Category Archives: nasdaq

ETF Strategies To Gain From In The Rest Of 2016

After a lackluster patch, the broader market showed some strength in Q2, but occasional volatility is still showing up. The S&P 500 is striving to stay in the green from the year-to-date look (as of May 18, 2016) (read: S&P 500 Again Shows Weakness: Go Short with These ETFs ). Several marked changes were noticed during this time, including the solid comeback in oil prices and subtle stabilization in the Chinese economy. But it seems that the S&P 500 is far from seeing its past success in the rest of this year. Though the U.S. economy started taking root lately and is expected to see upbeat growth in Q2, volatility will likely rule the market. Imminent ‘Brexit’ vote, further Fed rate hikes and the U.S. election in November will definitely not let the market stay calm (read: British ETFs in Focus on Brexit Talks ). Investors should note that though the Fed hike symbolizes a steady U.S. economy, the imminent reaction is a crash in the stock market in fear of a dearth in cheap money inflows. Against this backdrop, investors may want to know some worthwhile investing strategies. For them we highlight the trending policies in the market and some profitable ETF bets. Analysts Muted on Stocks Bank of America believes that the S&P 500 could slip to its February lows, while Morgan Stanley has applied the famous maxim “Sell in May and go away” to stocks at least till November. Goldman Sachs has also cut its outlook on equities to “neutral” over the coming one year. Now Goldman has gone “neutral” on U.S. (upgraded), Europe (downgraded), Japan (downgraded) and Asia ex-Japan equities. Europe and Japan definitely bear the burden of stronger currencies and weaker financial sectors due to the ongoing negative interest rates. On the other hand, U.S. equities may suffer from choppy earnings, overvaluation concerns and the Fed move. The ripple effects of any crash in the S&P 500 may shake stocks worldwide. So, it’s better to bet on the ProShares Short S&P 500 ETF (NYSEARCA: SH ) , the ProShares Short MSCI Emerging Markets ETF (NYSEARCA: EUM ) , or the ProShares Short MSCI EAFE ETF (NYSEARCA: EFZ ) . Time for Money Market Instruments? As per Goldman, cash can be an overweight pick this year due to fewer chances of a Fed rate hike. In such a situation, investors can bet on cash-like money market ETFs like the Guggenheim Enhanced Short Duration Bond ETF (NYSEARCA: GSY ) and the SPDR Barclays 1-3 Month T-Bill ETF (NYSEARCA: BIL ) . One thing is for sure, a rate hike will hit both stocks and bonds. This is because as the Fed enacts, yields will jump pushing bond prices down. Even Goldman is worrying about the interest rate shock. Investment Grade Corporate Bonds: Safety + Yield Investors can also consider long-term corporate bond ETFs like the Vanguard Long-Term Corporate Bond Index ETF (NASDAQ: VCLT ) for higher yields than treasuries. Goldman Sachs now expects its year-end 10-year yield to be 2.4%, down from the 2.75% it had projected in the first quarter. Bank of America Merrill Lynch pared down its forecast for the yearend 10-year yield to 2% from 2.65% at the start of the year. Morgan Stanley projects a lower 10-year yield at 1.75%, down from 2.7% when the year had started. So, the drive for higher yield is expected in the marketplace. However, since corporate bonds are riskier in nature, honing in on investment-grade ones is a prerequisite. After all, corporate leverage is peaking, so investors need to be aware of default risks. VCLT yields 4.30% annually (as of May 18, 2016). Play Rebound in Oil; but Tread Cautiously Oil prices have seen a lot in last two years. Now that things are turning in favor for oil with shrinking supply glut and a possible recovery in demand, a play on oil is warranted. With oil, investors can also bet on high-yield bond ETFs like the AdvisorShares Peritus High Yield ETF (NYSEARCA: HYLD ) . This is because of the fact that the U.S. energy companies are closely tied to the high-yield bond market, with the former comprising a considerable amount of junk bond issuance. Volatility to Crack the Whip: Play Risk Aware Volatility is expected to be strong in 2016. Investors can deal with this in various ways. While low volatility ETFs like the PowerShares S&P 500 Low Volatility Portfolio ETF (NYSEARCA: SPLV ) can be an option, defensive ETFs like the QuantShares U.S. Market Neutral Anti-Beta ETF (NYSEARCA: BTAL ) and risk-aware ETFs like the SPDR SSgA Risk Aware ETF (NYSEARCA: RORO ) can be tapped too. And last but not the least in queue are volatility ETFs themselves such as the C-Tracks on Citi Volatility Index ETN (NYSEARCA: CVOL ) and the ProShares VIX Short-Term Futures ETF (NYSEARCA: VIXY ) . Notably, as the name suggests, volatility products are quite rowdy in nature and thus suit investors with a short-term notion. Gold to Hit $1,400? Steep Fed tightening or not, the gold market looks shiny thanks to global political risks this year. Along with many other optimistic analysts, Denmark’s Saxo Bank A/S turned bullish on gold and projected that the price may hit as high as $1,400 this year. This invariably puts gold ETFs like the SPDR Gold Trust ETF (NYSEARCA: GLD ) in focus. Link to the original post on Zacks.com

Inside JPMorgan U.S. Mid Cap ETF

The broader U.S. market has been in a tight spot since the beginning of 2016 due to a host of global issues and uncertainty about the rate hike. Amid these concerns, mid-cap funds offer the best of both worlds, growth and stability when compared to small-cap and large-cap counterparts. Mid-cap funds are believed to provide higher returns than their large-cap counterparts, while witnessing a lower level of volatility than small-cap ones. Given the swings in the broader market segment so far this year, mid-cap funds have garnered a lot of attention as they are not very susceptible to volatility (read: 5 Mid Cap Value ETFs Are Top Picks Now–Here is Why ). Recently, one of the renowned ETF issuers, JPMorgan, introduced a product in the U.S. targeting the mid-cap space. The new product – JPMorgan Diversified Return U.S. Mid Cap Equity ETF (NYSEARCA: JPME ) – hit the market on May 11. Below, we highlight the product in detail: JPME in Focus The fund seeks to track the performance of the Russell Midcap Diversified Factor Index. JPME does not seek to outperform the underlying index nor does it seek temporary defensive positions when markets decline or appear overvalued. Its sole intention is to replicate the constituent securities of the underlying index as closely as possible. JPME is a well-diversified fund, where Westar Energy Inc. (NYSE: WR ) takes the top spot with 0.61% weight. Other stocks in the fund have less than 0.60% exposure individually. In total, the fund holds about 602 stocks. Sector-wise, Consumer Goods gets the highest exposure with 15.5% of the portfolio. Utilities, Financials, Consumer Services, Health Care, Industrials and Technology also get double-digit exposure in the basket. The fund has an expense ratio of 0.34%. How Does it Fit in a Portfolio? The fund is a good choice for investors seeking high return potential that comes with lower risk than their small-cap counterparts. With the tone of the minutes from the April FOMC meeting, released last week, being more hawkish than expected, chances of a rate hike in the June meeting have gone up. This could be due to a series of recently released upbeat U.S. economic data (read more: Fed to Hike in June? Expected ETF Moves ). Meanwhile, global growth worries are still at large. So, mid-cap stocks with higher exposure to the U.S. markets than their large-cap counterparts look attractive at this point. Thus, the launch of the new ETF targeting the U.S. mid-cap market seems well timed. ETF Competition The newly launched ETF will have to face competition from mid cap-focused ETFs like the iShares Core S&P Mid-Cap ETF (NYSEARCA: IJH ) . IJH is one of the most popular ETFs in the space with an asset base of $26.3 billion and average trading volume of 1.3 million shares. The fund tracks the S&P MidCap 400 index and charges 12 basis points as fees which is much lower than the aforementioned product. The SPDR S&P MidCap 400 ETF (NYSEARCA: MDY ) is another popular fund in the space with an asset base of $15.3 billion and trades in a good volume of more than 2.1 million shares a day. The fund tracks the S&P MidCap 400 Index. The fund charges 25 basis points as fees. Apart from these, JPME could also face competition from the iShares Russell Mid-Cap ETF (NYSEARCA: IWR ) tracking the Russell MidCap Index. The fund has an asset base of $12 billion and volume of almost 359,000 shares a day. It has an expense ratio of 20 bps. Thus, the newly launched fund is costlier than the popular ETFs in the space. So, the path ahead can be challenging for JPME. Link to the original post on Zacks.com

Sanofi Moves To Replace Medivation’s Board As New Buyers Rumored

Small drugmaker Medivation ( MDVN ) continued to battle  Sanofi ‘s ( SNY ) hostile takeover bid Wednesday as the latter tried to replace its board, while big biotechs Celgene ( CELG ) and Gilead Sciences ( GILD ) were said to be thinking of joining the fray. Sanofi proposed eight candidates “who are willing to fully and fairly evaluate all of Medivation’s strategic options,” which it believes Medivation’s current board did not do when it unanimously rejected Sanofi’s unsolicited $9.3 billion bid on April 29. Medivation responded with a statement urging shareholders to reject the attempt, which it called “a tactic for Sanofi to facilitate its substantially inadequate and opportunistically timed proposal to acquire Medivation.” While Sanofi is the only suitor that’s gone public, anonymous sources have been telling the media that a variety of other companies are thinking of making a bid. On May 9, Medivation reportedly signed non-disclosures agreements with Pfizer ( PFE ) and Amgen ( AMGN ), implying that it is open to being bought by somebody other than Sanofi. On Wednesday Bloomberg said that Celgene and Gilead were talking to advisors about the idea, though they hadn’t actually approached the company. Both Celgene and Gilead have been urged by investors and analysts to make a sizable acquisition — especially Gilead, as its massive hepatitis C franchise is already eroding in the face of competition. Medivation’s current $1 billion in 12-month sales wouldn’t make that big of an impact on Gilead’s $33 billion top line, but much of the interest comes from Medivation’s future prospects: its prostate-cancer drug Xtandi is still ramping while the company studies its use in other diseases, and it also has a few earlier-stage drugs in the pipeline. Medivation stock, which has lately gone tight after a sharp run-up amid the buyout speculation, was down a fraction, near 62, in late morning trading on the stock market today . Sanofi was up 2%, near 41. Gilead was flat, near 86, and Celgene was up 1%, near 105.