Navigating New ETF Frontiers: Scarcity and Cyclicals Reassert Leadership

Scarcity and Cyclicals Take the Lead as Defensive Momentum Cools

Alternative ETFs extended their rally, with scarcity and cyclical themes accelerating while defensive and yield-oriented strategies lost traction. As of January 9, the sharpest week-over-week momentum shifts in our universe highlight a decisive rotation into gold miners, semiconductors, and infrastructure, while minimum volatility and preferred income products lag.

Momentum Shifts and Thematic Contrasts

VanEck Gold Miners, VanEck Semiconductor, and Global X U.S. Infrastructure Development posted the strongest momentum acceleration, each registering a breakout. Gold miners led with an 11-point week-over-week surge, followed by semiconductors and infrastructure. At the other end, iShares MSCI USA Min Vol Factor and iShares Preferred and Income Securities marked breakdowns, with both ETFs showing weak current momentum and fresh deceleration. Four ETFs—Vanguard Real Estate, iShares MSCI USA Momentum Factor, iShares MSCI USA Min Vol Factor, and iShares Preferred and Income Securities—flipped positive, signaling early-stage reversals within defensive and yield segments. Meanwhile, iShares Bitcoin Trust remained the sole ETF with negative momentum, despite a modest improvement.

Historical Context and Mean Reversion

No ETF in our coverage triggered a high or medium mean-reversion signal, underscoring the absence of statistical extremes. Gold miners and semiconductors, while leading in current momentum, remain well below their one-year peaks, suggesting further room for extension. Infrastructure and covered call strategies also sit far from their highs, with low reversion risk. Across the board, all ETFs cluster in low mean-reversion territory, with no segment appearing overextended or at exhaustion risk. Notably, First Trust Long/Short Equity is closest to its 12-month peak, while iShares Bitcoin Trust remains anchored near its trough.

Emerging Trends: Acceleration and Deceleration

Momentum acceleration is concentrated in gold miners, semiconductors, and infrastructure, each showing strengthening trends within their historical regimes. In contrast, minimum volatility and preferred income ETFs display momentum deceleration, signaling cooling trends and early-stage fatigue.

Our take

The past week reinforced the dominance of scarcity and cyclical themes, with gold miners, semiconductors, and infrastructure ETFs accelerating sharply. Defensive and yield-oriented products continued to lose momentum, deepening the divide between innovation-driven strength and traditional defensive weakness. We observed persistent resilience in commodity and cyclical exposures, while fragility remains concentrated in defensive and income strategies across our universe.

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‍^‍‍‍Happy Long-Term Investing!

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