now software sector high-flyer zoom and DocuSign were recently added to the
nasdaq-100 replacing Willis Towers Watson and United Airlines respectively
here with me now to discuss the significance of this as well as how
investors have been utilizing etx to profit during the historic market rally
is Nasdaq Chief Economist Phil Mackintosh thanks for being here today Phil thanks
for having me all right so Phil what makes this recent
shake up to the nasdaq-100 significant in your view well I think it's kind of
interesting because you can see a lot of the companies that are really well
positioned for working from home have done very well in the coronavirus period
even before those two companies got added we saw the Nasdaq 100 index was
outperforming other large cap indexes by 10 to 15% and actually got back to
all-time highs recently and that's because of companies like Netflix is
because of companies like Microsoft and Amazon that a whole really well
positioned I'm first working from home in the future
yeah and zoom and DocuSign in particular with those being two younger software
names when it comes to the the mix of names that are in the nasdaq-100 do you
think that perhaps these two recent additions might give us some
line-of-sight to what we what we could expect in the future as the software
sector continues to grow yes so the nasdaq-100 index itself is by definition
a listings as Nasdaq listings which are a lot of new economy listings and a lot
of tech companies also a lot of healthcare companies so Gilead which is
just doing vaccine research is part of the Nasdaq-100 as well and so you can
kind of see that the mix of new economy companies is helping drive everything
forward and not only that but you're in the Nasdaq we don't have financials by
rule and we also don't have so many energy of material companies which have
held a lot of the other indexes back so to your point you can really see the
sectors that have been hurt by coronavirus energy complex materials a
lot of the old-school companies have been excluded from the Nasdaq-100
because of the way it's put together and a lot of
tech companies and healthcare companies that are really well positioned have
been helping it to outperform and the Nasdaq-100
you could obviously get exposure to that in ETF form with QQQ what had the
inflows been like for that fund during this whole coronavirus pandemic and all
of the volatility that we've seen over the last couple of months yes so the
Nasdaq-100 of accused etf actually passed a hundred billion dollars of
assets and that's a mixture of its performance and its employees obviously
but for us that was a milestone and it's it's a lot higher than it got in the
tech bubble ten or fifteen years ago so we're pretty proud when it passed that
mark it's a pretty decent sized ETF it's also one of the most liquidity s in the
US market trading millions of dollars every day with a really tight spread so
it's it's one of those ETS that's often used for hedging for trading and for
really short term and longer term investment threads yeah seems pretty
flexible and back to the software sector in particular the strengths in that
group can be underscored by the performance of software ETFs like CLOU
WCLD and SKYY to name a few so walk us through what you're seeing at this
time in terms of inflows for those funds yes it's actually been really
interesting if we rewind back and even to watch so you can see what's the
coronavirus here a lot of the flows in ETS when ETS by up to 40% of all the
value trading in the stock market and that's because hedge funds and retail
and a lot of insurers and hedgers all get in and use the ETS because they're
cheap easy ways to equities but the first thing we saw was a lot of outflows
whether it was in equities or bonds and then you saw people pivoting to your
point into the some of these new economy ETF so there is a huge amount of
thematic and factor based ETS out there now and we saw a lot of flows into cloud
online retail innovator funds and we also saw inflows you to some of the
healthcare and biotech ETFs because they were positioning for people working from
home for quite a long time and obviously investing in companies that had exposure
to the vaccine research and some of the the potential success stories that you
might get from there yeah it sounds like there's
lot of tactical moves happening right now in the ETF space so what else stands
out to you right now about the different ways that perhaps growth-oriented
investors have been able to successfully utilize ETFs to profit during this
historic rally yeah so one of the really interesting trends is that large cap
growth farms devan outperformed they've been outperforming for years but they
outperform even more the current of our sell off happened and what we've
actually seen is a couple of periods where we saw the I guess the corona-
virus cases pick up and people start to worry that spread flip that you saw a
lot of the growth of value ETS a lot of trading and the large gap and small cap
ETS and you saw weeks of out performance and then under performance so people
have been using those ETFs to position for growth and position for further
large cap on our performance that we've seen as well all right Phil Mackintosh
Chief Economist and adds that thanks so much for joining us today and breaking
all that down for us. No worries, thanks for having me.