ETF Heatmap
Birds-eye view of global financial markets through ETFs
Last updated
Birds-eye view of global financial markets through ETFs
Last updated
The overall organisation of the heatmap is consistent with our taxonomy. Asset classes are divided into equities / bonds / alternatives (commodities, real estate, etc.).
For reference, you can see the Returns tab (by pressing the Duration Returns button at the top). As you can see, the longer the time horizon, the better the performance of the tracking ETF relative to the index. That's because calculates returns using the ETF's adjusted share price. (The adjusted share price is a total return concept and can be thought of as the dividend yield scaled by).
The actual return of the representative index and the representative ETFs that track it.
This 3X3 format is a common "style breakdown box" used by fund analysts such as Morningstar.
From top to bottom, the categories are large-cap, mid-cap and small-cap, based on the market capitalisation size of the holdings. Large-cap ETFs are those with large market capitalisations, while small-cap ETFs are those with relatively small market capitalisations. The size distinction is usually made by ranking the market capitalisation, which can vary slightly depending on the index.
In this case, it's left and right, value and growth. On the left is the value sector. The right is the growth sector and the middle is a mix. The stock market has traditionally divided the attributes, or styles, of stocks into two broad categories: growth and value. "Value stocks typically include stocks that trade below the average P/E and P/B for their category. For example, in the case of large-cap value, the stocks in a large-cap index are ranked by P/E and P/B and then allocated on a market-cap-weighted basis, taking into account shares outstanding.
For growth stocks, we generally include companies with high sales growth, high earnings growth and so on, in that order.
You can understand the sentiment and cycles of the overall market by looking at the flow of industries. The 10 sectors are based on GICS. The Global Industry Classification Standard (GICS) is the standard used in the United States for classifying industries.
Energy
Energy-related industries, such as oil and gas and green energy companies
Materials
Basic and composite materials companies, including chemicals, steel, building materials, glass, paper, etc.
Industrials
Capital goods and logistics companies. Aerospace and defence, electrical equipment and machinery, construction and engineering, environmental, facilities, office, security services, transport logistics services, etc.
Consumer Discretionary
Consumer discretionary, automotive and parts, household durables, leisure products, textiles and apparel, distributors and retailers, hotels and restaurants, etc.
Consumer Staples
Less cyclical consumer companies. Producers of household and personal care products, distributors of consumer staples, and producers and retailers of food, beverages and tobacco.
Health Care
All healthcare-related companies. Manufacturers and distributors of healthcare services, medical equipment and supplies, Companies involved in the research, development, production and marketing of pharmaceutical and biotechnology products.
Financials
All financial companies. Companies involved in banking, financial services, consumer finance, capital markets and insurance.
Information Technology
IT-related software and hardware companies. Companies engaged in software and information technology services/hardware manufacturing, distribution, including telecommunications equipment, mobile phones, computers and peripherals, and electronic equipment manufacturing/manufacturing and distribution of semiconductors and related equipment and materials.
Communication Services
Communication services, content and information providers. E-gaming companies, communication services, media and entertainment companies.
Utilities Sector
Utilities such as electricity, gas and water companies. Includes independent power producers and energy trading companies related to renewable energy.
Real Estate
Companies involved in property development and operation, including those providing property-related services and equity real estate investment trusts (REITs).
To the right of the representative ETFs for each industry is a highly representative list of ETFs that are either sub-sectors (industry groups or industries) or grouped into themes within the industry.
Looking at the fixed income category, you will notice that it is organised in a matrix format, with the types of bonds on the left and the maturity of the bonds on the right.
US Treasuries represent all bonds in the United States. US Treasuries are the most popular US Treasury-related ETFs.
US corporate bonds are literally a collection of investment-grade corporate bonds issued by US companies.
US inflation-linked bonds are bonds issued by the US government with interest rates linked to inflation.
High yield refers to high-yield corporate bonds, which are also available in non-investment grade. In other words, the credit risk is slightly higher.
MBS is an ETF that invests in bonds backed by mortgages.
Bond ETFs do not have a well-known and uniform benchmark index (tracker) like equities, but often track an index published by Bloomberg or the Intercontinental Exchange (ICE). The most important thing to remember when investing in bonds is maturity. On the right you can see that it is categorised as mixed, short term, medium term and long term. (There are also different types of bonds, such as discount bonds and coupon bonds, so we mainly use duration, which is the maturity that takes the coupon into account. This is explained in great detail if you do a search on bond fundamentals, so I won't go into it here).
Alternative investment ETFs are broadly divided into commodities and real estate, and commodities are further divided into energy, metals and agricultural commodities.
There may be many other commodities, but these are the ones that are standardised within an industry and the most heavily traded, which is what makes them investable. Alternative ETFs tend to have higher fees across the board, depending on whether the underlying commodity is a futures contract or an exchange traded fund.
We don't currently provide data on ETNs because they are debt securities issued by investment firms based on the underlying assets. Although the probability is very low, given the recent defaults of some global securities firms, we believe it is somewhat safer to invest in ETFs rather than ETNs, preferably if they are the same type of benchmark.
Recently, commodity-related ETFs have started to withhold tax from foreigners investing in PTP (Publicly Traded Partnership) shares, such as DBC, the leading commodity ETF, and we offer an alternative ETF, PDBC. (However, this tax regime is limited, so we are constantly monitoring further changes).
The number of property ETFs has grown in recent years, so there are very few outdated ones. Also, even if there is a market-representative index, it is difficult to construct a portfolio that tracks it, so it is not easy to create a property ETF. However, as products such as REITs and mortgages have diversified in recent years, ETFs based on them have been launched.
So there you have it, an explanation of each item on the heatmap, linked to our typology.
If you're familiar with it, you'll find it useful for finding and categorising ETFs, such as the ETF screener.
