Value Back in Vogue as Inflation and Recovery Expectations Soar
March 19, 2021
Read Time 5 MIN
Global equity markets held steady following the February BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) rebalance as vaccine rollouts accelerated across the developed world, leading to growing optimism surrounding the economic recovery. Over 250 million doses were administered globally during February, double the amount from the previous month. A strong fourth quarter U.S. corporate earnings season concluded with 79% of S&P 500 companies beating expectations. As the economy strengthened, inflation concerns mounted, and the yield on the benchmark U.S. 10-year note spiked higher. Surging inflation expectations spurred a rotation within equity markets as price momentum and technology stocks fell sharply while shares of old economy “value” companies and financials soared.
Economic Re-opening Stocks Stabilize Returns
The dynamic nature of sentiment insights featured within the BUZZ Index insulates it from market environment shifts such as the move toward value that occurred over the past month. The top five contributors to performance featured old economy stocks such as American Airlines (NASD: AAL), Boeing (NYSE: BA) and Ford Motor Co (NYSE: F) together with two gaming focused companies which continue to benefit from regulatory tailwinds whereby an increasing number of U.S. states are allowing legal online gambling initiatives.
| Top Contributors: February 11, 2021 – March 11, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| American Airlines | AAL | 2.91 | 1.00 |
| Boeing Co | BA | 2.12 | 0.53 |
| DraftKings Inc | DKNG | 3.22 | 0.48 |
| Ford Motor Inc | F | 3.30 | 0.47 |
| Penn National Gaming | PENN | 2.01 | 0.35 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Conversely, the constrained nature of a price momentum approach leaves little room to hide amidst a changing market environment. The MSCI USA Momentum Index (the “Momentum Index”), which seeks to reflect the performance of the momentum factor, produced a return of -6.9% compared to -0.78% generated by the BUZZ Index in the period from the February to March rebalance dates. Three of the bottom five contributors to performance within the BUZZ Index are featured in the Momentum Index, including Pinterest Inc (NYSE: PINS), Zoom Video Communications (NASD: ZM) and Tesla Inc. (NASD: TSLA).
| Bottom Contributors: February 11, 2021 – March 11, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Virgin Galactic Holdings | SPCE | 2.25 | -0.84 |
| Novavax Inc | NVAX | 2.23 | -0.50 |
| Pinterest Inc | PINS | 2.04 | -0.35 |
| Zoom Video Communications | ZM | 1.91 | -0.35 |
| Tesla Inc | TSLA | 2.70 | -0.30 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Sentiment Stock Highlight: American Airlines
American Airlines (NASD: AAL) has long been featured in the BUZZ Index, yet aggregate investor sentiment had not previously been high enough to warrant a top spot in the index. From the period of January 2019 through May 2020, AAL was in the BUZZ Index in 12 of the 17 rebalances, with an average weighting of 0.65%. As the stock fell 70% from its pre-pandemic levels, online conversation began to soar alongside positive investor sentiment. AAL re-entered the BUZZ Index in June 2020, and in the nine months that followed, AAL was featured each month in the BUZZ Index at an average weight of 2.29% while the stock rallied over 65%.
American Airlines Stock Price: January 1, 2019 - March 15, 2020
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. For a complete list of holdings in the ETF, please visit www.vaneck.com.
BUZZ Index – March 2021 Rebalance Highlights
Norwegian Cruise Lines
The most notable addition to the BUZZ Index this month comes in the form of Norwegian Cruise Lines (NYSE: NCLH). Surging inflation expectations spurred a rotation in the market as momentum and technology stocks fell sharply in late February and early March. Meanwhile shares of old economy, value companies surged. Consumer discretionary stocks proved resilient as vaccine rollouts accelerated across the developed world, leading to growing optimism surrounding the economic recovery. Over the past year, travel related stocks were unsurprisingly some of the hardest hit names, and while they have recouped some losses, they have still largely underperformed. After falling 85% last year during the COVID-19 crash, NCLH has since nearly quadrupled in price, yet the stock remains 65% below its pre-COVID levels. Investor sentiment has steadily been climbing, and this month, NCLH joins the BUZZ Index for the first time ever with a 0.59% weight, accompanying Carnival Corp. (NYSE: CCL) as the second cruise line featured in the Index.
Energy Sector
Most investors remember the crash in oil prices during the peak of the pandemic last March, culminating in April when crude oil futures traded negative, a previously unfathomable event. At the time, the demand shock from COVID-19 was so great that people were unable to find storage for the barrels of crude that were building up. Much like the travel and leisure sector, energy stocks plummeted as global demand dried up. However, since April 2020, the price of crude has steadily been climbing, and remarkably reached pre-COVID levels this month after rising almost 40% year-to-date. While the positive contributing factors have been plentiful—the ongoing global recovery, vaccine optimism, a weak U.S. dollar—many market pundits remained skeptical of the rally. Recently, positive online investor sentiment toward oil and gas stocks has been picking up. This month, two of the 11 new names in the BUZZ Index are energy stocks: Marathon Oil (NYSE: MRO) with a 0.78% weight, and Occidental Petroleum (NYSE: OXY) with a 0.63% weight. The current energy stock in the Index, Exxon Mobil (NYSE: XOM), also saw increasing investor sentiment over the past month, resulting in its Index weight increasing to 1.18%. Investor sentiment is suggesting that this rally in the energy sector may be for real and could have more room to run.
For more on the BUZZ Index rebalance results, view the BUZZ Index reconstitution report.
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Important Disclosures
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) is a product of BUZZ Holdings ULC (“BUZZ Holdings”), and has been licensed to Van Eck Associates Corporation for use in connection with the VanEck Vectors Social Sentiment ETF.
“BUZZ” is a trademark of BUZZ Holdings, which has been licensed by Van Eck Associates Corporation for use in connection with the BUZZ Index.
VanEck Vectors Social Sentiment ETF is not sponsored, endorsed, sold or promoted by BUZZ Holdings, or its shareholders, or the licensor of the BUZZ Index and/or its affiliates and third party licensors. BUZZ Holdings makes no representation or warranty, express or implied, to the owners of the VanEck Vectors Social Sentiment ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Vectors Social Sentiment ETF, particularly or the ability of the BUZZ Index to track general market performance.
BUZZ Holdings’ only relationship to Van Eck Associates Corporation with respect to the BUZZ Index is the licensing of the BUZZ Index and certain trademarks of BUZZ Holdings. The BUZZ Holdings are determined and composed by BUZZ Holdings without regard to Van Eck Associates Corporation or the VanEck Vectors Social Sentiment ETF. BUZZ Holdings has no obligation to take the needs of Van Eck Associates Corporation or the owners of VanEck Vectors Social Sentiment ETF into consideration in determining and composing the BUZZ Index.
BUZZ Holdings are not responsible for and have not participated in the determination of the prices of VanEck Vectors Social Sentiment ETF or the timing of the issuance or sale of securities of VanEck Vectors Social Sentiment ETF or in the determination or calculation of the equation by which VanEck Vectors Social Sentiment ETF securities may be converted into cash, surrendered, or redeemed, as the case may be. BUZZ Holdings have no obligation or liability in connection with the administration, marketing or trading of VanEck Vectors Social Sentiment ETF. There is no assurance that investment products based on the BUZZ Index will accurately track index performance or provide positive investment returns.
BUZZ Holdings is not an investment advisor and the inclusion of a security in the BUZZ Index is not a recommendation by BUZZ Holdings to buy, sell, or hold such security, nor should it be considered investment advice.
BUZZ HOLDINGS DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE BUZZ INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). BUZZ HOLDINGS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. BUZZ HOLDINGS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY Van Eck Associates Corporation, OWNERS OF THE VanEck Vectors Social Sentiment ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BUZZ INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL BUZZ HOLDINGS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN BUZZ HOLDINGS AND Van Eck Associates Corporation, OTHER THAN THE LICENSORS OF BUZZ HOLDINGS.
Effective August 18, 2016, BUZZ Indexes Inc. implemented changes to the BUZZ NextGen AI US Sentiment Leaders Index construction rules. The index constituent count was increased from 25 to 75 stocks and the maximum constituent weight was reduce from 15% to 3%. These change may result in more a diversified exposure to index constituents than under the rules in effect prior to this date. Past performance is no guarantee of future results.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright ©2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
All investing is subject to risk, including the possible loss of the money you invest. Bonds and bond funds will decrease in value as interest rates rise. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
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Important Disclosures
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) is a product of BUZZ Holdings ULC (“BUZZ Holdings”), and has been licensed to Van Eck Associates Corporation for use in connection with the VanEck Vectors Social Sentiment ETF.
“BUZZ” is a trademark of BUZZ Holdings, which has been licensed by Van Eck Associates Corporation for use in connection with the BUZZ Index.
VanEck Vectors Social Sentiment ETF is not sponsored, endorsed, sold or promoted by BUZZ Holdings, or its shareholders, or the licensor of the BUZZ Index and/or its affiliates and third party licensors. BUZZ Holdings makes no representation or warranty, express or implied, to the owners of the VanEck Vectors Social Sentiment ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Vectors Social Sentiment ETF, particularly or the ability of the BUZZ Index to track general market performance.
BUZZ Holdings’ only relationship to Van Eck Associates Corporation with respect to the BUZZ Index is the licensing of the BUZZ Index and certain trademarks of BUZZ Holdings. The BUZZ Holdings are determined and composed by BUZZ Holdings without regard to Van Eck Associates Corporation or the VanEck Vectors Social Sentiment ETF. BUZZ Holdings has no obligation to take the needs of Van Eck Associates Corporation or the owners of VanEck Vectors Social Sentiment ETF into consideration in determining and composing the BUZZ Index.
BUZZ Holdings are not responsible for and have not participated in the determination of the prices of VanEck Vectors Social Sentiment ETF or the timing of the issuance or sale of securities of VanEck Vectors Social Sentiment ETF or in the determination or calculation of the equation by which VanEck Vectors Social Sentiment ETF securities may be converted into cash, surrendered, or redeemed, as the case may be. BUZZ Holdings have no obligation or liability in connection with the administration, marketing or trading of VanEck Vectors Social Sentiment ETF. There is no assurance that investment products based on the BUZZ Index will accurately track index performance or provide positive investment returns.
BUZZ Holdings is not an investment advisor and the inclusion of a security in the BUZZ Index is not a recommendation by BUZZ Holdings to buy, sell, or hold such security, nor should it be considered investment advice.
BUZZ HOLDINGS DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE BUZZ INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). BUZZ HOLDINGS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. BUZZ HOLDINGS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY Van Eck Associates Corporation, OWNERS OF THE VanEck Vectors Social Sentiment ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BUZZ INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL BUZZ HOLDINGS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN BUZZ HOLDINGS AND Van Eck Associates Corporation, OTHER THAN THE LICENSORS OF BUZZ HOLDINGS.
Effective August 18, 2016, BUZZ Indexes Inc. implemented changes to the BUZZ NextGen AI US Sentiment Leaders Index construction rules. The index constituent count was increased from 25 to 75 stocks and the maximum constituent weight was reduce from 15% to 3%. These change may result in more a diversified exposure to index constituents than under the rules in effect prior to this date. Past performance is no guarantee of future results.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright ©2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
All investing is subject to risk, including the possible loss of the money you invest. Bonds and bond funds will decrease in value as interest rates rise. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.