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Rally: Mid-Sized Companies

Updated: Jun 2, 2020

The recovery from the market bottom has been robust to say the least. It’s hard to not buy US stock if the Federal Reserve (Fed) and the government is pumping TRILLIONS of dollars into the economy. They did so much so fast that it was actually difficult to write about it as it changed so quickly.

As of May29th, the market has rallied to just under ~10% off the market high set on February 19, 2020. The giant stocks (MSFT, AAPL, AMZN, & GOOG) led the recovery. This momentum spread to the other large cap stocks in the S&P then to the mid-caps and finally small-caps and REITs. The iShares S&P Mid Cap ETF (IJH) was the best performing ETF last month. It was up over ~7% percent (see below). That is a huge move! Let’s hope that small and medium size companies can continue this rally. The large caps have already made a great run and may take a little break.

Is this market rally going to stick? I feel that we’ll definitely have a few rough patches; however, I do not anticipate the market correcting back down to the March lows.

ETF of the Week: State Street Real Estate Sector ETF (XLRE)

State Street’s XLRE was the best performing ETF last week. XLRE is an ETF that is designed to track the real estate sector of the S&P 500. Similar to the S&P 500, XLRE is market cap weighted. The top five holdings represent ~50% of the value of the index’s value. This design is helping it cope with the current market environment as the top 5 holdings are less impacted by the COVID-19 quarantine. These five are: AMT (cell phone towers), CCI (cell phone towers), PLD (logistic facilities), EQIX (data centers) & SBAC (cell phone towers).

*The data used in the tables above was taken from Yahoo finance. It’s not perfect; however, it definitely gives us a quick way to monitor what I call the core ETFs.


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