Tag Archives: alt-investing

5 Small-Cap Growth Mutual Funds To Consider

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. Meanwhile, small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds. Small-cap funds generally invest in companies having market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Below we will share with you 5 small-cap growth mutual funds . Each has earned a Zacks Mutual Fund Rank #2 (Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small-cap growth funds, investors can click here to see the complete list of funds . T. Rowe Price Diversified Small Cap Growth Fund (MUTF: PRDSX ) invests a large chunk of its assets in growth oriented companies having market capitalizations similar to those listed in the MSCI US Small Cap Growth Index. PRDSX is expected to maintain a diversified portfolio with a maximum of half of its assets invested in the top 25 holdings. The T. Rowe Price Diversified Small Cap Growth fund has returned 12.4% in the year-to-date frame. Sudhir Nanda is the fund manager and has managed PRDSX since 2006. ClearBridge Small Cap Growth Fund A (MUTF: SASMX ) seeks capital appreciation over the long run. SASMX invests a major portion of its assets in equities of small-cap firms. SASMX invests in domestic companies that believed to have impressive growth prospect. The ClearBridge Small Cap Growth A fund has returned 5.5% in the past one year. SASMX has an expense ratio of 1.24% as compared to a category average of 1.35%. Eaton Vance Small-Cap Fund A (MUTF: ETEGX ) invests a lion’s share of its assets in small-cap firms having above-average growth potential. ETEGX focuses on acquiring common stocks of companies. ETEGX may invest a maximum of one-fourth of its assets in non-US companies including those from emerging economies. The Eaton Vance Small-Cap A fund has returned 7.5% in past one year. As of March 2015, ETEGX held 64 issues with 2.43% of its assets invested in West Pharmaceutical Services (NYSE: WST ). WesMark Small Company Growth Fund (MUTF: WMKSX ) seeks long-term capital growth. WMKSX maintains a diversified portfolio by investing a large portion of its assets in small-cap companies. WMKSX defines small-cap companies as those which have market cap size within the universe of the Russell 2000 Index or the Standard & Poor’s SmallCap 600 Index. The WesMark Small Company Growth fund has returned 2% in past one year. WMKSX has an expense ratio of 1.22% as compared to category average of 1.35%. TCW Small Cap Growth Fund (MUTF: TGSCX ) invests a majority of its assets in companies having market capitalizations identical to those included in the Russell 2000 Growth Index. TGSCX may also invest in non-US firms including those located in developing and emerging countries, and ADRs. The TCW Small Cap Growth fund has returned 13.5% in the past one year. Chang Lee is the fund manager and has managed TGSCX since 2012. Original post

Inside ALPS’ New Sector Leaders’ ETF

Probably, every investor dreams of beating the benchmark index. And to fulfill this investor desire, issuers are increasingly resorting to smart-beta or unique approaches. After all, with the industry presently sporting close to 1,745 products and sitting on an asset base of $2.13 trillion, it is tough to wait out competition with a product that lacks novelty. To serve the need of the hour, ALPS recently launched an ETF, which does not focus on a specific sector or style like most, but uses the equal-weighted strategy as its winning mantra. To do so, the issuer targets the U.S. market itself, which is sitting pretty right now amid global market gloom spread by ‘Grexit’ worries and the Chinese equities sell-off. Below we give the details of this ETF. ALPS Sector Leaders ETF (NYSEARCA: SLDR ) in Focus The fund looks to track the S-Network Sector Leaders Index which is a benchmark of the U.S. large cap equities with equally weighted sector exposure. The index starts screening stocks from the S&P 500 index emphasizing high quality and growth scores. From every nine sectors of the S&P 500, five securities with the highest growth criteria are chosen. The fund charges 40 bps in fees. Investors should also note that the product uses an equal-weight methodology both in terms of individual securities and sectors. As a result, each company takes up about 2% of the total while each of the sectors has a roughly 11% weighting. Cigna Corp (CT) (2.64%), Alexion Pharma (NASDAQ: ALXN ) (2.45%) and Edward Lifesciences (NYSE: EW ) (2.39%) are top three holdings of the fund. How Does it Fit in a Portfolio? This ETF could be an interesting fit for investors who want a slight smart-beta approach, but want to stay invested in the broad markets. The product could also be an intriguing addition for those seeking an equal-weight strategy. The ETF is a fairly priced option as the fees on this product is in line with the average expense ratio of the U.S. large-cap blend equities ETFs. However, costs are roughly 4.5 times higher than what the biggest U.S. large-cap blend ETF – the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) – charges. The fund’s strategic approach might have caused it to charge higher than the plain vanilla market-cap oriented funds like SPY, the iShares Core S&P 500 ETF (NYSEARCA: IVV ) and the Vanguard S&P 500 ETF (NYSEARCA: VOO ) . In a nutshell, the fund offers huge diversification benefits with lower volatility as it provides meaningful exposure to every sector of the market. None of the sectors dominates the fund’s returns, thereby preventing the portfolio from heavy concentration. ETF Competition While SLDR may have a lucrative investment objective, the ETF will be facing some stiff competition for assets from some of the players in the U.S. large-cap blend equities ETFs. Among these, the Guggenheim S&P Equal Weight ETF (NYSEARCA: RSP ) , the PowerShares Russell 1000 Equal Weight Portfolio ETF (NYSEARCA: EQAL ) and the ALPS Equal Sector Weight ETF (NYSEARCA: EQL ) seem to be the top contenders. Link to the original article on Zacks.com

China, Greece And Volatility

Summary VXX will benefit if backwardation appears long-term. The U.S. is more exposed to China than Greece. Risks to investing in volatility should be assessed. The last few weeks have had Greece front and center in most financial publication headlines. However, is Greece the main focus right now? In this article we will review the performance of the U.S. stock market, some European markets, and the Chinese stock market. To conclude, we will factor how this has and might affect U.S. volatility going forward. The U.S. Market has seen a sharp increase in volatility, which has been historically low. Below is a look at the DAX and FTSE over the same time period. Now, let’s look at the Chinese (and Hong Kong) stock market, again using the same time period. Despite major shocks to global markets, the U.S. market has shown pockets of resilience. Given the current risk, I see the U.S. as a safe haven. Just three months ago you had many touting the emerging markets because growth projections were better than those here at home. They are taking a much larger hit from this than U.S. stocks have. Earnings season is also right around the corner which could provide additional instability if guidance is weak. Assessment This is a classic, here is what we want you to focus on. The media coverage of the Greek drama has far outweighed the plunge in Chinese shares. Only now has China surfaced in headlines. Why? Because Greece is playing nice and is getting boring. Drama sells news, even if that drama isn’t the most important thing to be focusing on. The U.S. has much more exposure to China, than to Greece. Take a look below on the social media data from StockTwits. China doesn’t come close to the amount of interest from Greece. (click to enlarge) Chart created by Nathan Buehler using data from StockTwits.com. Volatility In this article we will focus on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA: VXX ). For two times the leverage you could also use the ProShares Ultra VIX Short-Term Futures ETF (NYSEARCA: UVXY ). VXX invests in second month futures that roll over to the front month and will benefit from backwardation and suffer from contango. For a video on those terms, click here . See below for the current term structure of the VIX. (click to enlarge) Vixcentral.com is my go-to place for futures. However, the website has experienced some problems over the last few weeks with some changes at the CBOE. I would recommend checking the CBOE term structure here if you have any trouble with the above site. Currently futures are in backwardation, which are not reflected on vixcentral, but are reflected on the CBOE link. Contango/Backwardation Despite the recent market rout, futures have struggled to make it to, and maintain positions in backwardation (which benefits VXX). See below: (click to enlarge) Conclusion I continue to believe that Greece will come to a solution with its creditors. A deadline of Sunday (July 12th) has been set to have a permanent agreement in place. Each Monday for the past two weeks has opened down significantly due to weekend events. It is possible that next Monday could be the same. At the end of the week we will hear from Fed chair Janet Yellen and the FOMC meeting minutes will be in focus. China, in my opinion, will level out but still face a lot of volatility. If the plunge continues I would expect some spillover to the U.S. markets. I continue to look for a better opportunity in the VIX futures. For the risk in this environment I would prefer to see a backwardation event from 5-10%, I just don’t know if it will get there. For now, the U.S. economy continues to appear stable and that is my best outlook for the VIX. I have traded in and out of most of my positions in options and the ETFs I mentioned in previous articles. I came out slightly ahead but disappointed in the overall performance. Such is life. I expect China to take center stage if the Greek drama dies down, and vice versa. News channels always need something to talk about. Please take time to assess your risk during periods of uncertainty. I have several articles available on risk assessment. VXX Outlook VXX will benefit from larger periods of backwardation. Backwardation reduces your risk of losses from time value decay. I would be more concerned with a drop off in volatility after this plays out. I have always been one to short volatility after a spike instead of chasing it up the hill. The boulder will eventually roll back down and run you over. I urge you to read up on my previous articles to understand what I am talking about. This is not an article to support buying VXX. I would currently suggest the opposite. I have begun a new volatility blog that will feature options strategies that will complement my Seeking Alpha articles. Check it out here . I also hope to add a personal finance and budgeting section in the near future. As always I appreciate you reading and wish you the best. Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in UVXY, VXX over 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.