Tag Archives: apple

The Riddle About Differing Fund Flows And Assets Under Management

By Detlef Glow Click to enlarge Looking at market statistics from different providers such as data vendors, associations, central banks, and others, one realizes that none of the providers state the same number for a fund’s flows or assets under management for a specific date. Even though this may sound a bit odd, it is normal and the nature of the beast. Since all data vendors, associations, and others have a different basis for the data they provide, flow numbers will be different from one provider to another. Data vendors calculate flows based on the funds in their database, while associations use the data on flows and assets under management they receive from their members. These data may include mandates and special-purpose vehicles such as pension funds, which are not mutual funds at all. In contrast, central banks use the holdings data from their associated banks to evaluate the holdings of mutual funds. Statistics calculated for the same topic and for the same market can vary widely, since the underlying data can be totally different. Good examples of the differences in databases for a market segment are the several reports available on the European exchange-traded fund (ETFs) market. While the Thomson Reuters Lipper report focuses only on ETFs, i.e., products that are funds and regulated as such, other reports focus on the whole market of exchange-traded products (ETPs), which means those reports also include structured notes such as exchange-traded commodities (ETCs). Another factor that always leads to differences in numbers is the currency in which the report is calculated, since some providers use euros, while others use the U.S. dollar for the denomination of fund flows and assets under management. But even if two providers of fund flows reports use the same data to calculate the flows for a given region, they may end up with totally different results. The employed methodology for the calculation of the flows might be different and would by definition lead to different results. In addition, all results are dependent on correct and timely data input from the fund promoters, since any inaccurate numbers in the database impact the quality of the statistics. Even though a data vendor might have quality checks in place for the incoming data, it may not find all the corrupted data. Even though quality checks do help to get the numbers right, some data may be missing and have to be estimated with an algorithm. This also explains why flows and assets under management data change over time, since it takes a while for all the fund promoters to deliver correct data. All in all, it can be said that the most recent fund flows and assets under management statistics published shortly after the end of month should be seen more as a guide to evaluate market trends than as a scientific result. Anybody who uses these kinds of statistics should make a decision about which statistics suit their needs best and then stay with those statistics. This does not mean that one should not question whether the displayed data are right, but one should realize that there always will be differences in flows data for any given month. The views expressed are the views of the author, not necessarily those of Thomson Reuters Lipper.

First Trust Plans For A Mortgage REIT ETF

The year has been marked with ups and downs for mortgage REITs that provide real estate financing through the purchase of mortgages and mortgage-backed securities (MBS). Volatile markets triggered by global growth worries and a stronger dollar weighed on these REITs. However, dovish comments by Federal Reserve Chair Janet Yellen while addressing the Economic Club of New York earlier this week along with the Fed’s March meeting, where the federal funds rate was dialed back to 0.875% by the end of the year from the previously expected 1.375%, provided a boost to rate sensitive sectors like the REITs (read: ETF Winners & Losers Following Yellen Comments ). A low interest rate environment is expected to benefit the performance of mortgage REITs. These REITs finance their investments with equity and debt capital and generate profits through the spread between interest income on mortgage assets and funding costs. Lower interest rates would certainly aid their borrowing cost, pushing earnings and dividends higher. Encouraged by this, First Trust has recently filed for an actively managed ETF, The First Trust Strategic Mortgage REIT ETF, targeting this market. While a great deal of the key information, such as expense ratio and ticker, was not available in the initial release, other important points were released in the filing. We have highlighted those below for investors who may be looking for a fresh out-of-oven play targeting the mortgage REIT segment from First Trust should it pass regulatory hurdles (see all Real Estate ETFs here ). Proposed Fund in Focus As the name suggests, the fund will primarily invest in individual mortgage REITs, which rely on the spread between short-term borrowing costs and the investment yield earned on longer-termed investments. This is in stark contrast to equity REITs, which earn generally from rent revenues coming from owned real estate properties. Apart from mortgage REITs, the fund may also invest in mortgage-backed securities and exchange-traded and over-the-counter (OTC) options on mortgage REITs and real estate companies, OTC options on mortgage TBA transactions, exchange-traded U.S. Treasury and Eurodollar futures, exchange-traded and OTC interest rate swap agreements and exchange-traded and OTC options on interest rate swap agreements among others. The fund may even engage in short sales as part of its overall portfolio management strategies. As per the SEC filing , the fund’s objective is to generate high current income. It will select its investments based on a top-down approach involving macroeconomic views on the sector with a bottom-up approach involving quantitative and qualitative analysis of individual securities. The fund also has an eye for limiting volatility and mitigating mortgage REIT valuation pressures using interest rate and spread based hedges. How does it fit in a portfolio? This fund can be a good choice for investor having faith in Yellen’s dovish comments that only gradual increases in the federal funds rate are likely in the coming years given the uncertain economic environment, employment scenario and inflation goals. Apart from that, the fund is also recommended for investors looking to diversify their portfolio to include the mortgage REIT segment. However, the fund on its own does not provide diversification benefit as it focuses on a single industry or sector and would be associated with higher concentration risk as compared to a fund that is broadly diversified over several industries or sectors. ETF Competition The First Trust Strategic Mortgage REIT ETF definitely holds promise. Still, there are a number of U.S.-based ETFs that are worth mentioning. A couple of the top U.S. mortgage REIT funds include the iShares Mortgage Real Estate Capped ETF (NYSEARCA: REM ) and the Market Vector Mortgage REIT Income ETF (NYSEARCA: MORT ). REM tracks the FTSE NAREIT All Mortgage Capped Index. The fund consists of 38 securities in its basket while it charges investors 48 bps a year. The product has amassed around $765.7 million in its asset base and trades in an average volume of 1.1 million shares per day. It has a solid yield of 11.9%. On the other hand, MORT tracks the Market Vectors Global Mortgage REITs Index. The fund consists of 26 stocks and charges 41 bps in investor fees per year. The fund is relatively less popular with an asset base of $95.3 million and an average volume of roughly 36,000 shares per day. It has a dividend yield of 9.89%. Being an actively managed ETF, The First Trust Strategic Mortgage REIT ETF could command a higher expense ratio than REM and MORT. Thus, the proposed ETF, if launched, has a good chance of making a name for itself only if it manages to generate returns net of fees greater than the passively managed products in the mortgage REIT ETF space. Apart from these, The First Trust Strategic Mortgage REIT ETF could also face competition from the global mortgage REIT fund – the iShares Global REIT ETF (NYSEARCA: REET ) . Link to the original post on Zacks.com

Why You Should Closely Watch Apple’s Stock Chart Today

Loading the player… Apple ( AAPL ) shares are trying to make a pivotal move in the stock market today with the recapturing of a key technical level. Credit Suisse raised its price target on Apple from 140 to 150, saying that gross profit from Apple services — including Apple Pay, Apple Music and iCloud — has big growth potential. Meanwhile, Brean Capital cut its price target from 170 to 155. The analyst said that the Street’s iPhone unit shipment expectations for the March and June quarters may be too optimistic. Shares jumped as much as 1.9% in heavy volume Monday morning, breaking past resistance at the 110 price level and retaking the critical 200-day moving average in intraday trade. Apple hasn’t traded above the 200-day since five months ago, and even then it stayed above the line only briefly. Shares pared their gains to a 1.4% rise as the market hit turbulence. If the stock can close above the 200-day line, it would be bullish. The stock has suffered severe technical damage over the last year, but it’s up more than 20% from its January low. Apple is now 16% below its all-time high of 134.54, reached at the end of last April. Among other widely held tech stocks, Microsoft ( MSFT ) is trading about 2% below its late December high and a consolidation base buy point of 56.95. Microsoft shares were down 0.5% in intraday trade. Facebook ( FB ) is down 3.3% in big volume on a cautious report from Deutsche Bank. Facebook is now trading about 4% below its February high and a buy point at 117.69. Google owner Alphabet ( GOOGL ) is trading 6% below a cup-base buy point of 810.45. Alphabet was off 0.7% intraday. And Netflix ( NFLX ) is hitting resistance at its 200-day line for a second session. The stock is 21% below its December peak. Netflix shares lost 1.3% Monday.