Wall Street is rediscovering old-economy stocks.
So says Jamie Wise, the founder of Buzz Indexes and the man behind VanEck Vectors’ new Social Sentiment ETF (BUZZ), a basket of stocks popular with investors based on online sources.
BUZZ tracks the 5-year-old Buzz NextGen AI US Sentiment Leaders Index and rebalances once a month. The ETF is up nearly 5% since its March 2 debut.
Though names such as Amazon, Apple, Advanced Micro Devices and Tesla are among its top holdings, BUZZ isn’t “all high-flying growth stocks or tech stocks,” Wise told CNBC’s “ETF Edge” on Monday.
Ford, American Airlines and Novavax have been some of the index’s top performers, and the latest monthly rebalancing brought even more value into the mix, he said.
Names like Costco, Target, Occidental Petroleum, Norwegian Cruise Lines and United Airlines are now in the index. Wise called it “a shift more towards those industrial and value names, away from some of the higher-growth tech names.”
The shift reflects investors’ “collective conviction” in more “traditional, old economy” stocks, Wise said.
“They’re seeing some of these trends reemerge, they’re seeing the end of Covid potentially in sight and they’re starting to position their portfolios accordingly,” he said.
Another ETF on the market has a very different strategy for tracking investor sentiment.
The AI Powered Equity ETF (AIEQ) backed by IBM Watson and EquBot uses deep data to find what it deems to be the U.S. companies with “the highest potential for price appreciation,” EquBot’s Art Amador said in the same “ETF Edge” interview.
“One of the things that we’re currently seeing within the models is we’re observing positive signals for technology hardware demand,” said Amador, EquBot’s co-founder and chief operating officer.
AIEQ, which screens millions of data sources including news reports, social media posts, industry coverage, market data and financial statements to find its holdings, currently has the heaviest weightings in Applied Materials, Alphabet, Apple and Intel.
While semiconductor demand has been a major catalyst for tech, other parts of the space are struggling to reach Wall Street’s reopening optimism, Amador said.
“Although we are overweight technology names, we’ve actually been seeing kind of a scaling back of some of the technology software names, names like CrowdStrike, Zoom, DocuSign, Zscaler,” he said.
“Where these used to be top holdings, they’ve been scaled back quite a bit. We still own them. They’re still important stocks. But we’re seeing kind of a reallocation to some of the reopening benefactors, companies like Uber, Bank of America, Cimarex Energy and Six Flags as well as some REITs.”
