Tag Archives: etf

Catch These Poland ETFs On The Upswing

Poland’s currency zloty, bonds and stocks gained on Monday (May 16, 2016) as Moody’s reaffirmed its long-term credit rating for the country at A2. And unsurprisingly two ETFs tracking the country – the iShares MSCI Poland Capped ETF (NYSEARCA: EPOL ) and the VanEck Vectors Poland ETF (NYSEARCA: PLND ) – jumped 3.4% and 3%, respectively. Poland, one of the outperformers in the EU, has been lagging in recent months thanks to growth slowdown in the emerging markets. Eurozone troubles also continue to weigh on the country. Still, as per IMF forecasts, the country’s GDP growth rate is expected to touch 4% in 2016 as compared to 3.6% in 2015 building investors’ confidence in the country. Headwinds Remain Although Poland did not get a downgrade from Moody’s, the rating agency revised its outlook for the country to negative from stable. The agency cited several reasons for the change in outlook including fiscal risks arising from a substantial increase in current expenditures, uncertainty as to offsetting revenue measures and the government’s intention to lower the retirement age. Another factor affecting the outlook was the risk of deterioration in the investment climate thanks to unpredictable policies and legislations. The President’s office has recently presented a proposal to implement a law converting Swiss franc mortgages into zlotys. The International Monetary Fund (IMF) has criticized this proposal and stated that the country’s financial system along with credit and economic growth will stand to suffer if the country goes ahead with its plan to convert foreign-currency denominated mortgages. The IMF has also warned that the increase in government expenditure would lead to a rise in budget deficit to 2.8% in 2016. The rising budget deficit could even cross 3% in 2017, breaching the European Union’s budgetary rules. Instead, the IMF has encouraged the Polish government to follow policies that are market friendly. Despite these concerns, investors who believe that Poland is poised for a turnaround could catch the Poland-focused ETFs. Both the ETFs carry a favorable Zacks ETF Rank of 3 or ‘Hold’ rating, suggesting room for upside. EPOL in Focus EPOL has about $173.4 million in AUM and an average daily volume of 274,000 shares. The product tracks the MSCI Poland IMI 25/50, charging 63 basis points a year from investors. With 40 stocks in its basket, this fund puts as much as 46.1% of its total assets in the top five holdings, suggesting high concentration risk. Financials actually makes up roughly half of the portfolio with 44.7% exposure. Energy and materials round off the top three sectors with exposure of 17.3% and 9.6% respectively. Shares of EPOL fell roughly 5.4% in the last one-month period ended May 16, 2016. PLND in Focus The fund looks to track the VanEck Vectors Poland Index and has 26 securities in its basket, charging investors 60 basis points a year in fees. The fund has 36.4% of its total assets in the top five holdings. PLND also puts heavy focus on financials, with as much as 37.1% exposure, followed by a 14.1% allocation to energy, 12.7% coverage in utilities and 11.4% in consumer discretionary. PLND sees a paltry volume of around 13,000 daily, while the ETF lost more than 5.8% in the last 30 days. Original Post

What’s Driving The Global ETF Industry?

Amid continued volatility in the oil price and the instability in the stock markets, assets invested under global ETFs/ETPs touched an all-time high of $3.138 trillion in April. While equities failed to impress the ETF space, fixed income led the way. As per data from ETFGI’s April 2016 global ETF and ETP industry insights report , the Global ETF/ETP industry had a whopping 6,297 ETFs/ETPs from 283 providers on 65 exchanges at the end of April 2016. As per the report, inflows were witnessed across the globe with record levels of assets being gathered in the U.S. ($2.217 trillion), Canada ($77.42 billion), Europe ($533.34 billion), Japan ($145.93 billion) and other countries in the Asia-Pacific region ($125.21 billion) (read: Will European ETFs Continue to Underperform SPY? ). In April, global ETFs/ETPs witnessed net inflows of $10.13 billion, led by fixed income ETFs/ETPs which gathered the largest net inflows with $7.73 billion. This is not surprising considering the upcoming U.S. election, Brexit vote and the impact of quantitative easing across the globe which have ruffled investors. Below we have discussed a couple of areas which saw the highest inflow last month. Bond ETFs Record flows in bond ETFs could be attributed to the low-yield environment in most developed markets across the world. Disappointing macroeconomic data, global market turbulence and threats to the stability of the U.S. economy have been making headlines since the beginning of the year, leading to volatility across all asset classes. Because of these factors, bond ETFs have lately gained a lot of popularity as investors continue to look for attractive and stable yield in this ultralow rate interest environment (read: Time for Investment Grade Corporate Bond ETFs? ). In fact, these uncertainties led the central bank to lower the number of hikes and the projected federal funds rate this year. It now expects the federal funds rate to rise to 0.875% by the end of the year, instead of the previously expected 1.375%, implying only two rate hikes as compared to the four projected in December. The double blessing of easy monetary policy globally and a delayed rate hike in the U.S. made fixed-income securities a winner in the month, as investors scurried to safer assets. Funds which saw maximum inflows were the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA: LQD ) – $1.2 billion, the Vanguard Total Bond Market ETF (NYSEARCA: BND ) – $ 834.3 billion and the iShares Core Total U.S. Bond Market ETF (NYSEARCA: AGG ) – $829.6 million. Minimum Volatility ETFs With mixed data flowing in from various quarters and widespread fear among investors about the direction of the market, it’s not surprising that investors are looking to follow a proper trading strategy which ensures stability. With that in mind investors sought low volatility ETFs with funds like the iShares MSCI USA Minimum Volatility ETF (NYSEARCA: USMV ) and the iShares MSCI EAFE Minimum Volatility ETF (NYSEARCA: EFAV ) witnessing inflows of $1.2 billion and $601.2 million, respectively. Link to the original post on Zacks.com

Apple Bull Sees Path To $1 Trillion Market Cap

Ever since Apple ( AAPL ) stock peaked last summer, few on Wall Street have talked about the iPhone maker potentially reaching a market capitalization of $1 trillion, as they once did. But on Wednesday, Bernstein analyst Toni Sacconaghi resurrected the possibility. In a research report, Sacconaghi said the company’s “recipe for a $1 trillion market cap” could be a shift from being a hardware company to a service provider. Today, Apple is valued as a computer hardware company, making it vulnerable to replacement cycles and falling average selling prices and margins, Sacconaghi said. Apple would be valued more highly if it offered its devices on a service plan, he said. Apple stock was up nearly 1%, above 94, in afternoon trading on the stock market today , giving it a market cap of $516 billion. Sacconaghi rates Apple stock as outperform, with a price target of 135. “Consumers have become accustomed to paying monthly bills for various services, such as internet, cable, Netflix ( NFLX ), and Spotify, to name a few,” Sacconaghi said. “Even among the quantitatively-minded investment community, many find it easier to justify a $30 monthly charge (for an iPhone) than a $720 purchase every 2 years … even though they’re essentially the same.” Apple’s Slowing Upgrades Argues For Recurring Model By offering Apple products as a service, the company could switch to a recurring business model, which would likely get customers to spend more over time. In return, Apple customers could avoid hefty upfront payments for hardware and get the latest devices sooner, he said. Apple’s main business problem today is getting users to upgrade to newer devices when their current iPhones, iPads and Macs are working just fine. Apple isn’t like other makers of PCs and smartphones because it has a much stronger brand attachment. People love their iPhones, he said. “The challenge and opportunity for Apple is whether it can migrate from a transactional monetization model to a subscription model,” Sacconaghi said. Companies that have successfully shifted their business models to subscriptions include Adobe Systems ( ADBE ), Microsoft ( MSFT ) and Amazon.com ( AMZN ), he said. “We see the monthly cost of a family plan of Apple products amounting to similar or less than what U.S. consumers spend for cable television and wireless service,” Sacconaghi said. “We estimate that an Apple package needed for our family (3 iPad Minis, 1 iPad Air – each with a three-year replacement cycle; and 3 iPhones, each with a 2-year replacement cycle) would cost ‘only’ about $140 per month — well below the price of our current monthly cable bill and wireless bill. “Even if we included additional Apple services (Apple Music for $15 per month; iCloud storage for $10 per month; and a speculated but yet to be released over-the-top television offering for $40 per month), our hypothetical Apple monthly would be an estimated $207 per month.” If Apple were to pursue such a strategy, it would face resistance from its wireless carrier partners and would have to educate consumers of its benefits, Sacconaghi said. Apple already offers a smartphone subscription plan called the iPhone Upgrade Program. That program charges a monthly fee for iPhone hardware and handset upgrades every year. RELATED: Apple To Double iPhone Memory With Next Handset: Report Apple Has Reportedly Started Production On iPhone 7 Apple Should Be Valued Like Internet, Not Hardware, Company