Market Insider
- Stocks to Watch: RIMM, LULU, DAL & More
- Stocks to Watch: CHK, FB, VRTX & More
- June Could Be Turning Point for Markets, Economy
- Stocks to Watch: JCP, VRTX, CHK, FB & More
- Europe Has Wall Street's Bull on a Short Leash
- Hostage to Headlines
- Traders Worry Over 'Possible Risks' During Long Weekend
- Oil Declines, but Doesn't Help European Consumers
- Facebook Analyst Reports All Over the Map
- More Fallout From the Facebook Fiasco
EDITOR
RSS FEED
ETFs Don’t Impact All Stocks Equally: Goldman Sachs
Text Size 
Markets Producer, CNBC
A new research report from Goldman Sachs finds that trading in exchange-traded funds does impact individual stocks, but not equally.
 |
The stocks most affected are in the Russell 2000, potentially because of their lower levels of liquidity and cheap prices. While in the S&P 500, the most impacted areas are in select Real Estate Investment Trusts (REITs) and mid-sized energy names, according to Goldman analysts.
The report, published Friday, examines the impact of ETFs (excluding leveraged and inverse funds) on sector-based stock correlations and identifies the stocks most impacted by ETF activity.
Higher correlations mean that individual stocks could move more with the dynamic of the ETF than on their own fundamentals.
Karina Frayter
CNBC Markets Producer
Among the S&P 500 firms, FMC Technologies [FTI
Loading...
()
] has the highest average daily value traded from ETFs (23 percent), Goldman found. It is followed by Simon Properties (21 percent) [SPG
Loading...
()
] and Public Storage (21 percent) [PSA
Loading...
()
].
Excluding Financials and Energy, select Utilities and Consumer Discretionary stocks showed the greatest impact, says the report.
Most impacted ex-Financials, Energy and Materials |
| Ticker | Company Name | Estimated ETF Share of ADVT | Most Impactful ETF | Correlation of Stock and ETF |
| AN | AutoNation Inc. | 9% | XRT | 74% |
| AMT | American Tower | 9% | IYR | 58% |
| SVU | Supervalu Inc. | 9% | XRT | 67% |
| D | Dominion Resources | 8% | XLU | 87% |
| PGN | Progress Energy | 8% | XLU | 85% |
Source: Goldman Sachs |
Tech stocks dominate the list of the least correlated stocks to ETFs.
Tech stocks dominate the list of least impacted |
| Ticker | Company Name | Estimated ETF Share of ADVT | Most Impactful ETF | Correlation of Stock and ETF |
| FSLR | First Solar | 0.1% | XLK | 53% |
| NVLS | Novellus Systems | 0.2% | XLK | 60% |
| CRM | Salesforce.com | 0.2% | XLK | 71% |
| SNDK | Sandisk Corp. | 0.3% | XLK | 79% |
| FFIV | F5 Networks | 0.3% | XLK | 65% |
Source: Goldman Sachs |
Small-cap stocks in Russell 2000 have a disproportionately higher correlation to ETFs. This is primarily due to lower average volume for its stocks, which is about 30 times smaller than the average volume for the S&P500 stocks.
Among the fifty most affected stocks in the Russell 2000, all have more than 20 percent of stock average daily value traded driven by ETF trading. Here are top five:
Russell 2000: Potentially most impacted by ETF trading |
| Ticker | Company Name | Estimated ETF Share of ADVT | Most Impactful ETF | Correlation of Stock and ETF |
| SSI | Stage Stores | 66% | XRT | 81% |
| FRED | Fred's Inc. | 62% | XRT | 78% |
| CATO | Cato Corp. | 62% | XRT | 76% |
| PBY | Pep Boys-Manny Moe & Jack | 54% | XRT | 72% |
| BWS | Brown Shoe Company | 52% | XRT | 78% |
Source: Goldman Sachs |
ETFs have less than a tenth of the assets under management, compared to mutual funds, but they are commanding greater attention and use from institutional investors, says the report.
In the last five years, the number of U.S.-registered ETFs has grown from nearly 200 to over 1,100, with a similarly steep rise in assets under management from $200 billion to over $1 trillion.
Goldman analysts expect the impact of ETFs on investment decisions and portfolio construction to continue.
Questions? Comments? Email us at marketinsider@cnbc.com and follow me on twitter @kfrayter
- The economy is relatively resilient but there are some decisions that could hurt, says this analyst.
- To escape taxes or political uncertainty, millionaires and billionaires are migrating like never before.
- Some places are kinder than others when it comes to selling homes, as these cities seem to be.
- Here are the 15 publicly traded stocks, by value, that are the biggest holdings of Berkshire Hathaway.
- Some restaurants are taking kid favorites like peanut butter and jelly and turning them into adult fare.
- What we have here are the 10 richest counties in America, according to the average income.
Data is a real-time snapshot *Data is delayed at least 15 minutes
