Chantal Marx
FNB ETN Quarterly Update - 2Q24
The second quarter of 2024 again saw decent gains among the FNB ETN's. The Quanto ETN's (without currency exposure) outperformed the Compo ETN's because of rand strength. The experience was similar over a one-year period, with rand strength supporting improved returns in the Quanto ETN's relative to the Compo ETN's.
In 2Q24, six of the FNB ETN's delivered negative returns in US dollars, being Berkshire Hathaway, Ford Motor, McDonalds, Paypal, Visa and the Clean Energy ETN. McDonalds has seen pressure on consumers impacting its business and the payment companies have seen enthusiasm wane as global growth has shown signs of further pressure. Clean Energy stocks continued to underperform following euphoric gains till the start of last year. The best performing ETNs were new ETN exposures Nvidia (on its AI exposure), Eli Lilly (on continued demand for its weight loss drugs) and Palo Alto (due to the persistent growing importance of cybersecurity). Apple and Alphabet also performed very well in the quarter.
The top performers over one year were Meta, Netflix and Alphabet. The worst performers were the Clean Energy ETN, Paypal and Tesla.
Looking ahead
For the next twelve months, we expect less lofty returns than for the last 12 months, mainly due to base effects. Consensus expects the underlying specific companies to underperform the broader market this year on an equally weighted basis (5% versus ~10%) with four stocks expected to outperform over the next 12 months on current estimates (PayPal, McDonalds, Visa, and Amazon), while the rest are expected to deliver market returns or to pull back near term.
