Category Archives: etf

Inside NANR: The Most Successful New ETF Of 2016

Oil price volatility has put energy sector ETFs in focus since the start of this year. After tumbling to a 13-year low in mid February, oil has made an impressive comeback surging nearly 47% over the past one-month period. Robust performance was driven by improving demand/supply trends, which are rebuilding investors lost confidence in the rebalancing of the oil market. This is especially true given signs of falling production in the U.S. and the Organization of the Petroleum Exporting Countries (OPEC), hopes of a deal by major oil producers to freeze oil output at the January level, receding fears of a recession in the U.S., and signs of stabilization in China and the other developed economies (see: all the energy ETFs here ). Additionally, oil drilling activity in the U.S. has fallen to the lowest level since at least 1940 reflecting that U.S. output will continue to decline in the coming weeks. A slew of capital spending cuts last year and another round of major cuts this year added to the strength and will continue to curb oil production and reduce global supply. All these suggest that the oil market might bottom out after two years of persistent decline. However, volatility persists given increasing production in Iran, a strong dollar and weak global economic growth. Given the uncertain backdrop for oil, investors are seeking well-balanced exposure to the basket of natural resources companies instead of just energy sector allocation. And this drive has made the new ETF – SPDR S&P North American Natural Resources ETF (NYSEARCA: NANR ) – immense popular and successful so far this year. This fund offers exposure to the natural resources companies in the energy, materials and agriculture industries. This is because it has been getting the first-mover advantage and has accumulated $817 million in AUM in just three months of debut while surging 17.2% in the same period. Average daily volume is solid as it exchanges nearly 570,000 shares in hand (read: 5 Very Successful ETF Launches of 2015 ). Given this, it might be worth it to shed some light on this ETF and its holdings for those who are unfamiliar with the product, but are thinking about jumping in on the product. Below we highlight some of the key details regarding NANR, which made it one of the fastest-growing and most-successful ETFs of this year. NANR in Focus The ETF tracks the S&P BMI North American Natural Resources Index, charging investors 35 bps in fees and expenses. Holding 61 securities in its basket, it is highly concentrated on the top two firms – Exxon Mobil (NYSE: XOM ) and Chevron (NYSE: CVX ) – with over 9% share each. Other firms hold no more than 6.15% of assets. Materials make up for half of the portfolio, closely followed by 44.3% in energy and the rest in consumer staples. The product has a certain tilt toward large cap and value stocks as about more than two-third of the portfolio falls in the large-cap category while about half of it is classified as value picks. The combination of large-cap value securities has the potential to deliver higher returns and reduce overall volatility in the portfolio. In addition, these securities tend to outperform when considered on a long-term investment horizon and are less susceptible to trending markets. As such, these provide safety and could be the perfect choice for investors concerned about oil price volatility and its negative impact on the sector. In terms of performance, NANR has gained 15.6% year to date, easily outpacing the ultra-poplar Energy Select Sector SPDR ETF (NYSEARCA: XLE ) and the Materials Select Sector SPDR ETF (NYSEARCA: XLB ) . Investors should note that both these funds have plenty of holdings similar to NANR. Despite this, XLE and XLB are up just 3.4% and 2.3%, respectively. Link to the original article on Zacks.com

U.S. Fund Flows: Equity Funds Get Back In The Game

By Patrick Keon Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) took in over $13.2 billion of net new money during the fund-flows week ended Wednesday, March 9. All four of the fund macro-groups experienced positive net flows for the week; taxable bond funds were at the head of the table with net inflows of $5.8 billion, followed by equity funds (+$4.6 billion), money market funds (+$2.4 billion), and municipal bond funds (+$518 million). The positive flows into equity funds reversed a nine-week trend of investors pulling money out of the group. The equity markets continued their comeback during the week. After losing over 11.4% during the first six weeks of the year the S&P 500 Index recorded its fourth straight week of positive returns. The index gained back over 7.2% during this four-week timeframe, including this past week’s 0.1% appreciation. The market took strength during the week from a rally in oil prices. U.S. crude hit a three-month high ($38.51) during the week and experienced increases in seven of the last eight trading sessions. An increased demand for gas overpowered the record-high crude oil stockpiles to drive the price of oil higher. Another positive for the market was a strong jobs report as nonfarm payrolls grew by 242,000 jobs. The jobs report reinforced the belief that a recession was not in the cards for the near term and also opened the door to the possibility of more interest rate hikes by the Federal Reserve in 2016. The majority of the net inflows for taxable bond funds belonged to mutual funds (+$3.4 billion), while ETFs contributed $2.4 billion to the total. On the mutual fund side the largest net inflows belonged to funds in Lipper’s High Yield Funds classification (+$1.6 billion), while investment-grade debt categories Lipper Core Plus Bond Funds and Lipper Core Bond Funds took in $735 million and $657 million of net new money, respectively. The two largest individual net inflows for ETFs belonged to the iShares Core US Aggregate Bond (NYSEARCA: AGG ) (+$687 million) and the iShares JPMorgan USD Emerging Market Bond (NYSEARCA: EMB ) (+$528 million). ETFs (+$4.2 billion) accounted for the majority of the net inflows for equity funds for the week, while mutual funds pitched in $400 million of net new money. The largest net inflows among individual ETFs belonged to the iShares MSCI Emerging Markets (NYSEARCA: EEM ) (+$853 million) and the iShares Russell 2000 (NYSEARCA: IWM ) (+$535 million), while for mutual funds nondomestic equity funds had positive flows of $416 million and domestic equity funds suffered slight net outflows of $16 million. The week’s net inflows for municipal bond mutual funds (+$450 million) were the twenty-third consecutive weekly gains for the group. Funds in the Intermediate Muni Debt Funds (+$166 million) and General Muni Debt Funds (+$117 million) categories posted the largest net inflows for the week. The net inflows into money market funds (+$2.4 billion) marked the fourth consecutive week in which the group experienced positive flows. The group grew its coffers by over $13.3 billion during this four-week run. The largest contributors to this past week’s gains were Institutional U.S. Money Market Funds (+$7.5 billion) and Institutional U.S. Government Money Market Funds (+$2.8 billion), while Institutional U.S. Treasury Money Market Funds had net outflows of over $4.7 billion.

4 Outperforming Sector ETFs Over The Past One Month

After a tumultuous ride in January and mid-February, the U.S. stocks witnessed the fourth consecutive week of gains on continued signs of improvement in the domestic and international markets. As a result, all the three major indices erased most of the losses made this year, climbing more than 6% over the past one month. With this, the S&P 500 and Dow Jones are down just over 1% each from a year-to-date look while the NASDAQ Composite Index has shed 5.2%. Behind the Surge A spate of stronger U.S. economic data infused enough confidence in the economy, erasing fears of a recession any time soon. In particular, factory activity contracted less than expected in February, suggesting that the beleaguered industry is stabilizing. About half of the industries have shown strength for the first time since August. Oil price has stabilized as the global oil glut has eased and the demand-supply trend is improving, thereby giving boost to the battered energy stocks. Notably, U.S. crude has risen 47% from a 13-year low of $26.21 a month ago. The rise in oil price has also calmed fears over the health of banks, especially those that are highly exposed to the energy sector. On the international front, the European Central Bank (ECB) turned more dovish in its meeting last week. The bank cut its deposit rate further by 10% to negative 0.4%, and lowered its refinancing rate and marginal lending rate by 0.5% each to zero percent and 0.25%, respectively. Further, it has expanded its monthly bond buying program from €60 billion to €80 billion. Additionally, the People’s Bank of China (PBOC) also stepped up its efforts to reinvigorate growth in the economy by fixing the yuan higher against the dollar at 6.4905, the strongest level seen this year. Investors should note that the Chinese turmoil and oil price slide were the main culprits of a steep downfall early in the year. The receding fears increased the appeal for riskier assets leading to a bullish trend in stocks, though bouts of volatility are still showing up. Given this, we have highlighted four sector ETFs that easily crushed the broad market funds by wide margins and were the star performers over the past one-month period. PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) – Up 34.1% This fund provides exposure to the energy sector of the U.S. small-cap segment by tracking the S&P Small Cap 600 Capped Energy Index. It is less popular and less liquid with an AUM of $28.1 million and average daily volume of about 22,000 shares. Expense ratio comes in at 0.29%. Holding 33 securities in its basket, it is concentrated on the top firm with 16% share while other firms hold less than 10% of total assets. About 56.6% of the portfolio is tilted toward energy equipment and services while oil, gas and consumable fuels take the rest. PSCE currently has a Zacks ETF Rank of 5 or “Strong Sell” rating with a High risk outlook. SPDR S&P Metals and Mining ETF (NYSEARCA: XME ) – Up 28.0% The ETF offers a broad exposure to the U.S. metal and mining industry by tracking the S&P Metals & Mining Select Industry Index. Holding 26 stocks in its basket, it uses an equal-weight methodology and does not put more than 6.8% of assets in a single security. In terms of industrial exposure, steel makes up a large chunk at 52.6% while precious metals and gold mining round out the next two spots with a double-digit allocation each. The product has $314.6 million in AUM and trades in solid trading volumes of around 3.2 million shares per day on average. It charges 35 bps in fees and expenses. ETRACS ISE Exclusively Homebuilders ETN (NYSEARCA: HOMX ) – Up 24.0% This is an ETN option offering exposure to the companies that engage in the development and construction of homes and communities by tracking the ISE Exclusively Homebuilders Total Return Index. Notably, the index has 20 stocks in its basket with the largest allocation going to the top four firms with a combined share of 36.2%. The ETN has accumulated nearly $22 million in its asset base since its inception a year ago and trades in a light volume of about 32,000 shares. It charges 40 bps in annual fees and has a Zacks ETF Rank of 4 or “Sell” rating. PowerShares WilderHill Progressive Energy Portfolio ETF (NYSEARCA: PUW ) – Up 21.1% This fund provides exposure to 41 companies that focused on alternative energy, better efficiency, emission reduction, new energy activity, greener utilities, innovative materials and energy storage. This is easily done by tracking the WilderHill Progressive Energy Index. The ETF is pretty well spread out across various securities as each makes up for less than 3.7% of total assets. Oil, gas and consumables takes the top spot at 21.2% while electrical equipment and machinery make up for the next two spots with a double-digit exposure each. The fund has amassed $20.4 million in its asset base and sees paltry volume of nearly 5,000 shares a day. Expense ratio came in at 0.70%. PBW has a Zacks ETF Rank of 4. Original post