Stay in the Know

Todd Sohn

ETF Strategist

Jim Martin

National Accounts & Advisory Sales

(704) 995-3655

jmartin@strategasasset.com

Sector Flows Contrast, Small-Caps, And Derivatives Growth

12/03/2025

❚❚

In this week’s ETF & Markets video ETF Strategist Todd Sohn discusses the contrast between sector flows vs. broader equity ETF flows, how time frame matters for small-caps and diversification and finally, the growth of derivatives within ETFs and the transition from simple to complex.

Definitions:

ETFs (Exchange-Traded Funds) - Investment funds that trade on stock exchanges and hold a diversified portfolio of assets like stocks, bonds, or commodities
S&P 500 Index (SPX) – The S&P 500 is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the U.S
Equity ETF - An equity ETF (Exchange-Traded Fund) is a fund that trades on a stock exchange and invests primarily in stocks
Cyclical - Stocks or sectors whose performance is closely tied to the overall economy. They tend to do well during economic expansions and poorly during recessions
Defensive -Stocks or sectors that remain relatively stable regardless of economic conditions. They provide essential goods or services that people need even in downturns
Small-Cap ETF - Small-cap ETFs typically track a basket of publicly traded companies with market capitalizations between ~$250 million and $2 billion
Option Income - Option income refers to a strategy where investors generate additional income by selling options (usually call or put options) on securities they own or wish to own
Leverage - Leverage is the use of borrowed funds or financial instruments (like derivatives) to increase the potential return on an investment. It amplifies both gains and losses
Commodity - A commodity is a basic raw material or primary agricultural product that can be bought and sold, often standardized and interchangeable
FX Hedging (Foreign Exchange Hedging) - FX hedging is the practice of reducing or eliminating the risk of currency fluctuations in international transactions or investments
Managed Futures - Managed futures are professionally managed investment accounts that trade futures contracts across asset classes (commodities, currencies, interest rates, equity indices)

This communication was prepared by Strategas (“we,” “us,” or “our”), a brand that offers investment advisory services through Strategas Asset Management, LLC, an SEC Registered Investment Adviser, and provides research to institutional investors through Strategas Securities, LLC, a broker-dealer and FINRA member firm and an SEC Registered Investment Adviser. Information regarding market or economic trends, or the factors influencing historical or future performance, reflects the opinions of management as of the date of this communication, and are subject to change. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.

Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.

The ETFs described herein are referenced solely for illustrative purposes and should not be construed as an investment recommendation. An investment in exchange traded funds involves risk, including the possible loss of principal. For important disclosures and risks relating to each ETF referenced herein, see each respective funds’ prospectus or contact your financial professional.