Category Archives: etf

3 Strong Buy Mid-Cap Growth Mutual Funds

Mid-cap funds are an ideal investment option for investors looking for high return potential that comes with lower risk than their small-cap counterparts. Mid-cap funds are not very susceptible to volatility in broader markets, making it an ideal bet given that the macroeconomic conditions have generally offered a roller-coaster ride in recent years. Meanwhile, when capital appreciation over the long term takes precedence over dividend payouts, growth funds become a natural choice for investors. These funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms whose value is projected to rise over the long term. However, a relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because they may experience relatively more fluctuations than other fund classes. Below we share with you three top-rated mid-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. Columbia Mid Cap Growth A (MUTF: CBSAX ) seeks capital appreciation. CBSAX invests a major portion of its assets in companies that have market capitalizations in the range of the companies listed in the Russell Midcap Index. CBSAX invests in stocks that have the potential for long term, above-average earnings growth. The Columbia Mid Cap Growth A fund has a three-year annualized return of 9.5%. CBSAX has an expense ratio of 1.19% as compared to the category average of 1.28%. T. Rowe Price Mid-Cap Growth (MUTF: RPMGX ) maintains a diversified portfolio by investing a large chunk of its assets in companies having market capitalizations similar to those listed in the S&P MidCap 400 Index or the Russell Midcap Growth Index. RPMGX invests in companies having above-average growth potential. Though RPMGX focuses on acquiring common stocks of domestic companies, RPMGX may also invest in companies located outside the U.S. The T. Rowe Price Mid-Cap Growth fund has a three-year annualized return of 13.4%. Brian W.H. Berghuis is the fund manager of RPMGX since 1992. MFS Mid Cap Growth Fund A (MUTF: OTCAX ) seeks growth of capital. A large chunk of OTCAX’s assets is invested in issuers having medium market capitalization. These issuers have a market cap identical to the ones listed in the Russell Midcap Growth Index for the previous 13 months. The MFS Mid Cap Growth A fund has a three-year annualized return of 11.1%. As of February 2016, OTCAX held 103 issues with 2.59% of its assets invested in Ross Stores Inc. (NASDAQ: ROST ). Original Post

Successful ETF Launches Of Q1

The ETF industry is growing by leaps and bounds irrespective of whether the markets are on a bull or bear run. Thanks go largely to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and low cost. In fact, ETFs are now considered as a preferred investment vehicle across the globe over mutual funds and hedge funds. U.S. ETFs have gathered about $2.2 billion of capital so far in 2016, as per etf.com . Though it is much lower than $59 billion inflows seen in the year-ago period, both existing and new issuers remain active in binging innovative products to the market. About 37 ETFs have been launched in the first quarter, taking the total number of ETFs to 1,863 and total assets to over $2.1 billion. Below, we highlight four ETFs that have gathered maximum attention from investors and have a huge potential to dominate the market in the coming months. SPDR SSGA Gender Diversity Index ETF (NYSEARCA: SHE ) Several researches found that companies that have female employees in the top brass have a tendency to outperform the market. As per the latest study from market index provider MSCI , companies with boardrooms featuring “strong female leadership” have generated 36.4% greater return on equity since 2009 than male-dominated companies. A new study by Quantopian, a Boston-based trading platform, has revealed that companies with female CEOs in the Fortune 1000 generated 226% better returns than the S&P 500 over the past 12 years (read: Women Leaders ETFs Head to Head: WIL vs. SHE ). Given the long history of outperformance, investors have shown their eagerness to add female-centric companies to their portfolio. This is easily depicted by the successful debut of SHE, which has attracted nearly $265 million in assets since its inception on International Women’s Day. It is the most popular ETF launch of Q1. The fund offers exposure to the companies that have managed to recruit and retain women in leadership positions by tracking the SSGA Gender Diversity Index. Holding 140 stocks in its basket, it is moderately concentrated in the top firms with each holding less than 6.6% share. In terms of sector, financials, healthcare, information technology, consumer discretionary, and industrials occupy the top five positions with double-digit exposure each. The fund charges 20 bps in annual fees and trades in solid volume of 310,000 shares a day on average. PowerShares DWA Tactical Multi-Asset Income Portfolio (NASDAQ: DWIN ) Amid heightened uncertainty and volatility, investors are seeking to employ strategies that could fetch higher returns with lower risk to their portfolio. This has raised the appeal for multi-asset ETFs, which offer huge diversification benefits by investing across different asset classes having low correlations with each other. These products aim to provide a high level of current income with stability and potential for long-term appreciation while they simultaneously avoid the downside risk of specific asset classes (read: Multi-Asset ETFs to Counter Volatility ). As a result, DWIN has become extremely popular among investors in its first month of debut having amassed $35.5 million in AUM. It is a fund of five funds and tracks the Dorsey Wright Multi-Asset Income Index, which seeks to capitalize on seven different income-producing market segments including corporate bonds, emerging market debt, dividend stocks, MLPs, REITs, and preferred shares based on relative strength and current yield criteria. Currently, each of the five ETFs in the basket accounts for around 20% of the assets, making the portfolio highly diversified. The fund is quite expensive, charging 69 bps in fees and expenses while volume is light at around 40,000 shares. ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (NYSEARCA: MLPZ ) This is a leveraged ETN targeting the MLP corner of the broad energy segment. It delivers twice (2x or 200%) the returns of the monthly performance of the S&P MLP Index. Launched on February 8, the note is catching investors’ eye amid wild swings in oil prices. This is because most MLPs, which are engaged in the processing and transportation of energy commodities such as natural gas, crude oil, and refined products, are best positioned to withstand the decline in oil prices and be the major beneficiaries of an oil boom in the long term. These have relatively consistent and predictable cash flows, making them safer and less risky than other plays in the broader energy space. Additionally, the leveraged factor tacked on it is encouraging investors to make big gains on quick turns in oil prices. MLPZ has gathered about $34.9 million in its asset base since its inception but trades in light volume of about 30,000 shares. Expense ratio comes in at 0.95%. ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B (NYSEARCA: MLPQ ) MLPQ is also a leveraged MLP ETN launching on February 8 and providing two times exposure but tracks the Alerian MLP Infrastructure Index. It saw slightly lower inflows of $34.7 million and even lower average daily volumes than MLPZ. However, it charges lower fees by 10 bps. Link to the original post on Zacks.com

Top ETF Stories Of First Quarter 2016

The start to the first quarter of 2016 was a nightmare, given the twin attacks from oil price slide and China turmoil that intensified fears of a global slowdown. However, these concerns started to fade in the back half of the quarter on continued signs of improvement in the domestic and international markets, pushing global stocks higher. Given this, several events have impacted the ETF world in either a positive or a negative way. Below, we have discussed some of them that dominated headlines and are worth watching in the next quarter: Fed Turned Dovish Again After pulling the trigger for the first rate hike in almost a decade in mid-December, the Fed turned dovish again this year. The cautious approach came on the heels of increased market volatility, global growth concerns, and softness in exports and business investments. In the March meeting, the Fed kept the short-term interest rates steady in the 0.25-0.50% band and dialed back its projection for this year’s hikes. The central bank now expects the federal funds rate to rise to 0.875% by the end of the year, implying two lift-offs, compared with 1.375% that signaled four rate hikes. Expectations of longer-than-expected lower rates have given a boost to the rate-sensitive sectors such as utilities and real estate and high-yield securities. In fact, many of the utility and dividend ETFs like the Vanguard Utilities ETF (NYSEARCA: VPU ) , the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) , the iShares U.S. Utilities ETF (NYSEARCA: IDU ) , the PowerShares S&P 500 High Dividend Portfolio ETF (NYSEARCA: SPHD ) , the First Trust Morningstar Dividend Leaders Index ETF (NYSEARCA: FDL ) and the ProShares S&P 500 Dividend Aristocrats ETF (NYSEARCA: NOBL ) have been hitting regular 52-week highs and are expected to move higher in the coming weeks (read: Dividend ETFs Hitting All-Time Highs Ahead of Fed Meet ). Though real estate ETFs have not made new highs, they are outperforming the broad market from a year-to-date look. Some of the top ranked funds are the Vanguard REIT Index ETF (NYSEARCA: VNQ ) , the iShares U.S. Real Estate ETF (NYSEARCA: IYR ) and the SPDR Dow Jones REIT ETF (NYSEARCA: RWR ) that are expected to continue their outperformance. Crazy Run of ‘The Oil’ Oil price has been seesawing between losses and gains touching 12-year lows in mid February and then spiraling back to the $40-per-barrel mark in mid March. This spectacular performance led to smooth trading in the overall energy space. In particular, stock-based energy ETFs like the PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) , the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) and the First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) surged at least 19% over the past one month. Futures-based energy ETFs like the United States Oil ETF (NYSEARCA: USO ) and the United States Brent Oil ETF (NYSEARCA: BNO ) gained 7% each (read: Crude Back to $40: Can Energy ETFs Sustain Their Rally? ). However, this impressive rally is too good to last as demand will not be enough to reduce the global supply glut. While U.S. producers have started to reduce output and OPEC is looking to freeze production at January levels, increased production from Kuwait, Saudi Arabia and Iran will continue to weigh on the price, thereby failing to rebalance the oil market at least in the short term. Further, PSCE and XOP have an unfavorable Zacks ETF Rank of 5 or ‘Strong Sell’ rating and 4 or ‘Sell’ rating, respectively, while FCG has a Zacks ETF Rank of 3. Japan Moves to Negative Rates In late January, Bank of Japan (BoJ) adopted measures similar to the European Central Bank (ECB) by pushing interest rates to the negative territory, minus 0.1%, for the first time. The aim is to revive growth in the world’s third-largest economy. The move sparked a rally in the Japanese ETFs while weakened the yen against the greenback. Some of the top ranked ETFs in this space are the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) , the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) , the WisdomTree Japan Hedged SmallCap Equity ETF (NASDAQ: DXJS ) and the iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) . Negative interest rates in Japan had also accelerated the selling wave in the global banking sector in early February, which was already bearing the brunt of the tumultuous ride in the market. Nevertheless, the banking sector has been emerging from the crisis in recent weeks on a rebound in oil prices and improving global sentiments. Gold and Gold Miners Rocking After posting the third annual loss in 2015, gold has been on a tear this year as increased market volatility has perked up demand for the yellow metal as a store of value and a hedge against market turmoil. Additionally, the expectation for longer-than-expected low rates will continue to raise the appeal for the gold bullion. Notably, the SPDR Gold Trust ETF (NYSEARCA: GLD ) , the iShares Gold Trust ETF (NYSEARCA: IAU ) , the ETFS Physical Swiss Gold Trust ETF (NYSEARCA: SGOL ) and the Van Eck Merk Gold ETF (NYSEARCA: OUNZ ) are up about 17% each, from a year-to-date look. These funds have a Zacks ETF Rank of 3. Acting as a leveraged play on underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. In particular, the iShares MSCI Global Gold Miners ETF (NYSEARCA: RING ) stole the show in terms of performance, surging 59.3%. This was followed by gains of 52.8% for the ALPS Sprott Junior Gold Miners ETF (NYSEARCA: SGDJ ) , 50.5% for the PowerShares Global Gold and Precious Metals Portfolio ETF (NASDAQ: PSAU ) and 50.3% for the Sprott Gold Miners ETF (NYSEARCA: SGDM ). Bottom Line Investors should closely watch the developments in these spaces as we head into the next quarter and should tap opportunities as and when they come. Link to the original post on Zacks.com