Tag Archives: energy

Forget Production Cut: Short Oil And Energy ETFs

The free fall in oil prices for over the past one-and-a-half years had taken a brief pause in recent sessions on hopes of an output freeze by the Organization of the Petroleum Exporting Countries (OPEC). The biggest oil-producing countries – Saudi Arabia and Russia – along with Qatar and Venezuela had agreed to freeze oil output at the January level if other countries joined them in the initiative. Had the move materialized, the oil patch – which has long been suffering from higher supplies and lower demand on weak global growth – would see prices shoring up and losses paring down. Many had started to view the move as the beginning of the long-wished production cut. However, all optimism went down the drain after Iran called the OPEC top-brass Saudi Arabia-led initiative a ” joke “. In any case, chances of Iran joining the treaty were slim as the country has been trying to boost production after the sanctions on it were lifted last month. This is because it was producing below its capacity and pre-sanction levels since 20 1 1 while the other countries had raised their output limit to record levels in the mean time. After Iran’s remark, Saudi Arabia also scrapped the option of output cuts by major producers in the near term. However, Saudi oil minister Al-Naimi also noted that he expects more countries to agree on the output freeze scheme by next month. So, while output cut has taken a backseat, investors should also keep in mind that there is no improvement in the demand scenario either. Earlier this month, the International Energy Agency (IEA) slashed its estimates for global oil demand for 20 15 and 20 16, by 100,000 barrels a day. This represents flat demand growth ( 1.2 million barrels a day) this year. Market Impact Following the dimming prospects of an output cut and limited benefits from a likely output freeze at record levels, oil prices started giving up prior gains. The United States Oil ETF (NYSEARCA: USO ) – which looks to track the daily changes of the spot price of the U.S. crude – lost over 4.8% on February 23 while it lost about 1.3% after hours. On the other hand, the United States Brent Oil ETF (NYSEARCA: BNO ) – which looks to track the daily changes in percentage terms of the spot price of Brent crude oil – was off 3.5% on February 23. Short Oil Given the situation, investors may want to consider shorting oil or the entire energy space. So, for investors seeking to make an inverse bet on oil as a commodity or on the energy equities, below are three ETFs pertaining to each case. Any of these will prove gainful amid declining oil prices. However, investors should keep in mind that a short play in the futures market requires a strong appetite for risks. ProShares UltraShort Bloomberg Crude Oil ETF (NYSEARCA: SCO ) SCO is the most popular option in the short oil ETF space. The fund tracks the Dow Jones-UBS Crude Oil Sub-Index to provide twice the inverse performance on a daily basis of WTI crude oil. The fund was up 8.5% on February 23 while it added 2.7% after hours. DB Crude Oil Double Short ETN (NYSEARCA: DTO ) The note follows a benchmark of crude oil futures contracts to provide -2x exposure. The fund added more than 7.4% on February 23, 20 16. VelocityShares 3x Inverse Crude Oil ETN (NYSEARCA: DWTI ) DWTI is one of the riskier ways to play the short oil market, utilizing -3x exposure with daily rebalancing. The fund tracks the S&P GSCI Crude Oil Index to provide exposure to crude oil. The product surged 14.4% on February 23, obviously for its triple-leverage strategy and advanced 4.8% after hours. Short Energy ProShares Short Oil & Gas ETF (NYSEARCA: DDG ) This fund provides unleveraged inverse (or opposite) exposure to the daily performance of the Dow Jones U.S. Oil & Gas Index. The ETF makes a profit when the energy stocks decline and is suitable for hedging purposes against the fall of these stocks. DDG was up 3.3% on February 23. ProShares UltraShort Oil & Gas ETF (NYSEARCA: DUG ) This fund seeks two times (2x) leveraged inverse exposure to the Dow Jones U.S. Oil & Gas Index. DUG returned more than 6.5% on February 23. Direxion Daily Energy Bear 3x Shares ETF (NYSEARCA: ERY ) This product provides three times (3x) inverse exposure to the Energy Select Sector Index. The fund surged over 10% on February 23 and added 1.9% in after-market trading. Original post

16 Highly Traded Leveraged/Inverse ETFs Of 2016

Thanks to heightened volatility in the stock markets, leveraged or inverse ETFs have been gaining immense popularity as investors are making a dash for big gains on quick market turns. This is especially true as the stocks logged their best gains last week on a year-to-date basis after seeing the worst-ever start to a year. However, the markets fell again in yesterday’s trading session, keeping the volatility levels high. Leveraged or inverse products either create a leveraged long/short position, an inverse long/short position or a leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains a friend. However, these funds run the risk of huge losses compared to traditional funds in fluctuating or erratic markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as weeks or months). In spite of this drawback, investors flocked to these products for outsized gains in a short span. We have highlighted 16 leveraged/inverse ETFs that have seen massive trading so far this year. Most of these ETFs have delivered negative returns from a year-to-date look, yet have been investors’ darlings with abnormal returns piled up in a short period when the trend favored a specific corner of the world. ProShares Ultra VIX Short-Term Futures ETF (NYSEARCA: UVXY ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $48.38 billion This product provides two times (2x) exposure to the daily performance of the S&P 500 VIX Short-Term Futures Index, which reflects an implied volatility of the S&P 500 Index at various points along the volatility forward curve. It offers a daily rolling long position in the first- and second-month VIX futures contracts. The ETF has amassed about $378.4 million in its asset base while charging 95 bps in fees per year from investors. It is the most heavily traded ETF so far this year, with the highest trading volume of $48.38 billion. The fund has gained 3 1.3% in the year-to-date time frame. VelocityShares Daily Inverse VIX Short-Term ETN (NASDAQ: XIV ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $25.76 billion With an AUM of more than $ 1 billion, this ETN is popular and offers inverse (opposite) exposure to the S&P 500 VIX Short-Term Futures Index, charging a higher expense ratio of 1.35%. The note has seen total trading volume of $25.76 billion so far this year and has lost 23.7%. Direxion Daily Small Cap Bull 3x Shares ETF (NYSEARCA: TNA ) Leveraged Factor: 3x Inverse: No Benchmark Index: Russell 2000 Index YTD Volume: $14.54 billion This product provides triple (3x) leveraged play to the small-cap Russell 2000 Index, charging 95 bps in fees and expenses. It has been able to manage $787.7 million in its asset base with year-to-date trading volume of $ 14.54 billion. TNA is down 28.9% so far this year. ProShares UltraShort S&P 500 ETF (NYSEARCA: SDS ) Leveraged Factor: 2x Inverse: Yes Benchmark Index: S&P 500 index YTD Volume: $14.33 billion This fund seeks two times leveraged inverse exposure to the S&P 500 index, charging 89 bps in fees. It is relatively popular, having amassed $ 1.5 billion in AUM and having exchanged a total of $ 14.33 billion in volume so far. SDS is up 7.6% in the year-to-date time frame. VelocityShares Daily 2x VIX Short-Term ETN (NASDAQ: TVIX ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $13.86 billion Like UVXY, this note also offers two times exposure to the S&P 500 VIX Short-Term Futures Index, but comes with an additional expense ratio of 0.70%. With an AUM of $342.8 million, the fund has traded in massive volumes of $ 13.86 billion and has surged 30.7% this year. VelocityShares 3x Inverse Crude Oil ETN (NYSEARCA: DWTI ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: S&P GSCI Crude Oil Index Excess Return YTD Volume: $13.59 billion This product provides three times inverse exposure to the daily performance of the S&P GSCI Crude Oil Index Excess Return. With an AUM of $490.2 million, it has traded in massive volumes of $ 13.59 billion and has gained 18.4% this year. The ETN is a bit pricey as it charges 1.35% in annual fees. ProShares Ultra S&P 500 ETF (NYSEARCA: SSO ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $13.30 billion This is the most popular and liquid ETF in the leveraged space with an AUM of $ 1.6 billion. The fund seeks to deliver twice the return of the S&P 500 Index, charging investors 0.89% in expense ratio. It has seen solid trading volumes of $ 13.30 billion so far this year and is down 9.6%. ProShares Short VIX Short-Term Futures ETF (NYSEARCA: SVXY ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $12.64 billion Like TVIX, this fund offers inverse exposure to the S&P 500 VIX Short-Term Futures Index, but with no leveraged factor. It charges 95 bps in annual fees per year from investors and has exchanged about $ 12.64 billion in shares this year. The fund has accumulated $487 million in its asset base and shed 23.7% so far this year. Direxion Daily Gold Miners Index Bull 3x Shares ETF (NYSEARCA: NUGT ) Leveraged Factor: 3x Inverse: No Benchmark Index: NYSE Arca GoldMiners Index YTD Volume: $11.04 billion This product seeks to deliver thrice the daily performance of the NYSE Arca Gold Miners Index, which consists of firms that operate globally in both developed and emerging markets, and are involved primarily in the exploration and production of gold. It is rich in AUM of $946 million and has seen solid trading volume of $ 1 1.04 billion so far in the year. Expense ratio comes in at 0.95%. The fund has delivered robust returns of 1 12. 1% year to date. ProShares UltraPro Short S&P 500 ETF (NYSEARCA: SPXU ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: S&P 500 Index YTD Volume: $10.88 billion This fund provides three times inverse exposure to the S&P 500 Index. It has an expense ratio of 0.93% and has seen a massive trading volume of $ 10.88 billion so far this year. It has amassed $548.6 million in its asset base and gained 10.4% year to date. ProShares UltraPro Short QQQ ETF (NASDAQ: SQQQ ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: NASDAQ 100 Index YTD Volume: $9.91 billion Investors embracing this product made huge profits from the declining NASDAQ 100 Index in a very short period. The product has exchanged $9.9 1 billion in average daily volume this year. It offers three times inverse exposure to the NASDAQ 100 Index, charging 0.95% in annual fees. The fund has an AUM of $378.2 million and has added 19.9% in the year-to-date time frame. ProShares UltraPro S&P 500 ETF (NYSEARCA: UPRO ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $9.55 billion This product also tracks the S&P 500 index, but offers thrice the returns of the daily performance with a bit higher expense ratio (by 2 bps) than SPXU. It has an AUM of $856.9 million and year-to-date trading volume of $9.55 billion. UPRO is down over 14.9% so far this year. Direxion Daily Small Cap Bear 3x Shares ETF (NYSEARCA: TZA ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: Russell 2000 Index YTD Volume: $9.41 billion This product provides triple leveraged inverse play to the small-cap Russell 2000 Index, charging 95 bps in fees and expenses. It has been able to manage $444.2 million in its asset base with year-to-date trading volume of $9.4 1 billion. TZA is down 3 1.6% so far this year. VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P GSCI Crude Oil Index Excess Return YTD Volume: $8.69 billion This is the popular leveraged fund targeting the energy segment of the commodity market through WTI crude oil futures contracts. It seeks to deliver thrice the returns of the S&P GSCI Crude Oil Index Excess Return and has amassed $9 10 million in its asset base. Though the fund charges a higher fee of 1.35% per year, its total trading volume of $8.69 billion year to date is incredible. UWTI is down about 6 1.8% in the same time frame. ProShares Short S&P 500 ETF (NYSEARCA: SH ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 Index YTD Volume: $8.20 billion This is the most popular inverse ETF with an AUM of $2.6 billion, providing inverse exposure to the daily performance of the S&P 500 index. It has seen a massive trading volume of $8.20 billion so far this year and has returned about 5.4%. Expense ratio came in at 0.90%. Direxion Daily S&P 500 Bull 3x Shares ETF (NYSEARCA: SPXL ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $8.12 billion SPXL makes an excellent pick for investors seeking to make large profits from the soaring stock market in a very short span. The fund creates a triple leveraged long position in the S&P 500 Index while charging 95 bps in fees a year. It has $635.2 million in AUM and has traded in a solid total volume of $8. 12 billion so far this year. The ETF has lost about 18% year to date. Original post

Alternative ETFs To Gain On First Solar’s Q4 Beat

Leading U.S. solar-panel manufacturer First Solar (NASDAQ: FSLR ) reported its fourth-quarter 20 15 results after the closing bell yesterday. The company beat our estimates on earnings and revenues, but lowered its sales guidance for 20 16 that remains much above our estimate. Earnings per share came in at $ 1.60, which comfortably surpassed the Zacks Consensus Estimate of 80 cents, but declined 15.3% from the year-ago quarter. Revenues decreased 6.5% year over year to $942 million, but edged past our estimate of $93 1 million. For 20 16, the company maintained its earnings per share guidance of $4.00-4.50, but slashed its revenue outlook to $3.8-4.0 billion from $3.9-4. 1 billion. The midpoints of both the guided earnings and revenues are much higher than the current Zacks Consensus Estimate of $4. 10 and $3.78 billion, respectively. Shares of this thin-film solar PV maker rose 2.9% in the after-market hours. The stock currently has a Zacks #3 (Hold) with a solid Value Style Score of B and a robust industry rank in the top 6%, suggesting a bright near term. ETFs in Focus Following the earnings beat, the ETFs having larger allocations to this solar giant have been in focus and could make great plays over the coming days. Below we have highlighted them: Market Vectors Solar Energy ETF (NYSEARCA: KWT ) This fund manages $ 14.4 million in its asset base and provides global exposure to 29 solar stocks by tracking the Market Vectors Global Solar Energy Index. Here, FSLR takes the top spot with a 10% allocation. In terms of country exposure, U.S. and China account for the top two countries with 34.9% and 24.9% share, respectively, closely followed by Taiwan ( 18.3%). The product has an expense ratio of 0.65% and sees a paltry volume of about 2,000 shares a day. The ETF has lost 23% in the year-to-date time frame. First Trust NASDAQ Clean Edge Green Energy Index ETF (NASDAQ: QCLN ) This fund provides exposure to the U.S. clean energy companies across a wide range of industries, including solar power, biofuels, advanced batteries, as well as the installation of new technological systems. It tracks the NASDAQ Clean Edge Green Energy Index and manages assets worth $65.5 million. It charges 60 bps in fees per year while the volume is light at nearly 24,000 shares. In total, the product holds 45 securities with FSLR being the top firm, accounting for 9.6% of its basket. From a sector look, technology firms dominate this ETF, accounting for nearly 30% of assets while oil & gas companies take another one-fourth share. QCLN has shed 16% so far this year and has a Zacks ETF Rank of 3 with a High risk outlook. Market Vectors Global Alternative Energy ETF (NYSEARCA: GEX ) This ETF provides global exposure to stocks that are primarily engaged in the business of alternative energy by tracking the Ardour Global Index. The fund holds about 3 1 stocks in its basket with an AUM of $84. 1 million while charging 62 bps in fees per year. Average daily volume is paltry for this fund at around 8,000 shares. First Solar occupies the fourth position in the basket with an 8.6% share. From a sector perspective, industrials takes the largest share at 47. 1% while information technology (29.7%) and utilities ( 13.4%) round off the next two spots. In terms of country exposure, the fund is skewed toward the U.S. with a 50.8% share followed by Denmark and China. The ETF has lost 12.4% in the same period. iShares S&P Global Clean Energy Index ETF (NASDAQ: ICLN ) This fund provides global exposure to 3 1 clean energy stocks, including solar, wind and other renewable sources, by tracking the S&P Global Clean Energy Index. Out of these, FSLR occupies the top spot at 7.62% of assets and charges 48 bps in annual fees and expenses. It has amassed just $75.3 million in its asset base while volume is also light at about 38,000 shares. U.S. and China take the top two spots in terms of country exposure with 24.7% and 23.5% share, respectively. The ETF is down about 16.4% in the year-to-date time frame. Guggenheim Solar ETF (NYSEARCA: TAN ) This ETF follows the MAC Global Solar Energy Index, holding 29 stocks in the basket. First Solar occupies the top position with 7.7% share. American firms dominate the fund’s portfolio with nearly 55.9% share, followed by China ( 17.9%) and Hong Kong ( 15%). The product has amassed $22 1.6 million in its asset base and trades in solid volume of more than 196,000 shares a day. It charges investors 70 bps in fees per year. The fund has lost 28.3% in the year-to-date time frame and has a Zacks ETF Rank of 3 or “Hold” rating with a High risk outlook. Original post