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Stealing Someone’s Homework

Unit trusts are a simple way to invest, but their fee structures may be cost prohibitive for some. Unit trust companies, in their fact sheets, provide proven selection processes that one is able to replicate. By using their proven track records, one is able to develop a nice portfolio that works well with a “Buy and Watch” philosophy. Equity unit investment trusts are interesting allocation vehicles that have been around since the Investment Company Act 1940. They are investment companies, and the easiest description one can give is they provide a list of researched stocks that one can hold for periods ranging from 15 months to four years. They are unmanaged, as the stocks are selected with the philosophy of holding them throughout the maturity period. When the trust matures, one can take the value of the investment at NAV, or reinvest everything in another portfolio as a “rollover”. Rollovers are usually free. Conceptually, I like them, because they fit well within a “Buy and Hold” strategy, but allow one to make periodic changes over the years. The fee structures, though, make them prohibitive for those who are looking for a way to keep costs down. Fees for First Trust’s Capital Strength Portfolio average an initial 1.975% per year. Invesco’s Dividend Income Leaders Strategy Portfolio has an average annual initial fee of 2.36%. Both of these annual fees are reduced to 1.475% and 1.56% respectively with the free rollovers they provide. There are break points for high net worth investors where the fees can be reduced to 0.725% for First Trust and 0.32% for Invesco. Don’t misread as one saying these strategies do not work. They do. The question is whether one wants to pay the fees. If you don’t, then steal their homework. If one studies the fact sheets these companies provide, they do have fairly easy strategies that can be replicated on one’s own. Take the Capital Strength Portfolio for example. The fact sheet has these parameters for its stock selection process: Begin with the S&P 500 Cash greater than $1 billion Long Term Debt/Market Value of Equity < 30% Return on Equity > 15% Cash Flow Analysis and Analyst Judgment Hold for 24 months Does this strategy work? It sure does. I ran a general backtest to see how this approach performed since 1989. The results? How does an average annual return of 14.46% (σ = 23.82%) work for you? The S&P 500 averaged 10.14% during the same period; an excess of 430 basis points that is nothing to sneeze at. Given that a basic portfolio screen returns around 30 stocks, this is a fairly manageable strategy if one is willing to let the strategy play out over a two year period. The following table provided is a list of potential stocks for a 24 month portfolio: Ticker Name AAPL Apple Inc ACN Accenture PLC ADP Automatic Data Processing Inc. AFL AFLAC Inc AGN Allergan Inc. AVGO Avago Technologies Ltd BEN Franklin Resources Inc BIIB Biogen Idec Inc CA CA Inc CMI Cummins Inc. CTSH Cognizant Technology Solutions Corp EXPD Expeditors International of Washington Inc. FLR Fluor Corp GD General Dynamics Corp GOOG Google Inc GRMN Garmin Ltd INTC Intel Corp JNJ Johnson & Johnson LLY Eli Lilly and Co LRCX Lam Research Corp MA MasterCard Inc MSFT Microsoft Corp NKE Nike Inc PCLN Priceline Group Inc (The) PG Procter & Gamble Co (The) PH Parker-Hannifin Corp QCOM QUALCOMM Inc. SLB Schlumberger Ltd TROW T. Rowe Price Group Inc WDC Western Digital Corp XOM Exxon Mobil Corp YHOO Yahoo Inc Is there another way, though? What if you want to be a completely passive investor, but like this approach to stock selection? Well, there is an option for that too. Using the Capital Strength Index, which has many of the same screening criteria, The First Trust Capital Strength ETF (NASDAQ: FTCS ) is a nice way to go. It is a managed ETF with a moderate fee structure (0.76% gross), and has performed nicely since inception, and still beats the S&P 500. The way I see it, this is a nice passive way to invest, and still get performance from one’s portfolio. The 30 or so stocks are easy to watch and hold, and one only has to restructure biannually. It is an idea one should consider, if indexing is not part of the strategy. It is suggested here to study the strategies, and find one that works for you. If you would rather someone else do the work, then hire the companies and buy one of their portfolios. If that is even too much work, buy the ETF. Happy Investing! Disclosure: The author is long CTSH, QCOM. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Get Him To The GREK

The Global X FTSE Greece 20 ETF is a great way to leverage a favorable resolution between Greece and the euro-zone. The GREK is far off its 52-week high of $25.76, largely due to the political developments that have led investors to speculate about Greece leaving the euro-zone. The security is up from its low of $10.44 recently because of an increasing understanding that a favorable resolution is likely. Opportunity exists for near-immediate appreciation on the announcement of a favorable resolution as early as next week. Over the course of this year, the GREK ETF should gain further as it reflects the benefits of ECB actions like Greece’s peer markets have. Investors interested in leveraging the prospect of a favorable Greece resolution, but hoping to limit risk to any one individual Greek security, can look to the Global X FTSE Greece 20 ETF (NYSEARCA: GREK ). The security has come off its highs on fear that Greece could leave the euro-zone. Though it has also come off its lows on the prospect of a favorable resolution, it still has a way to go higher because of the ongoing absence of that event. I think investors can buy it here for immediate upside to $15 on a quick fix and longer-term gain to $17 to $20 this year. 5-Year Chart of GREK at Seeking Alpha As you can see here in the long-term chart of the Global X FTSE Greece 20 ETF, it has recently fallen precipitously. The reason for the decline should be obvious to anyone who has not been on a deserted island for the last couple months, save for a Greek island. When the popular Syriza party was elected into power in Greece, and before that when the polls showed it could be, Greek securities started to sell off. That was because of the tough talk against austerity that emanated from the party and its leaders. Fear rose that Greece could leave the euro-zone or be ejected from it due to the change in political power. But as time has passed, investors have become aware of what I already knew. Tough-talking Greek leaders do not have the backing of the Greek people to leave the euro-zone, as polls show a great majority of Greeks would vote against it in a referendum. That was known even before the elections, and Syriza indicated it was not interested in leaving the euro-zone, ensuring its election. However, Syriza still wanted an alteration to the bailout deals Greece had previously agreed to, due to the great damage austerity has done to many Greeks. The medicine while beneficial for the long-term economy was administered too much too soon and it made a good deal of Greeks sick, if not, unemployed. Over recent weeks, the emergence of a somewhat free-speaking Finance Minister, and Greek Defense Minister’s demands for Nazi war reparations have only stirred up more concern among the global investment community. Greek demands were met with tough talk from the Germans and other EU partners, so it got scary for some investors, who then bid the GREK security down to $10 and change. When the fear was palpable, I went long National Bank of Greece (NYSE: NBG ) at approximately $1 using long-term call options. Thanks for telling us now Greek , is what you are saying, but for your information, I just went long GREK Friday and it’s not too late still. I never had concern about the future of Greece, and was long GREK a few months ago at around $17. If Greece agrees to continued currency relations with its euro-zone partners, however altered the structure of the deal could be, much fear currently priced into the security must go away. Greece said today it will do whatever it can to reach a deal to keep it in the euro-zone; it has until February 28, but there is talk that a deal could be consummated as early as Monday. And it is in Germany’s interest to keep Greece in the euro-zone, because the presence of weak partners limits the upside of the euro, which serves Germany’s exports. 1-Month Chart of GREK GREK currently trades at approximately $13.63, after rising about 5% Friday. It was up Thursday too, and as you can see here, it has come off its low of $10.44. But GREK has upside from here, because before Syriza was elected, the security traded upward of $15, and before it was a concern altogether, it traded even higher with a 52-week high of $25.76. Now some of the security’s decline has been due to the general weakness of the European economy and that of Greece over the last 12 months, but Greek stocks should be benefiting year to date from the actions of the ECB, like its peers are. The iShares Europe ETF (NYSEARCA: IEV ) is up 4.8% year to date while GREK is down 5.5%. The Global X FTSE Portugal 20 ETF (NYSEARCA: PGAL ) is up 2.2%; the iShares MSCI Spain Capped ETF (NYSEARCA: EWP ) is only down 2.8% year to date because of Greece and Spain’s own similar political issues. Thus, given European shares seem to be finding bids here, there appears to be room to grow for GREK beyond just the immediate gain that should occur once it is clear Greece will remain in the euro-zone. I’m not anticipating a quick recovery to the 52-week high, but an immediate move to above $15 on a positive resolution seems likely to me. From there, I see no reason why the security that marks the Greek market cannot approach $16 in short time and $17 to $20 before year-end. So I say, get him to the GREK. I have been following these Greek developments, so interested parties may find value in following my column . Disclosure: The author is long GREK, NBG. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Bet On The American Consumer With These 3 ETFs

You pretty much have to believe in the resiliency of the U.S. consumer, as spending comes as second nature to most Americans. And given some of the recent economic trends, we could definitely see a burst in purchasing in the near term by this consumption-hungry group. Recent Trends After years of stagnation, the job market is finally starting to come back, giving plenty of lower income consumers some extra cash. And, with the market finally seeing some wage inflation raises, more money is going into consumers’ pockets all the time. Consumers are also seeing strong stock prices which makes many feel wealthier and thus more likely to spend, while the current state of the housing market doesn’t hurt matters either. After all, a house is the biggest investment for most people so with the Case-Schiller 20 city well off of the post-crash lows, the general mood is much improved as well. But arguably the most important trend for consumers lately is the sudden crash in oil prices. Crude has fallen to levels unseen in years, reducing gas costs for millions of Americans. These small savings each week are finally starting to add up, and are basically a massive tax cut for the middle class, freeing up dollars for discretionary purchases. Impact These trends set up nicely for the consumer sector, and in particular, the cyclical space. However, it is worth noting that we have yet to truly see a stock price impact, as many consumer stocks and funds have not led the market higher so far in 2015. This is actually great news for investors as it suggests there is still time to get in on the sector before consumers reallocate their new-found money to discretionary purchases. And thanks to ETFs, we don’t have to guess which particular company will benefit the most, as we can just buy the whole sector instead. For investors seeking to apply this approach to their portfolios, we have highlighted three consumer discretionary ETFs below which could be excellent choices in this type of environment. All three are quite diversified and have significant holdings in mid or small cap stocks, giving them a big tilt towards U.S.-centric companies: PowerShares DWA Consumer Cyclicals Momentum Portfolio ETF ( PEZ ) This fund looks to identify companies that are showing relative strength characteristics in the consumer cyclical space. The ETF seeks to hold at least 30 stocks in its portfolio, while it will charge an expense ratio of 60 basis points a year. Current holdings are focused on specialty retail (23%), airlines (15.5%), and hotels/restaurants/leisure (14.8%). However, it is worth noting that the product is pretty well spread out from an individual holding perspective, as no single company makes up more than 5.3% of total assets. We should also point out that the fund has a pretty health allocation to small and mid cap securities as these make up close to 60% of the portfolio. Currently, the fund has a Zacks ETF Rank #2 (Buy) and a medium risk outlook. Guggenheim S&P Equal Weight Consumer Discretionary ETF ( RCD ) For another way to play the consumer market, RCD is an excellent choice for those seeking an equal weight approach. The fund takes the S&P 500 consumer discretionary sector, and instead of weighting by market cap, gives each company in the space the same level of holdings. This results in a fund that has about 21% of its assets in specialty retail, 17% in media, and then 12.8% in the hotel/restaurant/leisure category. And due to the equal weight approach, no single company makes up more than 1.6% of assets. The ETF puts about half its portfolio in mid caps and the rest in large caps, which compares to roughly 80% large caps for the cap-weighted Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ). RCD currently has a Zacks ETF Rank #3 (hold) and it has a medium ETF Risk rating. PowerShares S&P SmallCap Consumer Discretionary Portfolio ETF ( PSCD ) If you are looking to just zero in on small cap securities in the consumer space, PowerShares’ PSCD will be tough to beat. The fund targets a subset of the S&P SmallCap 600 Index, focusing on about 90 companies that are in the business of providing consumer goods and services. The fund has a heavy focus on specialty retail (29%) and hotels/restaurants/leisure (about 29% each), followed by apparel (13.8%), and household durables (11.1%). It is pretty spread out in terms of individual holdings too, as only Jack In The Box (NASDAQ: JACK ) and Buffalo Wild Wings (NASDAQ: BWLD ) have allocations greater than 3% in the portfolio. The entire portfolio is focused on small caps, though it is worth pointing out that growth leads the way with a 40% holding. The fund has a Zacks ETF Rank #2 (Buy), though it has a high ETF Risk outlook.