(New York)

Increasingly, investing in tech companies means you need to go big or go home. What we mean is that large cap tech companies have been outperforming their smaller peers handily. The S&P 500 Information Technology Sector is up about 14% this year, much better than the index’s 3.7% overall gain, but the S&P 600 Information Technology Sector has only gained 9.9%. That means that the largest tech company are significantly outperforming their smaller peers.

FINSUM: This is not a surprise given the overall momentum the FAANGs have had over the last few years. However, given the worries over regulation, it is odd to see they have outperformed smaller rivals very recently.

(New York)

Retail has been stuck in a rut for some years. Big retailers have been closing stores left and right, so unless you are a contrarian, it is a tough time to invest in the sector. However, there is an ETF that might offer the best way to play the current environment. That ETF is called Amplify Online Retail (IBUY). IBUY has returned just over 15% this year, and tracks an index of companies that make at least 70% of their revenue from online or virtual sales. Three quarters of its holdings are in the US. Only about 10% of retail sales happen online in the US, but that is expected to double over the next five years.

FINSUM: If you are a believer in ecommerce’s ability to disrupt the predominant retail model and make profit, then this seems like a good way to play the sector.

(New York)

Small cap stocks have done well this year, and many are growing more interested in the area following underperformance in the last few years. With that in mind, here are some picks from a top global small caps fund manager. The first thing to know is that international small caps are one of the few areas where active management adds value because many companies are poorly covered by analysts. The other thing to know is that at small caps the CEO really makes a difference in a way that is impossible at much larger organizations. The manager picks shares like Japan’s Horiba, or ABC-MART, or Britain’s Electrocomponents.

FINSUM: Picking international small caps is definitely an area where management needs to be outsourced to a specialist, and to be honest, this fund’s (Vanguard FTSE All-World ex-US Small-Cap) picks and approach were to us impressive.

(New York)

All the press is on the growth of ETFs, but today some surprise data has come out—mutual fund inflows are outpacing ETFs this year, at least according to Pershing. So far this year mutual funds on Pershing’s platform have seen about $8 bn of inflows, while ETFs have seen just over $6 bn. The explanation for the trend, according to BNY Mellon Pershing is that “As advisors look to diversify their investment strategies to actively manage against emerging risks in the market, we are starting to see mutual fund inflows close the gap with ETFs”.

FINSUM: Active management and once-a-day liquidity do seem to give mutual funds an advantage in the risk avoidance department.

(New York)

Investors hang onto your hats, a big fixed income rout might be coming. While it was easy to write Italy’s big bond losses off to its recent political crisis, the Wall Street Journal is arguing that all risky bonds may be in for a reckoning. There are a couple reasons. One is that just as in Italy’s two-year bond, many fixed income securities may hit a “double bottom”, which could lead to serious losses. But more fundamentally, many investors are now starting to view bonds higher up the quality spectrum more favorably, which means the market may suffer a significant “risk-off” period. Global high-yield bonds are down almost 4% already this year.

FINSUM: Our bigger worry than the points mentioned here is that as safer bonds start to get better yields from rising rates, there is less and less incentive to buy junk. That is a major change from the paradigm of the last few years.