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Top And Flop ETFs Of November

Finally, the U.S. stock market has entered into its strong stretch. Historically, the three months from November through January are the most successful in the stock markets. A consensus carried out from 1950 to 2013 has revealed that November has ended up offering positive returns in 43 years and negative returns in 22 years, with an average return of 1.37%, as per moneychimp.com . November stands second in terms of monthly returns over the past two decades. However, this year, the market looked more like the down-years due to a host of concerns, with rising rate worries being at the helm. Global growth has been in jeopardy and commodities falling fast. Among the top ETFs, investors saw U.S. ETFs advance slightly with SPY adding 0.3%, DIA gaining 0.12% and QQQ moving higher by about 0.25% in the month (as of November 27, 2015). Let’s take a look at the three best and worst performing ETFs of the month. Top Performers KraneShares CSI China Five Year Plan ETF (NYSEARCA: KFYP ) – Up 14.7% China was the beneficiary of compelling valuation. After a bloodbath in August following the currency devaluation and several offhand economic data, China started to recoup losses from October with its A-Shares ETFs turning out as chartbusters in November. Plenty of monetary easing policies, changes in demographic policy and hopes for further easing (as the economy is still reeling under pressure) helped KFYP to add over 14% in the month. BioShares Biotechnology Clinical Trials Fund (NASDAQ: BBC ) – Up 13% The biotech space was hit hard in September on drug pricing concerns. However, the sell-off made this piping hot corner affordable. A whirlwind of mergers and acquisitions, plenty of drug launches, FDA approvals for the highly awaited drugs, ever-increasing demand in the emerging markets and surging health care spending made this sector the star performer of November. Needless to say, the operating fundamentals of the health care space are stronger than many other sectors. Other biotech and pharma ETFs that stole the show in the month were SPDR S&P Pharmaceuticals ETF (NYSEARCA: XPH ), Loncar Cancer Immunotherapy ETF (NASDAQ: CNCR ) and ALPS Medical Breakthroughs ETF (NYSEARCA: SBIO ) which advanced about 9.6%, 9.2% and 7%, respectively. Deutsche X-trackers Japan JPX-Nikkei 400 Hedged Equity ETF (NYSEARCA: JPNH ) – Up 12% Japan may have entered into a technical recession in Q3, but that did not turn off investors’ enthusiasm toward Japanese investing. An ongoing QE measure and hopes of further monetary support which can fight weakening growth and boost consumer prices were behind the optimism in the Japanese stocks. Another Japanese ETF that soared (about 10.7%) in the month was WisdomTree Japan Hedged Health Care Fund (NYSEARCA: DXJH ). Barclays Inverse US Treasury Aggregate ETN (NASDAQ: TAPR ) – Up 8.2% As the Fed gave cues of a rate hike, the inverse U.S. Treasury ETF which follows a unique strategy to hedge against or benefit from the rising U.S. dollar interest rates by tracking the Barclays Inverse US Treasury Futures Aggregate Index, gained over 8%. Worst Performers Metals were slaughtered in the month. The double whammy of flagging global growth suppressing demand and the strength of the greenback in the wake of the U.S. policy tightening have weighed heavily on metal ETFs. ETFS Physical Palladium Shares (NYSEARCA: PALL ) – down 19.1% This product looks to reflect the price of palladium. This precious metal has a number of uses in society including jewelry and dentistry, though the key use is in the auto sector with catalytic converters to control emissions. As a result, following the Volkswagen scandal, demand for the metal declined. While a higher greenback dampened the metal price, the rise in U.S. interest rates would make auto loans pricier, which in turn might curb auto sales in the country. E-TRACS UBS Bloomberg CMCITR Long Platinum ETN (NYSEARCA: PTM ) – down 18.4% This is a sub-index of the UBS Bloomberg Constant Maturity Commodity Index & measures the collateralized returns from a basket of platinum futures contracts which is designed to be representative of the entire liquid forward curve of the platinum contracts. In addition to usage in jewelry, platinum is widely used in auto-catalysts to control emissions and so its decline is self-explanatory. Global X Copper Miners ETF (NYSEARCA: COPX ) – down 18.9% Copper prices slipped to a six-year low on growth concerns. A weak Chinese economy remains a concern for the fund for long. China matters the most for this metal as the country is the world’s biggest consumer of this industrial metal, making up roughly 40% of global copper demand. This headwind shattered the copper mining ETFs in November. Notably, mining ETFs generally trade as a leveraged play on the underlying metal and thus see a higher jump. iPath Dow Jones-UBS Nickel ETN (NYSEARCA: JJN ) – down 16.6% Nickel prices plummeted to a nine-year low. Solid exports from Malaysia are resulting in a supply glut and soft demand for stainless steel in Europe has wrecked havoc on nickel ETFs. Original Post

Mixed Views On Emerging Markets: Funds To Buy And Sell

There are mixed views on emerging markets now. According to a report from Bank of America Merrill Lynch, fund managers have mostly been pessimistic about emerging-market equities since 2001. On the other hand, some strategists at leading banks and financial companies believe that securities from emerging markets may have hit their lowest point. Amid the contradictory opinions, certain market experts are of the view that investors often invest in emerging market funds too late or they stay invested for too long. So, while buying certain favourably ranked emerging market funds at a discount now should be a prudent move, investors may also dump certain Sell-rated funds that their portfolio will not miss. The Pessimism According to Bank of America Merrill Lynch’s monthly survey, fund managers are the most underweight on emerging-market equities against developed-market equities since the survey began in 2001. While post 2009, fund managers’ relative positioning had jumped and stayed mostly in the green till 2013, the sentiment soured after that. In 2014, the sentiment dropped to a new low before rebounding in late 2014 and early 2015. However, the sentiment is the most pessimistic now. The bearish outlook is concentrated mostly on Asia. Investors are apprehensive about the slowdown in China’s economy while the U.S. central bank may hike rates. The International Monetary Fund (IMF) meeting on Nov 30 is also crucial. Investors fear further devaluation in the Chinese currency but not before IMF adds the yuan to its Special Drawing Rights basket of currencies. And if this happens, Bank of America strategists fear that the markets will move even lower. Goldman Sachs projects that yuan traded at offshore rate may weaken by 2.5% to 3% against the dollar in the next 2 months. Eventually, the devaluation of yuan may impact other emerging-market currencies, as they are often influenced by the monetary policies in the world’s second-largest economy, China. The Contrarian View Meanwhile, market watchers at a number of leading banks and financial institutions have said that they believe asset values for emerging markets have hit a rock bottom. In fact, the views come from the likes of Bank of America, Goldman Sachs and Barclays PLC. Following three continuous years of losses, markets and assets from developing nations are poised for a rebound. According to Morningstar, in the 12 months ended October, emerging-market stock funds traded in the US dropped an average 13.4%. A major indicator of valuations for emerging markets is the MSCI Emerging Markets Index, which is down 30% from the high achieved in 2011. The index is currently trading at approximately 12x its earnings estimates. Additionally, the index’s valuation is nearly three times lower than the S&P 500’s current figure. This is why analysts at Barclays believe that prices of emerging market securities are significantly lower than their intrinsic value. Over the six-month period since the last three American market tightening cycles began, global markets have gained an average 15%. Strategists are also hopeful that emerging markets might rebound in 2016. They say that it might not mirror the “roaring”2000s, but 2016 might be the year the emerging markets “find their feet”. 2 Emerging Market Funds to Buy As mentioned earlier, investors should not miss the buying opportunity. An uptrend in emerging economies brings good tidings for investment instruments from these countries. Many of them currently have reasonable valuations compared to their historical averages. Below we present 2 International Bond – Emerging Market mutual funds that carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy). Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund. Fidelity New Markets Income (MUTF: FNMIX ) fund invests the lion’s share of its assets in emerging markets or makes other investments that are economically linked to emerging markets that have stock markets as defined by MSCI. These emerging market countries also may also be the ones with low- to middle-income as classified by the World Bank. FNMIX currently carries a Zacks Mutual Fund Rank #1. FSRPX has gained respectively 3.7% and 0.2% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are 1.2% and 5.4%, respectively. Annual expense ratio of 0.84% is lower than the category average of 1.16%. Goldman Sachs Emerging Market Debt A (MUTF: GSDAX ) predominantly invests in emerging market debt securities. These instruments may be issued by governments as well as corporate entities. To gain exposure to certain emerging economies, GSDAX may use structured securities or derivatives among others. GSDAX currently carries a Zacks Mutual Fund Rank #2. GSDAX has gained respectively 2.8% and 0.5% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are 1.5% and 5.1%, respectively. Annual expense ratio of 1.24% is higher than the category average of 1.16%. 2 Emerging Market Funds to Sell It is also important to not stay invested in certain underperforming funds. For investors not ready to bet on the emerging markets now or for investors who have lost plenty staying invested in some emerging market funds, below we present 2 funds that either carry a Zacks Mutual Fund Rank #4 (Sell) or Zacks Mutual Fund Rank #5 (Strong Sell). Eaton Vance Emerging Markets Local Income A (MUTF: EEIAX ) gains exposure to the emerging economies by investing in securities and derivatives among other instruments. Bulk of EEIAX’s assets are invested in securities denominated in currencies of emerging market countries, fixed income instruments that are issued by emerging market entities, and in emerging-market denominated derivative instruments. EEIAX currently carries a Zacks Mutual Fund Rank #5. EEIAX has lost respectively 10.6% and 16.5% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are negative 7.2% and negative 2.5%, respectively. Annual expense ratio of 1.25% is higher than the category average of 1.16%. PIMCO Emerging Markets Currency A (MUTF: PLMAX ) invests most of its assets in currencies of emerging market countries or in fixed income instruments denominated by these currencies. PLMAX currently carries a Zacks Mutual Fund Rank #4. PLMAX has lost respectively 5.2% and 9.7% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are negative 4.7% and negative 2.4%, respectively. Annual expense ratio of 1.25% is lower than the category average of 1.58%. Original post

Believe In T. Rowe Price? Invest In These EM ETFs

Worries over the emerging market (EM) bloc are piling up on the impending Fed tightening, commodity market crash, slowing growth and currency weakness. If this was not enough, China – the largest emerging market – is seeing a serious upheaval in its financial market and economy and sending shockwaves to the entire EM bloc. Several hedge funds are cutting their stake in EM equities and ETFs in the wake of the Fed move. Capital inflows to emerging markets are likely to turn negative this year for the first time since 1988. The fund outflows ($12.4 billion) in Q3 were the highest since the first quarter of 2014 when the emerging market funds bled $12.7 billion in assets. In September, emerging market ETFs witnessed $1.9 billion of extraction. Though bond funds were also unsteady, equities were hit hard. Two top EM ETFs – Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) and iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) – have shed 12% and 10.6% so far this year (as of November 20, 2015). However, not all emerging markets are seeing the same downtrend at least, if we are to go by T. Rowe Price , an American publicly owned investment firm. As per the organization, an improving U.S. economy will lug along other regions of the world including this vulnerable part, though a short-term setback in EM securities can’t be overruled. Moreover, the organization remains upbeat on several specific economies. Below we highlight those economies and their respective ETFs for investors who want to follow T. Rowe Price. Philippines T. Rowe Price described this economy as bearing all the features investors look for in an emerging market, i.e. growth, great demographics and a current account surplus. The Philippine economy recorded 66 successive quarters of economic growth. Barclays indicated that the economy has grown 6% on average per annum under the current administration, while inflation stayed at 3.7%, which is quite commendable as per the standard of emerging markets, per Financial Times. The Philippines economy grew 5.6% in the second quarter of 2015, which is still a strong growth rate compared with other developed economies. This calls for a look at iShares MSCI Philippines ETF (NYSEARCA: EPHE ). The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. EPHE is down 9.6% so far this year (as of November 20, 2015). India Though India’s economic growth slowed to 7% in the June quarter, consecutive interest rate cuts, decline in sky-high inflation, still-laudable economic growth and hopes of pro-growth policy reforms under the ministry of prime minister Narendra Modi put India investing in the best position in the BRIC bloc. An acute plunge in oil prices also went in favor of the huge oil-importing nation India. Currency condition is also not as vulnerable as it was in 2013 when taper talks ravaged the EM equities. Greenback gained about 2% against the Indian rupee in the last one month. Thus, India ETFs like PowerShares India Portfolio (NYSEARCA: PIN ), iShares MSCI India ETF (BATS: INDA ) and EGShares Indxx India Small Cap Fund (NYSEARCA: SCIN ) can be followed. However, each of these three ETFs is in red this year. PIN and INDA has lost about 8% while SMIN is down 1.7%. Indonesia T. Rowe Price views Indonesia as a contrarian bet and seeks bottom fishing. Indonesia ETFs have seen a horrendous sell-off this year and the worst-performing emerging market ETFs in the year-to-date frame. MSCI Indonesia ETF (NYSEARCA: EIDO ) is down about 22.3% so far this year. However, such a beating has made the Indonesia ETF fairly valued at the current level. Also, stimulus packages announced by its pro-growth President Joko Widodo put this largest Southeast Asian economy on watch for gains. In the last one month (as of November 20, 2015), U.S. dollar was over 2% up against the Indonesian Rupiah. T. Rowe Price has termed Indonesia as the ‘India of tomorrow’. Peru T. Rowe Price has a choice in the struggling Latin American pack too, i.e. in Peru. The country is famous for the production of this metal, the price of which has slid steeply this year. Peru’s economy will likely expand 3.9% year over year in Q4 and close out 2015 with a growth rate of about 3%, as per a central bank official . This will miss the central bank’s prior full-year growth forecast of 3.1% by a slight margin. The bank official went on saying that the economy’s 2016 growth will be 4.2%, unless an adverse weather condition hits the economy. Investors can play this growth via iShares MSCI All Peru Capped ETF (NYSEARCA: EPU ). Peru ETF has lost over 30% so far this year (as of November 20, 2015). Original Post