcoin logo is seen displayed on an Android mobile phone
Bitcoin logo is seen displayed on an Android mobile phone

The astonishing rally in the price of bitcoin in recent weeks shows few signs of losing steam, with some observers saying that the cryptocurrency is set to rise even further. 

Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing ETF, an approximately $808 million ETF that focuses on blockchain technologies and companies dealing with cryptocurrencies, says he sees bitcoin hitting $250,000 in the next three years.

“I think of [bitcoin] as a toll road for the future of the internet,” Venuto, who is also Chief Investment Officer of Toroso Investments, said. “The toll will only get higher.”

Bitcoin on Wednesday hit a record high of above $51,700, after soaring past $50,000 for the first time a day earlier. This brings the market capitalization of bitcoin close to the $1 trillion threshold. Still, the ETF manager admits there will be more volatility ahead of the cryptocurrency. 

“In the next 18 months, [the price of bitcoin] may double or half or both.”

As the rapid ascent of bitcoin prices has drawn scrutiny from pundits and regulators, it has also gained the support of major institutional backers such as Mastercard, Bank of New York Mellon, Tesla. Meanwhile, Microstrategy said announced this week it would raise money in order to add to its existing investment in the cryptocurrency. 

Morgan Stanley analysts in a note said the rally looks unsustainable unless bitcoin’s volatility falls.

‘In our opinion, unless bitcoin volatility subsides quickly from here, its current price… looks unsustainable,” the analysts said.

Meanwhile, JP Thieriot, CEO of Uphold, a digital money platform, sees the price of bitcoin hitting $85,000 by the end of the year.

“In prior crashes, like during the end of 2017, it was clearly  because it was a new thing under the sun. The drivers this time are much more profound,” Thierot said. 

But for Venuto, there is too much focus on the day-to-day price swings.

“I think there’s is an over obsession with price,” Venuto said. “Conversations about price are going to be more educational if they have a better time horizon.”

 

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Canada approves first bitcoin ETF, raising hopes that the US SEC will soon follow

Bitcoin
Bitcoin.


Canada’s financial regulator approved the first publicly traded bitcoin ETF in North America, according to records published Thursday.

The Purpose Bitcoin ETF will seek to replicate the performance of the price of bitcoin, minus the ETF’s fees and expenses, according to a fact sheet posted by Canada-based asset manager Purpose Investments. It will trade on the Toronto stock exchange under the ticket “BTCC.” 

“The Fund has been created to buy and hold substantially all of its assets in long-term holdings of Bitcoin and seeks to provide holders of ETF Units (“Unitholders”) with the opportunity for long-term capital appreciation,” the company prospectus reads.

Cidel Trust Company will be the custodian of the ETF while Tyler and Cameron Winklevoss’ Gemini Trust Company will be the sub-custodian. Ernst and Young will be the auditor of the ETF.

The ETF announcement raises hopes that the US Securities and Exchange commission could be one step closer to approving a US bitcoin ETF. Several firms have filed and failed to gain approval for a bitcoin ETF in the past, with the SEC typically citing security concerns.

“It’s another step towards an ETF being authorized in the US,” Sui Chung, CEO of CF Benchmarks told Insider.

While the Canadian bitcoin ETF is a  “significant”  move forward that demonstrates how regulators in North America have gotten more familiar with the crypto landscape, it’s unclear how quickly the US will follow suit, especially given the differences between Canadian and US financial regulations, Chung added.

Despite pushback from the SEC, demand for bitcoin-based investments has soared during bitcoin’s 2021 rally. The Grayscale Bitcoin Trust that follows bitcoin has gained 272% in the last twelve months. It’s similar to an ETF but it’s physically backed by bitcoin.

Read more: One of Wall Street’s most popular self-defense strategies failed during the coronavirus meltdown. Ex-Bridgewater advisor Damien Bisserier was among the few who made it work, and he told us how he did it.

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JPMorgan rolls out a supercharged tech trade designed to amplify gains in stocks like Tesla, report says

Nasdaq exchange
  • JPMorgan is selling investment products that allow clients to augment their bets on high-flying tech stocks.
  • The notes track three exchange-traded funds from Ark Investment Management leveraged 1.5 times over a six-year period, Bloomberg reported Monday.
  • The underlying ETFs have all rallied at least 150% in 2020. Two reaped the benefits of Tesla’s 660% year-to-date surge.
  • The product’s rollout comes as investors shift out of tech stocks and into cyclical sectors amid hopes for a vaccine-fueled recovery.
  • Visit the Business Insider homepage for more stories.

Tech stocks have already led the stock market to several record highs in 2020. JPMorgan thinks investors want to double down on the sector.

The bank is letting investors in on a new trade that amplifies bets on three tech-focused exchange-traded funds, Bloomberg reported Monday. The product tracks three ETFs from Ark Investment Management leveraged 1.5 times over a six-year period. JPMorgan has already sold $589,000 of the notes.

The funds – Ark’s Innovation, Genomic Revolution, and Next Generation Internet ETFs – are among the year’s best performers. Large stakes in Tesla boosted the Innovation and Next Generation Internet funds in 2020, as the automaker’s shares have rallied more than 660% throughout the year.

The Genomic Revolution ETF is up 194% year-to-date. The Innovation and Next Generation Internet ETFs have rallied 154% and 153%, respectively.

Read more: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

JPMorgan has debuted the product as investors begin to rotate out of tech stocks. The sector’s insulation from the virus fallout led them to outperform through much of the year, but hopes for a vaccine-fueled recovery in 2021 have prompted mass shifts into value stocks and previously neglected sectors. A prolonged rotation could drag tech stocks lower and weigh heavily on the new products’ gains.

The structured products also only track the worst-performing of the three ETFs, meaning one’s plunge would cancel out any gains across the other two funds. Still, those holding the notes are protected against the first 20% decline in any of the ETFs, Bloomberg reported.

Ark’s Innovation, Genomic Revolution, and Next Generation Internet ETFs trade under the tickers ARKK, ARKW, and ARKG, respectively. Though all three broadly track tech themes, the Genomic Revolution fund focuses on innovations in health care including CRISPR, gene editing, and agricultural biology.

Read more: ‘We are very confident that the stupid is currently alive and well in this market’: Jeremy Grantham’s heir apparent Ben Inker breaks down how GMO plans to profit from the growth bubble through a new long/short equity strategy

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