On this episode of the podcast, Ryan asks Brian Wesbury about the impact of government spending on economic growth, the upcoming presidential election, and whether or not tariffs are an effective policy tool.

• Net inflows for US-listed ETFs totaled $93.7 billion in May, bringing total ETF assets under management to $8.80 trillion.
  
  
• Equity ETFs had net inflows totaling $65.0 billion in May, bringing trailing 12-months (TTM) net inflows to $554.4 billion. Active equity ETFs accounted for $12.5 billion in net inflows in May, compared to $52.5 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $402.7 billion, accounting for 5.7% of all equity ETF assets ($7.02 trillion), as of 5/31/24.
  
  
• Fixed income ETFs had net inflows totaling $25.8 billion in May, bringing TTM net inflows to $214.1 billion. Active fixed income ETFs accounted for $7.5 billion in net inflows in May, compared to $18.3 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $210.9 billion, accounting for 13.4% of all fixed income ETF assets ($1.57 trillion), as of 5/31/24.
  
  
• Commodities ETFs had net outflows totaling $0.3 billion in May, bringing TTM net outflows to $14.9 billion. Broad commodities ETFs (+$0.5 billion) was the strongest commodity sub-category in May.

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Investors who have become overweight in growth stocks following a stretch of outstanding relative returns are faced with a conundrum. Many wish to maintain exposure to the extraordinary long-term growth potential of new innovations, such as artificial intelligence, cloud computing, advanced medicine, and others. However, they also worry about the added risk that accompanies high growth stocks and their contribution to the overall riskiness of their portfolios. These concerns are heightened by the significant increase in valuations for many growth stocks over the past several months. Below, we discuss a barbell approach to managing portfolio risk that seeks to balance some of the higher risk exposure of growth stocks by incorporating an allocation to the First Trust Value Line® Dividend Index Fund (FVD).

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The equity market capitalization of the S&P 500 Index is $44 trillion dollars as of 5/31/24. The forecasted earnings of the index for 2024 is expected to surpass $2.0 trillion dollars. That would be the best ever earnings for the index. It would also be the 4th year in a row where earnings have been significantly higher than the $1.3 trillion earned in 2019, which at the time was the highest ever.

In summary, the earnings produced by the largest American companies are on an unprecedented tear. The dividend payout ratio of the S&P 500 Index is approximately 30% of earnings. Based on $2.0 trillion of anticipated earnings, that leaves a lot of “extra” earnings (~ $1.4 trillion) to reinvest in the business or to reward shareholders.

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Richard Bernstein, CEO/CIO of Richard Bernstein Advisors, discusses deglobalization, the reindustrialization of America, and how most investors are ignoring one of the most powerful secular growth opportunities today.

Historically, the exchange-traded fund ("ETF") industry has been dominated by passively-managed (passive) investments, but over the past few years, actively-managed (active) ETFs have gained a foothold. One catalyst for this turn of events was the Securities and Exchange Commission’s (“SEC”) adoption of a new regulatory framework in 2019 (the “ETF Rule”), which made it easier for fund managers to launch active ETFs. However, this doesn’t explain the increase in demand for these ETFs, which occurred even as active open-end funds faced massive redemptions. We discuss some of the factors that we believe have led to increased adoption of active ETFs, highlighting why we believe this trend is still in its early stages.

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Description: Brian Wesbury joins the ROI Podcast for a wide ranging discussion about the state of the US economy, why government spending suppresses growth, and what factors could ultimately prevent an economic recession.

• Net inflows for US-listed ETFs totaled $35.0 billion in April, bringing total ETF assets under management to $8.55 trillion.
  
  
• Equity ETFs had net inflows totaling $15.1 billion in April, bringing trailing 12-months (TTM) net inflows to $511.3 billion. Active equity ETFs accounted for $11.1 billion in net inflows in April, compared to $4.0 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $380.3 billion, accounting for 5.6% of all equity ETF assets ($6.81 trillion), as of 4/30/24.
  
  
• Fixed income ETFs had net inflows totaling $16.5 billion in April, bringing TTM net inflows to $202.4 billion. Active fixed income ETFs accounted for $9.7 billion in net inflows in April, compared to $6.8 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $202.7 billion, accounting for 13.2% of all fixed income ETF assets ($1.54 trillion), as of 4/30/24.
  
  
• Commodities ETFs had net inflows totaling $0.8 billion in April, bringing TTM net outflows to $13.6 billion. Broad commodities ETFs (+$0.6 billion) was the strongest commodity sub-category in April.

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In this episode, Dave McGarel, Chief Investment Officer at First Trust shares his perspective on the risks and opportunities that may lie ahead for equities.  Dave shares why First Trust believes low volatility stocks are growing more attractive, why the technology sector has been the secular growth story of our lifetimes, and which data points investment professional should pay close attention to for the rest of 2024.

“Sell in May and go away” is an old Wall Street adage you will be hearing a lot in the coming weeks. While we have never advocated timing the market, it is certainly rational to be nervous about the continued upward trajectory of US equities after the 21% increase over the last 6 months as of 4/30/24 in the S&P 500 Index including the 6% year-to-date (YTD) increase. This is especially true considering valuations are stretched, the Federal Reserve (Fed) is attempting to be restrictive, inflation is proving tough to tame and market leadership is heavily concentrated. Geopolitical worries in Russia and the Middle East along with the looming US election add further to investor angst.

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