Category Archives: apple

5 Low-Cost ETFs Poised For Long-Term Wins

The global ETF industry has been growing by leaps and bounds and has already accumulated almost $4.5 trillion in assets, as per ETFGI data. ETFs gained popularity over mutual funds because of their flexibility, liquidity and low cost among other factors. In fact, low cost has been one of the biggest drivers for the ETFs, enhancing their total returns. This is primarily because fund managers generally don’t actively manage an ETF. As these products often engage in passive index-based investing, they charge a much smaller fee. Several research reports have shown that only a handful of fund managers outperform the market over the long term. This gives a major boost to passive investing strategies. As per the 2015 SPIVA U.S. Scorecard , over the last five years, 84.2% of large-cap managers, 76.7% of mid-cap managers, and 90.1% of small-cap managers underperformed the S&P 500, the S&P MidCap 400 and the S&P SmallCap 600, respectively. The number of managers outperforming the benchmark index is equally bleak over the 10-year investment horizon. Roughly 82.14% of large-cap managers, 87.61% of mid-cap managers, and 88.42% of small-cap managers lagged their respective benchmarks. Additionally, managers across all international equity categories failed to outperform their benchmarks in the above mentioned time frame. Although there are several cost components to an ETF like trading commissions and bid/ask spreads, expense ratios are paid the foremost attention by investors. With several ETF providers including iShares, Vanguard and Charles Schwab vying with each other, ETFs have gotten cheaper every year (read: 5 Costly ETF Mistakes You Can Easily Avoid ). Knowing how important the expense ratio is, we have highlighted five of the cheapest ETFs for long-term investors (see: all the ETFs with Low Expense Ratios here ): iShares Core S&P Total U.S. Stock Market ETF (NYSEARCA: ITOT ) – Expense ratio: 0.03% This fund provides a broad exposure to the U.S. equity market by tracking the S&P Total Market Index and is one of the low-cost choices in the equity ETF world, charging just 3 bps in annual fees. Holding 3,819 securities, the fund is widely diversified across sectors and securities. Information technology is the top sector accounting for less than 20% while Apple (NASDAQ: AAPL ) is the top firm taking 2.7% share of the basket. Large caps account for 74% of the assets while mid and small caps take the remainder. ITOT is a popular and liquid ETF with AUM of $3.6 billion and average daily volume of 286,000 shares. The product has delivered 70.9% returns over the last five-year period. Schwab U.S. Broad Market ETF (NYSEARCA: SCHB ) – Expense ratio: 0.03% This fund also provides a broad exposure to the U.S. equity market. The fund tracks the Dow Jones U.S. Broad Stock Market Index and charges just 3 bps in annual fees. Holding 2,077 securities, the fund is widely diversified across sectors and securities. Like ITOT, information technology is the top sector accounting for less than 20% while Apple is the top firm taking 3.3% share of the basket. Large caps account for 73% of the assets while mid and small caps take the remainder. SCHB is one of the popular and liquid ETFs with AUM of $5.8 billion and average daily volume of 927,000 shares. The product has delivered 70.7% returns over the last five-year period. Schwab U.S. Large-Cap ETF (NYSEARCA: SCHX ) – Expense ratio: 0.03% This fund targets the large-cap segment of the U.S. equity market by tracking the Dow Jones U.S. Large-Cap Total Stock Market Index and holds 777 securities in its basket. Here again, information technology is the top sector with just over 20% share while Apple is the top firm at 3%. With an expense ratio of 0.03%, the fund has amassed $5.3 billion in its asset base and volume is solid at over 783,000 shares. While this is a large-cap fund, mid and small caps take minor portions each in the basket. The fund has gained about 72.4% over the past five-year period. Vanguard Total Stock Market ETF (NYSEARCA: VTI ) – Expense ratio: 0.05% This ETF follows the CRSP US Total Market Index, holding a large basket of 3,712 securities. Each security holds no more than 2.5% of total assets while financials, technology, consumer services and health care make up for a nice sector mix in the portfolio. It is one of the largest and a popular fund with AUM of nearly $57.9 billion and average daily volume of nearly 3.5 million shares. It charges 5 bps in fees and expenses and has gained 70.3% over the past five years. Vanguard S&P 500 ETF (NYSEARCA: VOO ) – Expense ratio: 0.05% This is another low-cost, well-diversified large-cap fund tracking the S&P 500 index. It holds 505 securities in its basket with each taking less than 3.2% share while sector-wise too, none accounts for more than 21% of assets. The fund has AUM of $43.5 billion and trades in heavy volume of 2.7 million shares per day on average. Expense ratio came in at 0.05%. The ETF returned about 74.5% in the same period. Link to the original post on Zacks.com

Peak Oil And Runaway China: A Dangerous Combination Of Memes

By Ron Rimkus, CFA Back in 2005, investors heard an endless chorus in the financial media around two memes: the end of oil, and the growth of China. Oil production was supposedly hitting its upper limits. In 2005, the US Department of Energy published a study on the peaking of world oil production (.PDF) that stated: Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing [….] This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production [….] The world has never faced a problem like this [….] Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary. The peak oil narrative was reaching a fever pitch around the same time as China’s “runaway growth” meme. A BBC report on ” 2004: China’s Coming Out Party ” highlighted how China’s increasing appetite for oil was affecting global prices. Other articles made eye-popping comparisons of China’s cities before and after the country’s economic changes (decades apart). For instance, Shenzhen transformed from a sleepy fishing village in 1980 to a bustling urban empire by 2006 . Shenzhen had grown at an annual pace of 28% per year during this 26-year period. Yes, you read that right. The pair of memes led some investors to embrace the notion that oil supply was peaking just at the moment that oil demand was accelerating- a recipe for higher and higher oil prices. Then, we all marveled as the price of oil rose from $30 per barrel in 2003 to well over $100 by 2008 . In subsequent years, both memes were proven wrong. There was no “abrupt and revolutionary” oil peaking, and China’s energy demands would not keep growing forever . But higher oil prices created an umbrella of opportunity for capital formation, and much of that capital flowed into US shale oil projects. Between 2009 and 2015, total US oil production nearly doubled from 5,000 barrels per day to just under 10,000 barrels per day , thanks largely to shale oil. The shale revolution, which took place because high prices stimulated investment and innovation, blew apart the notion that the world had reached peak oil. By the end of 2014, it became apparent that oil output would satisfactorily meet demand growth. Blindly following popular investment memes is a recipe for disaster, and investors who convinced themselves that oil prices would remain above $100 per barrel were blindsided by the return of oil priced under $40 per barrel – even though it was a function of price signals directing capital investment as a normal part of the business cycle. One person who correctly identified the business cycle as it played out was Amy Myers Jaffe , executive director for energy and sustainability at the University of California, Davis. “When I would talk about this boom and bust cycle in 2005 and 2007,” Jaffe said in a 2013 issue of The Planning Report , “people would heckle me off the stage because it looked like the price of oil was going to be high forever.” But time has a way of vindicating truth, and now her perspective looks quite prescient. Jaffe will be sharing her views on current events in global energy markets at the 69th CFA Institute Annual conference in Montréal. All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Like Apple, Google Android Said Ordered To Unlock Smartphones

Apple ( AAPL ) isn’t the only tech giant to face government demands to unlock cellphones. Alphabet ( GOOGL ) unit Google reportedly has been ordered to help federal agents open cellphones in seven states. The American Civil Liberties Union found 63 instances stretching back to 2008 where the government sought a court order to help it access data from a locked cellphone, the Wall Street Journal reported Wednesday. Apple’s first iPhone was released in mid-2007. Details of the cases came after the U.S. Department of Justice on Monday told a federal judge that it no longer needed to compel Apple to help unlock the password-protected iPhone 5C used by Syed Farook, one of the two now-deceased shooters in the San Bernardino, Calif., massacre. The DOJ said the FBI was able to access data on the iPhone with the assistance of an unidentified outside party, without Apple’s help. Apple had argued that a court order forcing it to write software to bypass its own security protections would have set a dangerous precedent. Creating a “back door” for the government’s use would have made all iPhones more vulnerable to hackers, criminals and spies, the company said. Google told the WSJ: “We carefully scrutinize subpoenas and court orders to make sure they meet both the letter and spirit of the law. However, we’ve never received an All Writs Act order like the one Apple recently fought that demands we build new tools that actively compromise our products’ security. … We would strongly object to such an order.” Google is among the many tech companies that have backed Apple in its fight with the FBI. The ACLU, though, says the All Writs Act was used in the Google cases, which involve investigations by the FBI, Secret Service, Homeland Security Department, Drug Enforcement Administration and Bureau of Land Management, the WSJ said. Prosecutors have sought to use the All Writs Act, a law from the 18 th century, to compel the smartphone makers to allow access to data, unleashing a massive privacy debate. The first cases relying on the All Writs Act date back to 2008. In one of the Google cases, a 2015 drug investigation in California, prosecutors got a court order compelling Google to provide assistance in getting data from an Alcatel and a Kyocera cellphone, that used Google’s Android operating system, the WSJ said, citing court records. The ACLU found Google was also the subject of All Writs Act cases in Alabama, New Mexico, North Carolina, North Dakota, Oregon and South Dakota, according to the report. A court filing last month from Apple indicated there were about a dozen cases in which the Justice Department was pursuing similar orders involving Apple iPhones. Google’s Android is an open source operating system that runs on phones manufactured by a number of companies, while Apple’s iOS is used just on its iPhones. Apple stock was up 1% in early afternoon trading in the stock market today , near 109. Alphabet stock was up a fraction, near 771.