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The Best And Worst Of January: Managed Futures
Managed futures mutual funds and ETFs bounced back in January after having a tough month in December. In the first month of 2016, managed futures funds, including “CTAs” (commodity trading advisors), averaged gains of 2.05%. This, in a month when U.S. stocks, commodities and high-yield bonds all saw large drawdowns. Managed futures strategies have often been referred to as “crisis alpha”, and January’s performance shows why they have been labeled as such. Over the three years ending January 31, funds in the category generated average annualized returns of +3.36%. These returns were comprised of -1.79% annualized alpha and 0.58 beta relative to Credit Suisse Managed Futures Liquid TR USD Index. Top Performers in January The three best-performing managed futures mutual funds in January were: Equinox Funds dominated the managed futures category in January, occupying all three of the top spots. EBCIX, EQIPX, and MHFAX generated respective one-month gains of 6.81%, 6.17%, and 6.09% in January, greatly outperforming the category average of 2.05% Of the three funds, only MHFAX has been around for at least three years, and its three-year annualized returns through January 31 stood at +4.64%, ranking in the top 30% of the category. The fund’s three-year Sharpe ratio, a measure of risk-adjusted returns, was 0.51, compared to 0.34 for the category. Its three-year standard deviation, measuring volatility, stood at 9.69%, compared to the category average of 9.01%. MHFAX’s three-year alpha of -1.79% was equal to the category average, while its beta of 0.73 was higher than the category’s 0.58. Category leader EBCIX and #2 fund EQIPX launched in June 2014 and July 2015, respectively. EBCIX had one-year returns of 6.02% through January 31, ranking in the top 8% of the category. EQIPX was launched too recently for annual returns, but its six-month gains through January 31 stood at 4.69%, ranking in the top 6% of the category. Worst Performers in January The three worst-performing managed futures mutual funds in January were: TVTAX was by far January’s worst-performing managed futures fund, returning -7.02%. The fund, which launched in November 2014, had one-year returns of -13.93% through January 31, ranking in the bottom 7% of the category. Although they were the second- and third-worst performers in the category, FCMLX and DNASX’s January losses were considerably lighter than that of TVTAX, at 2.95% and 2.96%, respectively. Both FCMLX and DNASX launched long enough ago to have three-year returns, alphas, betas, Sharpe ratios, and standard deviations: FCMLX had three-year annualized losses of 2.61%, with a three-year alpha of -5.99%, beta of -0.03, a Sharpe ratio of -0.19, and standard deviation of 11.03%. DNASX’s respective stats were -1.42%, -1.09%, 0.42, -0.24, and 5.54%. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.
3 Momentum Stocks And ETFs To Play
After over a month-long storm, the global market has finally taken a breather. Heavy sell-offs triggered by the Chinese market slowdown, global growth issues and a steep plunge in oil prices now appear overdone. The factors – mainly oil and China – for which the market went into a tailspin, brought the recent relief. The Chinese central bank let the value of the yuan rise sharply against the U.S. dollar on Monday, when the biggest one-day jump in the currency was seen in almost a decade. The move finally prevented long-standing high-level talks about a meaningful deceleration in yuan. On the other hand, developments were positive in the oil patch, with prices soaring as the market mulled over the possibilities of a deal to limit supplies later in the year. Also, stimulus hopes in Japan and Europe to boost waning economies charged up the market. Back home, retail sales for January came in at the stronger side. Retail sales gained 0.2% in January – higher than the consensus estimate of a 0.1% increase. All these developments have brought back the risk-on trade sentiments – which were long missing – in the market. Among the top U.S. ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) add 1.7%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) advance 1.4% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) move higher by about 2.3% on February 16. Not only the U.S. market, the all world ETF iShares MSCI ACWI Index (NASDAQ: ACWI ) was up 2%, the iShares Asia 50 ETF (NYSEARCA: AIA ) jumped 2.8%, the China ETF iShares China Large-Cap (NYSEARCA: FXI ) advanced 4.2%, the Vanguard FTSE Europe ETF (NYSEARCA: VGK ) moved higher by 1.7% and the iShares MSCI Japan ETF (NYSEARCA: EWJ ) climbed 3.7%. While we do not believe these bounces have legs, investors’ sentiments about risky investments became relatively relaxed lately especially because of compelling valuation. Thus, momentum investing might be an intriguing idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks which are sizzling on the market. Below, we highlight three momentum stocks and three ETFs that may find a place in investors’ wish list. Stock Picks For stocks, we have chosen top picks using the Zacks Screener that fits our criteria of a momentum score of “A”, stock Zacks Rank #1 (Strong Buy) and positive estimate revisions for the current quarter. Here are the three recommended stocks. Delta Apparel Inc. (NYSEMKT: DLA ) Based in South Carolina, this retailer of apparel has delivered an average positive earnings surprise of 36.36% over the trailing four quarters. The consensus estimate for the current quarter has risen from $0.07 to $0.33 per share in the last 30 days, as one analyst raised the forecast, while none cut the estimate. Along with a Momentum score of “A”, the stock also has a Value score of “A”. This Zacks Rank #1 stock is up 13.8% so far this year (as of February 16, 2016). OraSure Technologies Inc. (NASDAQ: OSUR ) The company makes and markets oral fluid diagnostic products and specimen collection devices in the United States, Europe and internationally. OSUR is down 1.1% so far this year. The stock currently has a solid Zacks Industry Rank in the top 18%. It also has a Growth score of ‘A”. The consensus estimate for the current quarter has risen from breakeven to $0.01 per share. It has delivered an average positive earnings surprise of 216.7% over the trailing four quarters Tyson Foods Inc. (NYSE: TSN ) Based in Arkansas, Tyson Foods, together with its subsidiaries, operates as a food company worldwide. The stock currently has a Growth score of “A”, a Value score of “B” and a solid Zacks Industry Rank in the top 1%. In the last 30 days, its projection of earnings increased from $0.86 to $0.93. While one analyst raised the estimate, another cut it in the last 30-day frame. This high-momentum stock is up 16% so far this year (as of February 16, 2016). ETF Picks iShares MSCI International Developed Momentum Factor ETF (NYSEARCA: IMTM ) The $11-12 million fund looks to track the performance of large- and mid-capitalization developed international stocks exhibiting relatively higher momentum characteristics. The product charges 30 bps in fees and yields 1.73% annually. No stock accounts for more than 2.41% of the basket. The fund has a diversified double-digit exposure in the Consumer Staples, Discretionary, Financials, Industrials and Healthcare sectors. The product is heavy on Japan (32.23%), while Germany and U.K. also have solid exposure of 11.33% and 10.07%, respectively. IMTM is down 6.8% so far this year, but added 3.4% on February 16, 2016. The fund has a Zacks ETF Rank #3 (Hold). iShares S&P 500 Momentum Portfolio ETF (NYSEARCA: SPMO ) The $2.4-million fund tracks the performance of stocks in the S&P 500 Index that have a high momentum score. The fund charges 25 bps in fees and is heavy on Consumer Discretionary (31.9%) and Healthcare (27.5%). Consumer Staples and IT also have double-digit exposure. SPMO is down 7% year to date, but added over 2.2% on February 16, 2016. Cambria Global Momentum ETF (NYSEARCA: GMOM ) This active ETF seeks to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction. The bond fund iShares 3-7 Year Treasury Bond ETF (NYSEARCA: IEI ) holds the top position with 11.73%, followed by other U.S. Treasury funds, namely the Vanguard Short-Term Bond ETF (NYSEARCA: BSV ) and the iShares 1-3 Year Treasury Bond ETF (NYSEARCA: SHY ) in the next two spots. The fund charges 94 bps in fees and yields 1.91% annually. Equity ETFs also get a place in the fund. The fund has lost just 1.7% so far this year, while it added 0.2% on February 16, 2016. This could be a great pick in the bear market as well. Original Post