Top ETF Stories Of Fourth Quarter 2020

Since small-cap stocks are more closely tied to the domestic economy, stimulus hopes and vaccine news boosted the segment more. Hopes of sooner-than-expected return to normalcy have played a role in lifting smaller-capitalization stocks (read: Small-Cap ETFs Outperforming Bigger Peers: Here's Why).

Value Stocks Prevailed

The recent gains in Wall Street were based on a value stock rally.In the past three-month frame (as of Dec 28, 2020), SPDR Portfolio S&P 500 Value ETF (SPYV) has gained 14.0% versus the 11.3% uptick in SPDR Portfolio S&P 500 Growth ETF (SPYG).

In November, “the scale of the rotation to cheap “value” stocks from trendy “momentum” names was the most violent on record, eclipsing even the turmoil of the 2008 financial crisis or the bursting of the dotcom bubble,” as quoted on Financial Times. Since there has been a rise in bond yields and value stocks perform well in a rising rate environment, the segment performed well.

Solid M&A Activity

The semiconductor and shale space have been buzzing with mergers and acquisitions. Chip producer Xilinx added solid gains in October on news that Advanced Micro Devices (AMD) may buy the former for more than $30 billion. Then, Marvell Technology (MRVL) announced in late October its decision to acquire Inphi (IPHI) for $10 billion in a cash-and-stock deal (read: ETFs to Gain as Marvell's Inphi Buyout Creates $40B Giant).

iShares PHLX Semiconductor ETF (SOXX) , First Trust Nasdaq Semiconductor ETF (FTXL) and VanEck Vectors Semiconductor ETF (SMH) have been beneficiary of these news.

Also, Pioneer Natural Resources Company (PXD), one of the largest independent shale operators, announced the buyout of Parsley Energy Inc. (PE) in October.Plus, in October, ConocoPhillips (COP) announced that it will purchase Permian-focused shale oil driller Concho Resources (CXO) for $9.7 billion. iShares U.S. Oil & Gas Exploration & Production ETF(IEO) is an ETF with considerable weight in the above-mentioned companies, making it a beneficiary of the shale mergers.

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