The goal of the Boulder Sector Fundamentals team is to help you get underneath the headlines to the S&P 500 companies driving a sector ETF. While a sector ETF may include another 20+ companies, the S&P 500 components provide the liquidity and biggest moves. So if you’re looking for multi-year growth driven by Trump’s military buildup, you need to know whether the move will come from the entire sector or just a few companies.
In our demo example, the Aerospace and Defense Sector has eight S&P 500 components: Arconic, Boeing, FLIR Systems, General Dynamics, Lockheed Martin, Northrop Grumman, Raytheon, and TransDigm Group (ARNC, BA, FLIR, GD, LMT, NOC, RTN, TDG). Our BSF report for this sector includes over 2000 pages of SEC filings and earnings transcripts in an interactive dashboard. You get basic financial data and ranking metrics, ratios, cash flow and margins with YoY trends. In addition, BSF reports use our proprietary A.I. analytics for topical drill down to the explanations with entity tracking and sentiment. From inside the dashboard company websites and full text filings are all in one place, a click away.
For example, compare the 2016 performance of the S&P Aerospace & Defense ETF (SPSIAD) to the individual performance of four large cap components. It’s up 21% for the year so if you’ve been holding it you should be happy. But look closer, an investment in NOC would have done better by 12% and either LMT or GD would have done better, while BA did worse by 15%. If you take out the YTD Trump effect, you’re returns are off by half. With the BSF report we were able to 1) Identify Boeing underperforming, 2) Compare YoY financial indicators, 3) Drill down to Boeing’s explanations and 4) See Entities in the Document (locations, organizations and people) then click out to the full document, all in a few minutes.
The performance of the components of a sector ETF can be dramatically affected by the fundamental performance of larger components. Diversification is the primary benefit, but a close look at the stocks in the group can help you outperform the sector. No diversification benefit; BA never outperformed LMT, GD, NOC or the index.
Returns are largely due to growth in the overall market driven by macro factors, followed by picking the right industries/sectors. Picking the top stock in the top sector is ideal but that takes a lot of time and your time is valuable. Our Sector Annual Reports give you the tools to be smarter about sector companies so you can make better portfolio decisions for 2017.
Be smarter quicker. The analyst reports for every company all rolled into one service. All the numbers, all the filings and transcripts and all the data charges in one service delivered to your desktop.