The Emles @Home ETF (LIV) seeks investment results that correspond, before fees and expenses, to the price and yield performance of the Emles Home Lifestyle Index, an index comprised of companies that substantially focus on, and could benefit from, the trend of increased and diverse home activities.
Performance summary of Q4 2020
Since the Fund’s inception on October 14, 2020, the Emles @Home ETF (LIV) has continued to rise gaining 3.6% as of December 31, 2020. This return compares unfavorably to an 8.0% return delivered by the S&P 500 Index over the same time period as U.S. markets finished a volatile year on a high note.
- Contributors: Allocations to securities in the movie & entertainment and interactive home entertainment sectors aided portfolio performance
- Detractors: Our allocation to a security in the application software sector detracted from results
- Outlook: We anticipate earnings for sectors aligned to secular “at-home” trends to continue experiencing healthy demand. Movie & entertainment and semiconductors sectors represent the top exposures within the Fund. The apparel, accessories & luxury sector is the largest underweight, followed by integrated telecommunications
Quarter in review
- The Fund underperformed the benchmark, the S&P 500 Index, from inception on October 14, 2020, to quarter-end on December 31, 2020.
- A position in The Walt Disney Company (5.6% portfolio weighting) was the top contributor as investors rewarded the company for the continued strong growth of its streaming service, Disney+. Disney forecasted 230-260M subscriptions in its direct-to-consumer offering by 2024, representing faster growth than even the highest estimate across Wall Street analysts.
- A position in Zoom Video Communications (2.4% portfolio weighting) was the largest detractor from performance, as investors are concerned that its demand was pulled-forward due to the COVID-19 pandemic.
We believe that continued government intervention and a gradual reopening will further support U.S. equity markets in 2021. With strong economic recovery expected, we believe corporate earnings will experience a stellar year of growth. We anticipate earnings for sectors aligned to secular “at-home” trends, such as technology, e-commerce and communications, to continue experiencing healthy demand despite near-term headwinds of anti-trust concerns and cyclical rotation — or until vaccine distribution and economic recovery allows the world to “re-emerge.”
- The movies & entertainment (9.7% portfolio weighting) and semiconductors (8.5% portfolio weighting) remain the top sector weights, as we have conviction that the companies within these allocations have underappreciated secular growth characteristics.
- The education services (5.4% portfolio weighting) sector is an area we believe will continue to grow, as remote learning in its early innings of adoption.