Proper waste management has been largely ignored by newly emerged economies. Legislation in advanced economies has necessitated the creation of a waste management industry. The Market Vectors ETF contains top-tier companies as well as very specialized waste management companies. Over the past twenty years or so, many nations discovered that socialist economic management, although noble in concept, was impractical in reality. Nations such as China, India, Russia, Eastern Europe and many South American nations pursued and adopted “free market principles” with great success. Literally millions upon millions have risen out of poverty and have attained a better standard of living. However, as so often happens in emerging markets, environmental sustainability took a back seat to economic development. The rapid industrial expansion may well have created a global “climate change”. It certainly has created dangerous levels of smog and air pollution in many of the world’s most famous cities. Several of the world’s great rivers have become polluted and nearly devoid of life. One critical problem that has hardly been addressed is the various kinds of solid waste; everything from industrial waste down to the trash generated, by each of us, every day. Van Eck Global offers investors a way to benefit from a niche market through its Market Vectors ETF Environmental Services ETF (NYSEARCA: EVX ) . The fund tracks the performance of the NYSE Arca Environmental Services Index (AXENV) : a modified equal dollar-weighted index intended to give investors exposure to the environmental services sector. A word of caution: This is a very thinly traded specialized fund so it may not be a suitable holding for all investors. However, it does contain well-known, well-established, dividend-paying companies. Hence, the questions are whether it’s worth holding the fund, or simply selecting individual companies. Since there are only 23 companies in the fund as of the first week of August 2015, it would be best to break the holdings down into their respective sectors and identify both strong and weak points. First, the fund is comprised almost entirely of US-based companies, 96.4%, and also a few Canadian holdings, 3.6%. This is an important point. Both governments have long established legislation on environmental issues, including the proper, safe and sustainable disposal of industrial and residential waste, for one example, the Ocean Dumping Ban Act of 1988 . Further, legislation is far from complete. Individual US states have their own requirements. The point being that there is a demand for the management of waste necessitated by laws and regulations. Further, laws, regulations, certifications, permits, specialized equipments and procedures are required to collect, transport and dispose of medical waste. A quick examination of the top ten holdings demonstrates the general waste management industry as well as the lesser-known specialized waste management companies. In fact, potential investors might even find the services offered as unique, interesting, and without a doubt critically necessary. Company and Symbol Percentage of Fund’s Holdings Recent TTM P/E Recent EPS Recent Dividend Yield Industry Specialization What They Do Waste Management (NYSE: WM ) 11.09% 23.36 $2.17 3.03% Industrial Provides waste management through local subsidiaries. Collects, transports, recycles: paper, glass, plastics, metal, electronics. Owns landfill and landfill gas-to-energy facilities. Republic Services (NYSE: RSG ) 10.99% 25.23 1.69 2.82% Industrial Similar to Waste Management, collecting, transporting and recycling non-hazardous residential, municipal and industrial solid waste. Waste Connections (NYSE: WCN ) 10.61% 26.89 1.85 1.05% Industrial and Minerals Diversified. Managing, collecting, transferring, disposing and recycling of municipal and residential wastes. Recycles paper, glass, metals and compostable waste, as well as non-hazardous natural resource exploration wastes. Stericycle (NASDAQ: SRCL ) 10.70% 40.91 3.49 0.00% Healthcare Services Provides consulting and regulated compliant solutions for healthcare and commercial businesses. Subsidiaries in the Americas, Europe, and the Pacific. Collections include “sharps”, pharma, blood, dental, used safety products and veterinary waste. Steris Corp. (NYSE: STE ) 3.88% 29.92 2.25 1.49% Healthcare Services Medical sterilization equipment and services. Disinfection systems, surgical tables, OR storage, scrub sinks; OR and GI procedure accessories; patient tracking; cleansing products. Some brand names: Amsco, Hamo, Cmax, Reliance and Harmony Tetra (NASDAQ: TTEK ) 3.77% 17.57 1.50 1.22% Materials and Energy Engineering and consulting services; water management and infrastructure, oil sands, geotechnical and Arctic engineering services. Operates in Canada as well as the US. Cantel Medical Corp. (NYSE: CMN ) 3.74% 49.40 1.09 0.19% Healthcare Services/Consumer Products Infection Prevention; GI equipment reprocessing, sterilants, detergents; disposable healthcare products; dialysis disinfection; biological packaging; and water purification. US, Canada and Puerto Rico. Progressive Waste Solutions (NYSE: BIN ) 3.69% 26.77 1.02 1.92% Industrial Municipal and residential waste management; landscape collection and recycling, recycling centers and landfill operations; portable toilets; waste audits and education/event services. Serves US, and Canada. ABM Industries (NYSE: ABM ) 3.68% 22.72 1.45 1.94% Industrial Provides integrated facilities solutions for commercial, government, institutions, hotel, airports, data centers, high-tech manufacturing. Commercial cleaning, maintenance and repair, HVAC maintenance, janitorial, security, parking management. US and Canada. US Ecology, Inc. (NASDAQ: ECOL ) 3.56% 35.22 1.38 1.48% Industrial/ Mineral Collection, transportation, treatment, disposal, recycling of hazardous, non-hazardous, and radioactive wastes. Chemical cleaning, decontamination, spill and emergency response. Operates in US and Canada. (Data from Van Eck and Reuters) Overall, 5 of all 21 holdings have a negative trailing twelve-month (TTM) EPS. The fund’s average EPS is positive at 0.96. The average TTM P/E is 25.5195 and the average dividend yield is 1.23%. The fund has a total of $15.6 million in total net assets. Its gross expense ratio is somewhat high at 0.92%, however, according to Van Eck, expenses for the fund are capped at 0.55% through January of 2016. As noted above, the fund is very thinly traded averaging 250 shares per day, over the past 30 days. The fund is currently trading at a slight premium to NAV of 0.03%. The share price was $62.51 as of the close on August 7, $0.03 over the NAV. The following table is a summary of the fund’s basic metrics: 1 Month 3 Months YTD 1 Year 3 Year 5 Year Since Inception 10/10/06 EVX -0.54 -1.1 -4.51 -2.32 9.82 8.67 6.45 EVX Shares -0.65 -1.55 -6.04 -4.37 9.67 8.57 6.41 AXENV Index -0.5 -1.01 -4.45 -2.16 10.29 9.20 6.99 (Data from Van Eck) Lastly, the fund pays a yearly dividend, as summarized in the table: (Data from Van Eck) A word or two needs to be said about a few of the holdings. For example, Newpark Resources (NYSE: NR ) , 2.01% of the holdings, is actually an oil and gas driller and only loosely connected to the management of resource waste management, per se. The company emphasizes its corporate responsibility to the environment as a provider of sustainable and ecologically-friendly drilling services in the industry. Needless to say, the company has been affected recently by overproduction in the oil and gas industry. Tenneco (NYSE: TEN ) , 3.00%, manufactures catalytic converters and diesel oxidation catalysts for combustion engines, thus indirectly managing carbon emission waste. Schnitzer Steel (NASDAQ: SCHN ) , 1.80%, specializes in large-scale metals shredding, blending and recycling to customer specifications, thus reducing landfill waste. Layne Christensen (NASDAQ: LAYN ), 1.86%, specializes in water management, drilling and construction. Darling Ingredients (NYSE: DAR ) , 3.03%, manufactures sustainable natural ingredients for edible and inedible bio-nutrients. These examples demonstrate that not every holding is a “pure-play”, which goes “out into the field”. They and others in the fund recycle or repurpose what would otherwise be an unusable waste product. However, all of the companies do relate to the central theme of hazardous and non-hazardous waste management: transportation, recycling, repurposing, filtration, disposal and also environmental consulting services. Since the sector has so few participants, it’s reasonable to consider the potential of competition and then pricing power. It’s reasonable, but not likely as EPA regulations require licensing, certification, inspection and needless to say accountability if something should go wrong. Thus, it would be difficult, expensive and time consuming for new entrants to establish themselves in this sector. On the other hand, an outright purchase of an established specialized waste management company would be far simpler. Recent headline-making events such as oil drilling accidents, freight train derailments causing chemical spills and fires requiring the evacuations of entire towns, coal wastewater ponds leaking into the water table, difficult or untreatable hospital infections, salmonella bacterial contamination in food production, contaminated HVAC cooling towers causing the often fatal Legionnaires’ disease, all indicate the growing need to fill a large niche for private sector investment. The Van Eck Market Vectors ETF is one of the few funds which specialize in environmental service. The companies in this fund are mostly profitable to the point of paying dividends. Once more, the lack of a market for the ETF shares will make this difficult to trade. But the fund will give a long-term investor with a little extra risk capital and patience, an opportunity to hold a diversified position in a growing industry, increasingly mandated by law and public demand. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: CFDs, spread betting and FX can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure you understand the risks. Seek independent financial advice if necessary. Nothing in this article should be considered a personal recommendation. It does not account for your personal circumstances or appetite for risk.
Aggressive growth funds’ second-quarter performance did not justify its characteristic of high capital gains. Except for the top 2 gainers, none of the funds could cross a 4% return in the second quarter of 2015. However, a higher number of non-aggressive growth funds posted returns over 4%. Gains for certain growth funds such as the Driehaus Micro Cap Growth Fund (MUTF: DMCRX ) and the Berkshire Focus Fund (MUTF: BFOCX ) soared as much as 10.7% and 9%. While average gains for the top growth funds performers of second quarter 2015 reached 6.8%, the average gain for top 10 aggressive growth funds was 3.2%. However, it was a tough second quarter for the broader markets. Markets had a dismal run in the second quarter, wherein the S&P 500 and Dow declined 0.2% and 0.9%; however, the NASDAQ did gain 1.8%. Just 41% of mutual funds could manage to finish in the green in the second quarter. This is less than half of the 81% gains scored by mutual funds in the first quarter. These losses, however, owed a lot to the selloff on the eve of the quarter’s end. Of the 289 funds under the study, 124 funds finished in the green while 3 funds had a breakeven return. The average gain for these 124 funds stood at 1.5%. As for the remaining 161 funds that finished in negative territory, the average loss was 1.1%. (Note: This number includes the same funds of varied classes) Aggressive Growth Funds Investors looking for the highest capital gains should look no further than investing in aggressive growth mutual funds. These funds invest in companies that show high growth prospects, but also comes with the risk of share price fluctuations. This category of funds also invests heavily in undervalued stocks, IPOs and relatively volatile securities in order to profit from them in a congenial economic climate. Securities are selected on the basis of their issuing company’s potential for growth and profitability. This category of instruments has a strong positive correlation with market movements and provides good returns during a market upswing. Such performance is achieved by investing in securities issued by companies with strong growth potential and in IPOs which are often resold quickly at a handsome profit. Many aggressive growth mutual funds may also invest in options to achieve their goal of high returns. Best Performing Below we present the top 15 aggressive growth mutual funds with best returns of Q2 2015: Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5000 have been excluded. Q2 % Rank vs. Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. An interesting thing about the list of top gainers is that the 15 funds are all from different fund families. Certain major names include the Federated Kaufmann Fund A (MUTF: KAUAX ), the American Century Ultra Fund A (MUTF: TWUAX ), the Rydex NASDAQ-100 Fund Inv (MUTF: RYOCX ), the Fidelity New Millennium Fund (MUTF: FMILX ) and the Franklin Growth Opportunities Fund Adv (MUTF: FRAAX ). These are respectively from Federated , American Century , Guggenheim Investments , Fidelity and Franklin Templeton . While, KAUAX and FMILX carry a Zacks Mutual Fund Rank #4 (Sell), TWUAX, RYOCX and FRAAX hold a Zacks Mutual Fund Rank #3 (Hold). Talking of fund families, not many fund families had strong second-quarter performance. The best gain for a Franklin Templeton mutual fund lagged Fidelity’s best gain of 11.6% . Separately, Vanguard had a dismal second quarter and their best gain was just 3.8%; however, it should be noted that Vanguard has more passive funds than other fund families. Meanwhile, funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) are the Hartford Growth Opportunities Fund A (MUTF: HGOAX ), the Wasatch Ultra Growth Fund (MUTF: WAMCX ) and the White Oak Select Growth Fund (MUTF: WOGSX ). Separately, the Cambiar Aggressive Value Fund Inv (MUTF: CAMAX ), the Baron Partners Fund Adv (MUTF: BPTRX ) and the Jacob Micro Cap Growth Fund (MUTF: JMCGX ) hold a Zacks Mutual Fund Rank #2 (Buy). Original Post
By James T. Tierney Jr., Chief Investment Officer – Concentrated US Growth As the popularity of passive investing continues to gain momentum, take pause to think about a lesson from baseball. The question is: what kind of equity lineup creates a winning team? Nobody can deny the increasing shift of equity investors toward index strategies. Net flows to passive US equity funds have reached $21.7 billion this year through June, while investors have pulled $83.7 billion out of actively managed portfolios, according to Morningstar. In this environment, active managers are increasingly challenged to prove their worth and justify their fees. Building a Winning Lineup Baseball provides an interesting analogy for the active equity manager. Across all players in Major League Baseball, the batting average this season is .253 , as of August 6. Yet even in today’s statistics driven environment, you won’t find a single team manager who would choose to put together a lineup of nine players who all bat .253-even if it were possible. The reason is clear and intuitive. For a baseball team to be successful, you need to have at least a few hitters who are likely to get hits more often than their peers. And to create a really robust lineup, a manager wants a couple of power hitters who pose a more potent threat. Of course, some hitters will trend toward the average and slumping players will hit well below the pack. That’s why you need a diverse bunch. A team comprised solely of .253 hitters is unlikely to have the energy or the momentum needed to win those crucial games and make the playoffs. False Security in Average Performance So what does this have to do with investing? When an investor allocates funds exclusively to passive portfolios, it’s like putting together an equity lineup that is uniformly composed of .253 hitters. This lineup might provide a sense of security because returns will always be in synch with the benchmark. But it’s little consolation if the benchmark slumps. A passive equity lineup won’t be able to rely on any higher-octane performers to pull it through challenging periods of lower, or negative, returns. Still, many investors fear getting stuck with a lineup of .200 hitting active managers. We believe the best strategy to combat that risk is to focus on investing with high conviction managers, who have a strong track record of beating the market, according to our research . Passive and Active: The Best of Both Worlds Passive investing has its merits. Investors have legitimate concerns about fees as well as the ability of active managers to deliver consistent outperformance. The appeal of passive is understandable. Yet we believe that putting an entire equity allocation in passive vehicles is flawed. It leaves investors exposed to potential concentration risks and bubbles that often infect the broader equity market. And with equity returns likely to be subdued in the coming years, beating the benchmark by even a percentage point or two will be increasingly important for investors seeking to benefit from compounding returns and meet their long-term goals. There is another way. By combining passive strategies with high-conviction equity portfolios, investors can enjoy the benefits of an index along with the diversity of performance from an active approach, in our view. Baseball managers don’t settle for average performance. Why should you? The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio management teams.