Category: Periodic commentary

ETFMathGuy provides periodic commentary on risks and opportunities of investing in Exchange Traded Funds (ETFs), including recent market trends.

ETFMathGuy is a subscription based education service providing commission-free ETF optimal portfolios. We offer individual investors insights into building optimal portfolios.  Each month, we analyze hundreds of commission-free ETFs available to individual investors.  Then, we build optimal portfolios based on a variety of risk tolerances and current market conditions using a quantitative methodology.

We hope these periodic commentaries on ETFs help you improve your investment knowledge!

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Gold and Silver as Safe Haven? Volatility is Back

Investors often turn to gold and silver in times of macroeconomic uncertainty. Market participants often view these precious metals as traditional “safe haven” assets that preserve value when equities falter or inflation worries spike. In early 2026, this narrative took center stage. Both metals surged to multi-year highs amid geopolitical tensions, a soft U.S. dollar, and rising inflation expectations. However, the last week of January 2026 brought a stark reminder that even safe havens can experience intense volatility. In this post, we view this risk through the lens of liquid instruments in exchange-traded funds (ETFs).

📊 Glimpse at GLD & SLV Performance

GLD and SLV are two ETFs that track the spot price performance of gold and silver. SPDR Gold Shares (GLD) is the largest gold ETF. It is widely used to proxy gold price exposure. Similarly, iShares Silver Trust (SLV) is the premier silver ETF, reflecting broader investor positioning in silver. Over the week ending January 31, both ETFs experienced sharp swings. GLD dipped from recent highs, while SLV posted even larger percentage moves. This dip reflected silver’s historically higher volatility and tendency to amplify market sentiment shifts.

📉 Late-January ETF Safe Haven Volatility

Data from the week of January 12–18 shows how sharply these assets have been moving.

  • GLD (Gold) demonstrated an intra-week range of about ~2.35 %. Its annualized volatility of ~13 % over this week indicated relatively contained swings for gold historically—even as spot prices rose.
  • SLV (Silver) exhibited an intra-week range above ~11.5%. Its annualized volatility above ~75 % over this week underscored silver’s tendency for much larger price oscillations.

In other words, silver’s volatility, especially in extreme market episodes, can be much more than that of gold, reinforcing the idea that SLV carries greater short-term risk for traders and investors alike.

📌 Historical Risk Metrics for a Safe Haven

Longer-term risk figures support this short-term pattern.

Gold and Silver as a safe haven? Volatility is back.
Gold, Silver, U.S. Stocks, and Aggregate Bond ETF performance over the last 12 months, as of January 30, 2026. Source: https://www.etfreplay.com/charts
  • Silver ETF SLV has historically shown higher volatility compared with gold ETFs, meaning silver prices tend to swing harder and more often than gold when markets shift sentiment or macro drivers change.
  • Gold ETF GLD’s lower volatility has often made it a preferred choice for risk-averse investors seeking stability.

🧠 What This Means for Investors

The late-January sell-offs and reversals — where precious metals retreated significantly after touching record highs — illustrate that safe-haven status doesn’t equate to smooth performance in every market environment. Sharp reversals driven by shifts in monetary policy expectations or risk appetite can quickly compress profits and widen losses, particularly for more volatile assets like silver.

In short, gold and silver may still play roles as portfolio diversifiers or long-term hedges — but recent prices in GLD and SLV remind us that volatility is very real, and risk metrics matter when evaluating these in a diversified portfolio.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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Returns in 2025 for U.S. Stock ETFs: A Strong Year

The U.S. stock market delivered solid returns in 2025. Investors benefited from artificial intelligence enthusiasm, late-year Federal Reserve rate cuts, and strong earnings across several key industries. According to The Wall Street Journal, U.S. stock funds and ETFs returned an average of about 14.6% for the year. Consequently, 2025 marked a third consecutive year of double-digit gains. As we discussed previously, the market performed well despite heightened volatility early in the year,

At the broad market level, the S&P 500 (ticker: IVV) posted a robust 17.8% total return for the year. Large-cap technology and cyclical shares contributed most significantly, according to ETFReplay.com and Yahoo Finance. The Nasdaq-100 (ticker: QQQ) outperformed the broader market. Mega-cap tech names continued to anchor market breadth late into the year as optimism around AI deployment persisted.

Total Returns in 2025 for the S&P 500, Nasdaq, and other U.S. Sectors ETFs. Source: ETFReplay.com
Total Returns in 2025 for the S&P 500, Nasdaq, and other U.S. sector ETFs. Source: ETFReplay.com

Sector Leaders and Laggards

Sector ETF returns in 2025 highlighted both rotation and concentrated leadership:

  • Communication Services (XTL) was the top performer, benefiting from investments in data centers and cloud computing.
  • Technology (XLK) was among the top performers, with total return growth powered by demand for semiconductors, AI infrastructure, and software. Many XLK holdings significantly outpaced the broader market over multiple time horizons.
  • Industrials (XLI) also delivered strong returns as economic activity and capital investment improved, reflecting strength in industrial and transportation names.
  • Financials (XLF) and Healthcare (XLV) logged solid gains, as bank profitability rebounded and health care stocks rallied on earnings beats and defensive positioning.
  • Utilities (XLU) and Consumer Staples (XLP), traditionally defensive sectors, generated positive but more modest returns, with staples lagging as investors favored growth-oriented ETFs.
  • Materials (XLB) and Energy (XLE) posted marginal returns, supported by commodity demand and stable energy prices, but lacked the momentum seen in tech and cyclical sectors.
  • Consumer Discretionary (XLY) saw mixed performance, often tied to retail sentiment and macroeconomic shifts throughout the year.

Market Themes from Returns in 2025

While AI-linked ETFs — including in XLK and QQQ — powered much of the returns in 2025, concerns about valuation and potential “AI bubble” dynamics persisted. Broad macro swings — from tariff-driven drawdowns to four rate cuts by the Federal Reserve — underscored a year of notable volatility even as the market finished strong.

In summary, 2025 rewarded long-term investors with healthy total returns but also demonstrated the importance of sector diversification — as illustrated by the contrasting performance among ETFs like XLK, XLI, XLF, and defensive plays like XLU and XLP.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs

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The Great Social Security Debate: Claim Early or Wait for a Larger Payoff?

The conventional “gold standard” advice for retirement is simple: delay claiming Social Security until age 70. Why? Because for every year you wait past your full retirement age, your benefit grows by 8% annually. Consequently, delaying provides the maximum possible inflation-protected life annuity. This decision can be a powerful hedge against longevity risk. So, it can create a larger safety net should you or a spouse live into your 90s.

Despite this clear benefit, few delay until age 70. In fact, the vast majority of retirees claim their benefits early, often at the minimum age of 62. For many, the choice isn’t financial optimization but necessity. They are being pushed out of the workplace or simply feeling they cannot afford to wait. There are also several tax implications to this decision.

The Great Social Security Debate: Claim Early or Wait for a Larger Payoff?
The debate continues over when a retiree should begin to claim Social Security

Some Arguments for Claiming Social Security Early

For those with adequate savings, a growing school of thought challenges the wisdom of delaying. Critics argue that traditional advice overstates the value of future benefits by using unrealistically low discount rates (0% to 2%). For example, the opportunity cost of a retiree’s potential portfolio growth makes delaying less attractive.

Furthermore, early claiming mitigates several real-world risks:

  • Mortality Risk: Claiming early ensures you collect benefits, reducing the risk of dying before reaching the break-even age.
  • Sequence-of-Returns Risk: Drawing income from your portfolio to delay Social Security can amplify losses during a market downturn.
  • Flexibility: Social Security doesn’t offer lump sums for unexpected needs, meaning a preserved portfolio provides better spending optionality.
  • Behavioral: Retirees are often more willing to spend a guaranteed income stream. However, they may be reluctant to draw down a nest egg. So, early claiming may potentially solve the problem of underspending in the healthiest years of retirement.

A Personalized Decision

So, early claiming can be a rational choice, especially for those with health concerns or a limited nest egg. Ultimately, the best age is unique to you, and you may benefit from running some online calculators. The key is to assess your health, your need for early cash flow, and your portfolio’s size. We suggest you take this information and use an online calculator. For example, you can try Mike Piper’s Open Social Security or our Optimal Retirement Income Calculator.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs

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Globalization and International Stock ETFs

Globalization over the last several decades has increased the correlation between domestic and international stock ETF returns. In this post, we quantify how this relationship has recently changed, what may be contributing to this change, and what it means for ETF investors.

Correlation changing?

Correlation measures potential portfolio diversification benefits. A high correlation indicates that the prices of two assets move similarly to one another. For diversification benefits, portfolios should contain assets that do not exhibit high correlation with each other. We previously discussed the correlation between the S&P 500 and a wide variety of asset classes. Below, we show that there appears to be a recent downward trend in correlation between U.S. and international stocks.

90-day Correlation of Total Returns of International Stocks (VEA) against the S&P 500. Downward trending suggests a reduction in globalization.
90-day Correlation of Total Returns of International Stocks (VEA) against the S&P 500

Here, the short-term correlation between the total returns of the iShares Core S&P 500 ETF (ticker: IVV) and the Vanguard FTSE Developed Markets ETF (ticker: VEA) hit a recent low from its longer-term average. This reduction in correlation suggests that U.S. and international stock markets are moving more independently than in the past. Thus, there is the potential to offer enhanced diversification benefits for investors.

Tariffs and Globalization

The most likely explanation of lower correlations is the news of significant tariffs on imported goods to the U.S., and perhaps more broadly, due to different central bank policies and geopolitical factors. This new trend appears to be reversing much of the investments in globalization that led to a high correlation between domestic and international stock markets. However, since most of these investments take some time to go into effect, we shouldn’t expect a rapid shift in correlations between domestic and international stock markets. The longer and more significant the tariffs are, the greater the chance that globalization will decrease. For ETF investors, enhanced diversification from international stock market investments may offer greater risk reduction than it did previously.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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Bond ETFs and Money Market Funds

One of our favorite WSJ writers this week provided a critical analysis of money market funds, which many individual investors use to hold their cash. In this post, we discuss the similarities and differences between money market funds and ETFs that invest in treasury bills.

The purpose of money market funds

One purpose of a money market fund in a taxable brokerage account is to provide a place for cash to stay after it is transferred in from an outside source, like a bank checking or savings account. It also serves as a holding place for securities after they are sold. But some investors are also using them as a safe haven to avoid sharp changes in the stock market. Unfortunately, these funds tend to charge relatively high fees compared to ETFs that provide a similar safe haven. According to this WSJ article, the average money market fund charges 0.51% in fees and yields 3.89%.

But you’re probably getting ripped off on your money-market funds—and it’s one of the biggest heists on Wall Street.

Jason Zweig, WSJ columnist, May 2, 2025

Brokerages also use money market funds as a “sweep” account for investors. So, investors can benefit from this feature by being able to write checks against these balances. However, the cost and convenience of assets in these funds, which often invest in short-term U.S. treasury bills, means investor returns underperform when compared to investing in an ETF with a similar level of risk.

Very low risk ETFs

Bond ETFs still have risks, depending on the type of bonds included in them. But some bond ETFs can provide investors with direct access to short-term treasury bills, which some would refer to as a good proxy for a risk-free rate. The list below shows several of these types of ETFs, along with their expense ratio and assets under management.

ETFTickerExpenseAssets Under Management
iShares 0-3 Month Treasury Bond ETFSGOV0.09%$45 B
SPDR Bloomberg 1-3 Month T-Bill ETFBIL0.14%$47 B
iShares Short Treasury Bond ETFSHV0.15%$22 B
Three large ETFs investing in short-term U.S. treasury bills

Although the expense ratios are all quite similar, it is clear that the return of SGOV is likely to be the highest. The figure below shows this is true and that all of these ETFs had a slow and steady investment return over the last three years.

Total returns for the last three years of short-term U.S. treasury bill ETFs were higher than the average money market fund.
Total returns for the last three years of short-term U.S. treasury bill ETFs

So, investors willing to take the time to invest their money market funds into one of these ETFs can often earn very close to the current U.S. treasury bills yield, which in the last year was about 4.8%. Additionally, these ETF returns may be exempt from state taxes, unlike money market funds. Investors not needing the convenience of money market funds may wish to consider these ETFs as an alternative safe haven.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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2024 Year-end returns of broad index and sector ETFs

With 2024 officially over, it is a good time to reflect on 2024 equity ETF returns. Like our mid-year post from 2024, this post highlights the top and bottom-performing ETFs by sector. We’ve added the Nasdaq-100 ETF (ticker: QQQ) 2024 returns for comparison. We also discuss what themes likely contributed to this performance.

S&P 500 Sector Returns, S&P 500 and Nasdaq ETF total returns, 2024

Top and bottom-performing sector ETFs for 2024

As the chart above shows, communication services (ticker: XTL) was the top-performing sector ETF of 2024, with a nearly 35% return. This may be surprising, given it was the worst-performing sector ETF in the 1st half of 2024. It appears that this ETF’s exposure to artificial intelligence (AI) and data centers contributed significantly to its total return for 2024. The healthcare sector ETF (ticker: XLV) was the worst-performing sector of the S&P 500 index. Considered a more defensive sector, investors were not looking for this approach in 2024. However, lower prices in the healthcare sector, relative to other sectors in the S&P 500, may bode well for healthcare ETF investors in 2025.

The S&P 500 has another strong year in 2024

For ETF investors who selected the broad-based S&P 500 index (ticker: IVV), this was another strong year, with a total return of nearly 25%. The past two years have been the best returns for this broad-market index in the past 25 years. So, investors looking for a diversified equity ETF did well in 2023 and 2024 by investing in an S&P 500 index ETF.

S&P 500 Index performance since 1995. Source: WSJ.

2025 ETF Outlook

As we noted in previous outlooks at the start of the year, there is plenty of uncertainty going into 2025. With a new political party in the White House, and the Fed still considering the potential of future rate cuts, 2025 should be another challenging year for ETF investors.

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ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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The biggest ETF may be changing

The largest and oldest ETF is the SPDR S&P 500 ETF Trust (ticker: SPY), with $624 B in assets under management. However, two other S&P 500 ETFs are close behind. The Vanguard S&P 500 ETF (ticker: VOO) and iShares Core S&P 500 ETF (ticker: IVV) have $588 B and $582 B of assets under management. In this post, we discuss the likely change in the largest ETF, what may be contributing to it, and why it matters to investors.

In this post, we discuss the likely change in the largest ETF, what may be contributing to it, and why it matters to investors.
Photo by Markus Winkler on Pexels.com

The oldest ETF, SPY

The SPDR S&P 500 ETF Trust, commonly referred to as SPY, has been around the longest of any ETF. With an inception date of January 1993, SPY created an entirely new way to invest in a passive index that offered greater tax efficiency than mutual funds. As we wrote about a few years ago, the taxable gains between ETFs and mutual funds can be significant. This tax inefficiency makes no difference for Individual Retirement Accounts (IRAs). But for taxable account holders, significant tax drag is drawing investors into ETFs. Several mutual funds are converting to ETFs.

The two other S&P 500 index ETFs

ETFs from Vanguard and iShares also offer ETFs that track the S&P 500 index. This index is very popular with many investors as it diversifies across many equity sectors. But, because of its weighting by market capitalization, some companies hold more significant influence. Nevertheless, it remains a popular index for investors. And, with an expense ratio of 0.03%, these ETFs offer this exposure with very little cost. These expense ratios are in stark contrast to SPY, with its expense ratio of 0.09%. While still small, the expense ratio of SPY is 3X larger, helping VOO and IVV to grow faster than SPY.

Another driver of ETF growth

So, investors seem to be preferring lower expense ratio ETFs. VOO’s unique structure may also be contributing to its popularity. But, this benefit, which Vanguard patented, has expired in 2023. So, IVV and VOO may continue to grow at a similar rate. For individual investors, the small difference between the two ETF structures likely makes little difference in meeting their investment objectives.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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Business leaders are cautious

Business leaders and other corporate insiders aren’t as optimistic as others who are contributing to strong market returns for 2024. Also, according to InsiderSentiment.com, their index continues to track below the long-term average. So, this post examines other possible contributors to lower optimism among business leaders, like Warren Buffett, Jamie Dimon, and Jeff Bezos.

business leaders have low sentiment
Photo by energepic.com on Pexels.com

The fourth year of a presidential cycle

As we’ve written about previously, the four years of a presidential cycle can have very different market returns. So here, we’ve updated the table below from this previous article, and included the upper and lower 95% confidence limits.

Presidential YearAverage Return (%)95% Lower Limit (%)95% Upper Limit (%)
16.7-2.115.6
23.3-4.911.5
314.06.621.5
46.70.612.9
Average Returns of the S&P 500 from 1928 to 2024. Data Source: www.macrotrends.net

So far, with the S&P 500 up about 21% this year, we are well above the upper limit for the 4th year of the Biden administration. Consequently, this statistical analysis suggests markets may trend back to their long-term mean.

Other factors at play for investors and business leaders

Of course, there have been other factors influencing investors recently. For instance, the Federal Reserve recently reduced short-term interest rates by 0.5%. Also, the monthly jobs report was stronger than expected. Lastly, seasonal hiring appears to be picking up ahead of a potentially strong demand this holiday season. Whether these factors hold until the end of the year is uncertain. And, many expect the presidential election result may also impact future market performance, along with whether the port workers strike again in the early part of 2025. Thus, only time will tell how the market responds to these factors of uncertainty.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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2024 Mid-Year Review of Stock-Based ETFs

Welcome to our 2024 mid-year review of stock-based ETFs. Like our previous mid-year reviews, we will discuss here how various sectors of the market performed in the last six months using ETFs. Consequently, we will show a significant performance difference between various sectors of the S&P 500.

Review of the 11 Sectors of the S&P 500

To review, recall that there are 11 sectors in the S&P 500 as shown below. So, while some of these sectors have several ETFs tracking them, we choose the ETFs in parentheses due to their long history in the markets.

  • Information Technology (XLK)
  • Health Care (XLV)
  • Financials (XLF)
  • Consumer Discretionary (XLY)
  • Communication Services (XTL)
  • Industrials (XLI)
  • Consumer Staples (XLP)
  • Energy (XLE)
  • Utilities (XLU)
  • Real Estate (IYR)
  • Materials (XLB)

Then, using this list and reinvesting dividends, we see that some sectors had total returns that did very well in the first half of 2024. However, a couple sectors, such as the Real Estate and Communication Services, lost value in the first six months of 2024.

2024 Mid-year review of S&P 500 sector ETFs. Total Returns. Source: https://www.etfreplay.com/charts.aspx
2024 Mid-year review of S&P 500 sector ETFs. Total Returns. Source: https://www.etfreplay.com/charts.aspx

Best ETF investment performers of 2024

As the chart above shows, the technology sector continues to outperform the broader index. As our favorite WSJ writer recently described, the three largest stocks in the S&P 500 (Microsoft, Apple, and Nvidia) contributed more than 20% of the total market value of the index. In fact, eight of the top ten stocks in the S&P 500 index are technology stocks. This outperformance still appears to be attributable to the substantial investor interest in artificial intelligence (AI) and how this interest is impacting other sectors, like utilities.

Outlook

While we won’t try to estimate where markets will go from here, it does seem reasonable that stock-picking to beat the S&P 500 will continue to be challenging. Thus, the high concentration of technology stocks in this index continues to propel the performance of this market cap weighted index. As a result, if the technology sector does falter, the diversification of this index may help reduce volatility.

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ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs
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AI and the S&P 500

Artificial intelligence (AI) continues to impact markets like the S&P 500 in 2024. If you are already invested in broad-based ETFs, you may be invested in AI, whether you realize it or not. In this post, we discuss how AI companies are influencing cap-weighted indices.

close up photo of monitor
Photo by energepic.com on Pexels.com

Fear of Missing Out

Jason Zweig at The Wall Street Journal recently wrote an article about one of the leading AI companies Nvidia. In his article, he noted how this company was now more than 4% of the S&P 500 index, thanks to its recent rise in share price.

And, other companies working in the AI space are also seeing very positive share price increases, like Microsoft. In fact, according to this page on ETF.com, Microsoft and Nvidia now account for about 11.5% of the S&P 500 index. This weighting of AI in the S&P 500 is due to the S&P 500 being a “cap-weighted” index.

A stock market index wherein each component is weighted relative to its total market capitalization

What is a Capitalization-Weighted Index? source: Corporate Finance Institute (CFI)

So, even if an investor thinks they may have “missed out”, they have not if they owned an S&P 500 ETF or some other cap-weighted index fund.

Other firms in the S&P 500

Because the S&P 500 is cap-weighted, the firms in this index become more (or less) significant as their market capitalization increases (or decreases). The image below shows the current top-10 holdings in the S&P 500 ETF (ticker: IVV). Note that over half of those in this list are tech firms that are at the forefront of AI. In fact, for investors in Apple, there may not be enough investment in AI.

Top 10 holdings in the S&P 500 ETF IVV. Source: etf.com
Top 10 holdings in the S&P 500 ETF IVV. Source: etf.com

ETF investor options to embrace or avoid AI

Hopefully, ETF investors realize that they may already have AI investments, if they are invested in one of the ETFs tracking the S&P 500, like VOO, IVV, or the oldest ETF SPY. Alternatively, ETF investors wishing to embrace AI more may seek tech-centric ETFs, like XLK. Or, by seeking dividend-paying stocks not seeking growth from AI, an ETF investor may seek funds like DVY or VTV. Investor preference for growth in the AI space will likely affect investments for many years to come.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs