ETF Transactions by U.S. Insurers in Q3 2021

Combining ESG and Islamic Finance Principles in an Index Framework

U.S. Equities Market Attributes November 2021

S&P Kensho New Economies Commentary: Q3 2021

S&P Target Date Scorecard Mid-Year 2021

ETF Transactions by U.S. Insurers in Q3 2021

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Raghu Ramachandran

Head of Insurance Asset Channel


Over the first three quarters of 2021, U.S. insurance companies traded almost USD 48 billion in ETFs.  The amount traded increased in each quarter.  After a sluggish second quarter, insurance companies resumed buying Fixed Income ETFs in the third quarter.  However, they continued to exit Equity ETFs.  Over the three quarters, insurance companies added USD 2.6 billion into ETFs.  In this report, we analyze these trades and explore the differences of insurance ETF usage over the first three quarters of 2021.


In the third quarter, insurance companies traded USD 16.5 billion in ETFs; this was 56% larger than the USD 10.6 billion they traded in the third quarter of 2020. However, trading was 3% lower YTD than in 2020, mostly because of the unusually large volume of trading in the first quarter of 2020.

As seen before, trading volume was not uniform throughout the Q3 2021 period. Trading by insurance companies was fairly subdued in the beginning of the third quarter but picked up toward the end (see Exhibit 1).

While overall trading was split evenly between Fixed Income and Equity, companies exhibited significantly different behaviors in each quarter. They traded evenly in the first quarter, more Fixed Income in the second, and more Equity in the third (see Exhibit 2).

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Combining ESG and Islamic Finance Principles in an Index Framework

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Michael Orzano

Senior Director, Global Equity Indices

Islamic finance and environmental, social, and governance (ESG) investing are complementary in many ways and hold a number of shared principles. Though broader in nature, ESG strategies often exclude companies involved in such businesses as alcohol, tobacco and gambling that are considered Haram in the Muslim world. However, there are also fundamental Shariah compliance exclusions, such as conventional financial services and pork, that are not considered problematic in general ESG strategies.

This article will explore the similarities and differences of broad-based ESG and Islamic indexing through a real-world example of an innovative index that combines both frameworks — the S&P Global 1200 ESG Shariah Index. This index also allows us to examine the impact of applying ESG and Shariah screens on the general investment characteristics of the S&P Global 1200 — a conventional global equity benchmark.

Understanding ESG and Shariah screening criteria

Because Islamic and ESG investors seek to avoid companies involved in certain activities, it is necessary to apply various quantitative screens to identify and exclude companies violating specific ESG or Shariah compliance criteria. While these involve a number of overlapping themes, there are also some distinct areas that only fall in the Islamic or ESG space. Figure 1 provides a general overview of typical screens relevant for ESG and Islamic indices.

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U.S. Equities Market Attributes November 2021

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Howard Silverblatt

Senior Index Analyst, Product Management


U.S. Equities Market Attributes November 2021


Another COVID-19 variant emerged, as was expected, and the World Health Organization named it Omicron.  It will take at least another week to determine any of the infection or health hazards of Omicron, but the initial data on the variant has it containing approximately 50 mutations, with 30 spike proteins (which allow it to attach to human cells).  Even before Omicron emerged, infections were on the rise (especially in Europe), as were restrictions, and many countries have now added travel restrictions to slow the potential spread of Omicron.  As for the market’s reaction, it was strong, but not significant.  In the U.S., the S&P 500 declined 2.27% when the news was released during Black Friday’s shortened holiday session (Nov. 26, 2021), the third worst day of the year (646th worst since 1928), which left the S&P 500 2.34% off its Nov. 18, 2021, closing high (its 66th of the year, second only to 1995’s 77).  While the impact of the variant was not known, the Street took an optimistic view (buy on the dip), not seeing (or wanting to see) a return to lockdowns, as it recouped 1.32% the next day.  Then on the following day, Tuesday (Nov. 30, 2021) came Powell’s disallowance of elevated inflation as transitory, as tapering was seen as happening more quickly (with the first rate hike earlier than expected; no more debate on one or two increases in 2022).  As a result, the S&P 500 declined 1.90% for the day, turning the month negative at -0.83%, but only 2.92% away from a new closing high and up 21.59% YTD (after 16.26% in 2020)

As for the part of the month not as affected by Omicron COVID-19 news (the first 18 of the 21 trading days), the S&P 500 posted seven new closing highs, and both earnings and sales (as well as buybacks and dividends) appeared to set a quarterly record.  Consumers continued to be the backbone, as pre-holiday shopping increased, spurred on by supply concerns.  Initial estimates for the start of the actual holiday season (Black Friday) showed an estimated 48% increase over the depressed 2020 period as customers returned to the stores, but it was still 28% shy of the 2019 level, as Americans spent an estimated USD 8.9 billion (margins are expected to be much higher).  As for my indicator, my wife and daughter ventured out for their 17th Black Friday expedition (this year starting in SoHo, then making their way up to Midtown), as they reported banners were large, but sales were few, and some limited inventories had them texting me to make a run to Hudson Yards for a jacket (it’s not my area, but that shopping center was not crowded at all, and the jacket had a minor 10% discount; there were only two in stock).  Cyber Monday added (disappointingly) to the spree, but U.S. shoppers have been on cyber for most of the pandemic.

At this point, COVID-19 does not appear to be the biggest long-term Street fear, although it could have the largest impact if the new (or next) variant turns out to be worse than expected.  The honor of biggest Street fear goes to inflation, which continues to be fed by supply shortages, labor costs, worker shortages, and consumers, who have not pulled back (high demand).  The shorter-term fear, however, is the budget, which is due Dec. 3, 2021 (which some feel will be given another band-aid), and the debt (which should meet its limit in the first half of December), as many on the Street still look for a Santa Claus rally.  Given the inflows and optimism, far be it for me to say “bah humbug”—long live irrational exuberance (and may the trades be with you).

The S&P 500 closed at 4,567.00, down 0.83% (-0.69% with dividends) for November from last month’s 4,605.38, when it was up 6.91% (7.01%), and the prior month’s 4,307.54 close, when it was down 4.76% (-4.65%).  The three-month return was 0.98% (1.32%), the YTD return was 21.59% (23.18%), the one-year return was 26.10% (27.92%), and the index was up 34.87% (38.80%) from its pre-COVID-19 closing high on Feb. 19, 2020 (there have been 85 new closing highs since the pre-pandemic high).  The S&P 500 posted seven new closing highs in November (5 in October, 1 in September, 12 in August, 7 in July, 6 in June, 1 in May, 10 in April, and 5 in March, February, and January) and 66 YTD; it has posted new closing highs in every month since November 2020 (it missed October 2020 but had new closing highs in August and September 2020).  Since Biden won the Nov. 3, 2020, U.S. election, the S&P 500 has gained 35.55% (37.74%), with 64 closing highs since his inauguration (Jan. 20, 2021).  The bull market was up 104.12% (109.64%) from the low on March 23, 2020.  The index closed the month 2.92% off its Nov.18, 2021, closing high (4,704.54).

The S&P 500 started November where it ended October, with more new closing highs (the last two days of October posted new closing highs; Oct 29-30, 2021).  November opened with a perfect week—all five days had a new closing high (Nov. 1-5, 2021; making it seven trading days in a row).  The index went on to post another the following Monday (Nov. 8, 2021; making it eight trading days in a row—it was the fifth such occurrence since 1928).  The index then defended its gains but continued on, setting another new closing high on Nov. 18, 2021, making it 66 new closing highs YTD (second only to the record 77 in 1995).  The last three trading days of the month (after the Thanksgiving Day holiday) posted 1% moves, as reaction to the Omicron variant produced a knee-jerk decline of 2.27%, while the next day rebounded 1.32%, but then Chair Powell’s testimony of higher inflation and more tapering led into a decline of 1.57% for the end of the month.

S&P Kensho New Economies Commentary: Q3 2021

Top 3 From Across the New Economies

Enterprise Collaboration (+5.3%)
The pandemic has been a major catalyst for adoption and improvement of enterprise collaboration tools. As lockdowns ease, more companies are embracing a hybrid workspace model going forward. This trend continues to benefit this subsector. Two companies focused on work management platforms, Asana and Atlassian, produced strong performances over the quarter. Asana made its publicly traded debut last autumn and has accumulated an impressive number of paying users. Atlassian has been a consistent double-digit-percentage grower for years and delivered stronger-than-expected quarterly results with its ongoing pivot to cloud.

Cyber Security (+0.5%)
Tailwinds from the ongoing digital transformation, favorable security backdrop, and remote work contributed to accelerated demand for next generation security. Palo Alto Networks, Fortinet, and Zscaler were the top three contributors this quarter. All three companies reported better-than-expected revenue. They are well positioned for the ongoing firewall spending cycles as well as the focus on Secure Access Service Edge-driven Next Generation Security spending (SASE-driven NGS spending).

Smart Borders (-1.6%)
Increasing tension across borders and a rise in terrorism are projected to drive the market growth of border technology for years to come. The biggest contributor this quarter was Embraer S.A., a Brazilian aerospace and defense company. Its stock price benefited from the rightsizing trend in executive jets suitable for regional travel.

Bottom 3 From Across the New Economies

Electric Vehicles (-16.9%)
Electric Vehicles faced a tough quarter, with only five securities generating positive returns in Q3. Tesla reverted its disappointing performance in the first half of 2021. However, concerns over the Chinese regulators clamping down on large technology companies spread to the three major Electric Vehicle manufacturers: Nio, Li Auto, and XPeng. Other headwinds in the sector include Workhorse’s loss of an over USD 6 billion contract from the USPS, and Nikola’s founder Trevor Milton being charged by prosecutors with making false statements to investors.

Digital Communities (-18.3%)
With the gradual reopening of the global economy and people returning to the office, Digital Communities posted a disappointing performance in Q3. The Chinese tightening regulatory environment toward tech companies further amplified the negative sentiment toward large Chinese online communities. iQiyi and Bilibili, two major Chinese video streaming websites, both saw their prices drop by over 40% in Q3. Skillz was down primarily due to the economic reopening, which gives people more options to spend their time and money instead of playing mobile games, as well as the company’s excessive spending on marketing with little topline contribution, which disappointed the investors.

Distributed Ledger (-19.7%)
The battle between regulation and the market took place in Distributed Ledger as well. The People’s Bank of China and other regulators said all crypto-related transactions were illegal and must be banned. The statement put strong pressure on cryptocurrencies and their related stocks such as Riot Blockchain and Ebang International. OneConnect Financial Technology is another victim of Chinese technology collapsing.

S&P Target Date Scorecard Mid-Year 2021

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Hamish Preston

Director, U.S. Equity Indices


  • The S&P Target Date® Scorecard provides performance comparisons and analytics covering the target date fund (TDF) universe.
  • The S&P Target Date Index Series offers representative benchmarks for TDFs. The series is investable, comprises consensus-derived asset allocation weights, and its composition is known in advance of evaluation periods.
  • After recovering all of their COVID-19-related losses in 2020, continued optimism over the health of the U.S. economy helped U.S. equities to continue their upward trajectory in the first half of 2021.
  • Economic reopenings offered a particular boost to smaller companies, which are typically more domestically focused in their revenue exposures. Indeed, small caps led the way over the 12-month period ending June 30, 2021; the S&P Small Cap 600® (up 67%) beat both the S&P MidCap 400® (up 53%) and the S&P 500® (up 41%).
  • Unsurprisingly, far-dated S&P Target Date Indices once again posted higher returns than their nearer-dated counterparts; the former were helped by their greater equity allocations.
Exhibit 1

  • But as we have highlighted before, nearer-dated S&P Target Date Indices outperformed over all time horizons on a risk-adjusted basis. The risk reduction from allocating more heavily to fixed income—a typically less volatile asset class compared with equities—more than compensated for the lower returns.
Exhibit 2
  • The relative returns of TDFs with fewer assets improved compared with our previous reports. Equal-weighted returns were higher than asset-weighted returns in five vintages over the one-year horizon and in seven vintages over the five-year period. However, the picture was little changed over the three-year horizon; asset-weighted returns were higher across the board.
  • S&P Dow Jones Indices also produces S&P Target Date Style Indices. The “To” style indices aim to reduce the impact of market drawdowns around the expected retirement date, while the “Through” style indices aim to mitigate longevity risk—the risk of outliving one’s assets in retirement. Hence, “Through” style indices have higher equity allocations than “To” indices.
  • “Through” style indices posted higher returns than their “To” counterparts, while “To” style indices posted lower volatilities. Overall, near-dated “To” style indices posted higher risk-adjusted returns than their “Through” counterparts. The opposite was true for far-dated style indices.

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