Tag Archives: etf

Retail ETFs To Watch Ahead Of Q4 Results

The Q4 earnings season has been weak across all sectors with growth harder to come by in a slowing global economy, a stronger U.S. dollar, and weakness in oil. In fact, Q4 may be the third quarter in a row of negative earnings growth. However, with about half of the Q4 reports yet to come, retail is faring better than many other sectors. Total earnings for the retail sector that has reported so far are up 6.8% on 11.8% revenue growth. Notably, revenue growth of this sector has been the best so far this season. This is especially true given the robust numbers from retailers like Whole Foods Market (NASDAQ: WFM ), Yum! Brands (NYSE: YUM ) and Michael Kors (NYSE: KORS ). The strength is likely to continue when the big retailers like Wal-Mart (NYSE: WMT ) and Nordstrom (NYSE: JWN ) reports earnings results tomorrow. Other major retailers such as Home Depot (NYSE: HD ), Macy’s (NYSE: M ), Lowe’s (NYSE: LOW ), Target (NYSE: TGT ), Gap Inc. (NYSE: GPS ), and Kohls (NYSE: KSS ) release earnings reports next week. Solid Trends Though consumer spending, which accounts for more than two-thirds of U.S. economic activity, moderated in the final quarter of 2015 buoyed by more savings, it started regaining momentum lately as consumers began to reap the benefits of a slow but recovering economy, better job and wage prospects, and a lower oil price. As a result, retail sales edged up 0.2% in January, better than the market’s expectation of 0.1% growth. Further, U.S. consumer confidence is improving, as measured by the Conference Board. The Consumer Confidence Index jumped to 98.1 in January from a revised 96.3 in December while the index of consumer expectations for the next six months climbed to 85.9 in January from 83. Moreover, the upside to this segment could be confirmed by the Zacks Industry Rank, as three-fifths of the industries falling under this segment have a solid Rank in the top 42% at the time of writing. ETFs to Buy Given encouraging fundamentals and a spate of earnings releases this week and in the next, investors should carefully watch the movement in retail stocks and could consider a broad play via ETFs in order to take advantage of the power-packed earnings releases seen so far and solid trends. For this, looking at some of the top-ranked retail ETFs having a Zacks ETF Rank of 1 (Strong Buy) or 2 (Buy) could be excellent picks as these funds have potentially superior weighting methodologies, which could allow them to outperform in the coming months. SPDR S&P Retail ETF (NYSEARCA: XRT ) This product tracks the S&P Retail Select Industry Index, holding 100 securities in its basket. It is widely spread across each component as none of these holds more than 1.48% of total assets. Small cap stocks dominate nearly three-fifths of the portfolio while the rest have been split between the other two market cap levels. In terms of sector holdings, apparel retail takes the top spot at one-fourth share while specialty stores, automotive retail and Internet retail also have double-digit allocations each. XRT is the most popular and actively traded ETF in the retail space with AUM of about $404.5 million and average daily volume of more than 4.3 million shares. It charges 35 bps in annual fees and gained 3.8% over the past one month. The fund has a Zacks ETF Rank of 1. Market Vectors Retail ETF (NYSEARCA: RTH ) This fund tracks the Market Vectors US Listed Retail 25 Index and holds about 26 stocks in its basket. It is a large cap centric fund and is heavily concentrated on the top 10 holdings with 64.1% of assets. The largest allocations go to Amazon.com (NASDAQ: AMZN ), Home Depot and Wal-Mart. Sector wise, specialty retail occupies the top position with less than one-third share, followed by double-digit allocation to Internet and catalogue retail, hypermarkets, drug stores, departmental stores and healthcare services. The fund has amassed $151 million in its asset base while average daily volume is moderate at about 77,000 shares. Expense ratio came in at 0.35%. The product lost 0.7% over the past one month and has a Zacks ETF Rank of 2. PowerShares Dynamic Retail Portfolio ETF (NYSEARCA: PMR ) This retail fund provides a diversified exposure across various market caps with 45% in large caps, 43% in small caps and the rest in mid caps. This is easily done by tracking the Dynamic Retail Intellidex Index. The fund has accumulated just $21.4 million in its asset base while it trades at a light volume of under 5,000 shares a day. The ETF charges 63 bps in fees per year. In total, the product holds 29 securities with none accounting for more than 6.12% of assets. In terms of industrial exposure, specialty retail takes the top spot at 48%, while food retail (19%) and drug stores (12%) round off the top three positions. PMR is relatively flat over the past one month and has a Zacks ETF Rank of 2. Original Post

Insurance ETFs Benefiting From Decent Q4 Earnings

Though the financial sector has been on a rough ride this year, especially on plunging oil prices, global growth concerns and reduced likelihood of frequent interest rate hikes, Q4 earnings are faring well so far. Total earnings for 77.9% of the sector’s total market capitalization are up 5.3% on 0.7% higher revenues. This is better than earnings growth of 3.6% and revenue decline of 1.3% for the group of the same companies reported in Q3. As much as 66.2% of the companies beat earnings estimates and 60.8% beat on the top line compared with earnings and revenue beat ratios of 55.4% and 44.6%, respectively in Q3. In particular, earnings from the insurance industry have been strong with most players managing to beat either our earnings or revenue estimates. Earnings at Chubb Corp (NYSE: CB ) surpassed our estimates while Prudential Financial (NYSE: PRU ) and American International (NYSE: AIG ) topped revenues. Aflac Inc. (NYSE: AFL ), Allstate (NYSE: ALL ) and Travelers (NYSE: TRV ) surpassed our estimates for both the top and the bottom lines while MetLife (NYSE: MET ) missed on both (read: Buy the Dip in These Undervalued Sector ETFs & Stocks ). Insurance Earnings in Focus Earnings at one of the leading property and casualty insurer – Chubb – outpaced our estimate by 4.39% but decreased 3.6% from the year-ago quarter. However, revenues of $4.73 billion missed the Zacks Consensus Estimate of $4.77 billion. Another property and casualty insurer and an industry bellwether, Allstate , topped the Zacks Consensus Estimate by 27 cents reporting earnings of $1.60, which declined 7% from the year-ago quarter. Revenues declined 0.8% year over year to $8.94 billion and edged past the Zacks Consensus Estimate of $8.01 billion. Aflac , the seller of supplement health insurance, posted earnings per share of $1.56, beating our estimate by 8 cents and improving 20.9% year over year. Revenues declined 3.5% year over year to $5.32 billion but were ahead of our estimate of $5.24 billion. Earnings of $2.93 per share reported by personal property and casualty insurer Travelers trumped the Zacks Consensus Estimate by 19 cents but decreased 6% from the year-ago quarter. Revenues slid 2% year over year to $6.7 billion and were well ahead of our estimate of $6.63 billion. However, MetLife , the U.S. life insurer behemoth, reported disappointing earnings of $1.23 per share, which lagged the Zacks Consensus Estimate of $1.36 and declined 11% from the year-ago quarter. Revenues also fell 6% year over year to $17.11 billion and were well below our estimated $17.45 billion. On the other hand, PRU , the second-largest U.S. life insurer, also missed our earnings estimate by a huge 33 cents and declined 8.5% year over year. Revenues plunged 16.3% year over year to $13.2 billion but surpassed our estimate of $11.6 billion. The largest commercial insurer in the U.S. and Canada, AIG lagged the earnings estimate but beat on revenues. Loss per share of $1.10 is wider than the Zacks Consensus Estimate of a loss of 90 cents. In the year-ago quarter, the company had reported earnings of 97 cents per share. However, revenues of $13.49 billion came above our estimate of $12.84 billion. ETFs in Focus Given decent Q4 earnings, insurance ETFs have fared well, losing less than the other corners of the financial space from a one-month look. This is especially true as these funds lost in the range of 2.5-4% compared to the loss of 6.5% for the Financial Select Sector SPDR ETF (NYSEARCA: XLF ) and 8% for the SPDR S&P Bank ETF (NYSEARCA: KBE ) . Investors looking to gain exposure to the insurance corner of the market segment in a diversified way may consider the following ETFs. SPDR S&P Insurance ETF (NYSEARCA: KIE ) This fund follows the S&P Insurance Select Industry Index and offers an equal weight exposure to 49 stocks, suggesting no concentration risk. None of the securities holds more than 2.61% of total assets. More than one-third of the portfolio is allocated to the property and casualty insurance sector while life & health insurance accounts for 21.4% share. The ETF has managed $412.7 million in its asset base and trades in a moderate average daily volume of about 134,000 shares. The product has an expense ratio of 0.35% and lost nearly 2.5% over the past one month. It has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. iShares U.S. Insurance ETF (NYSEARCA: IAK ) With AUM of $97.3 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 44 bps in annual fees. Volume is light, trading in roughly 31,000 shares per day. In total, the fund holds 61 securities in its basket with the largest allocation going to American International at 12.1%, closely followed by Chubb at 10.4%. Other firms hold less than 7.8% of assets. From an industry look, property & casualty insurance accounts for 46.7% share while life & health insurance and multiline insurance round off the top three with double-digit exposure each. IAK is down 3.8% from a one-month look and has a Zacks ETF Rank of 3 with a Medium risk outlook. PowerShares KBW Insurance Fund (NYSEARCA: KBWI ) This fund tracks the KBW Nasdaq Insurance Index and holds 24 securities in its basket. Each firm holds less than 8.8% share with TRV, AIG, MET, PRU and ALL being among the top 10 holdings. While insurance makes up for 96% of the portfolio, consumer finance and banks take the remainder. The product has amassed about $11.9 million in AUM while volume is paltry with about 1,000 shares exchanging hands a day. The ETF charges an annual fee of 35 bps and shed 3.5% in the trailing one-month period. It has a Zacks ETF Rank of 3 with a High risk outlook. Link to the original post on Zacks.com

4 Best-Rated Utility Mutual Funds For Stable Returns

Investors with a conservative mindset looking for stable current income would do well to consider utility funds. They are used as defensive instruments, which protect investments during a market downturn. This is because the demand for essential services such as those provided by utilities remains unchanged even during difficult times. In recent years, many funds in this category have increased their exposure to emerging markets and unregulated companies. Though this strategy has increased the risk involved, it has also generated higher returns. Below, we will share with you 4 top-rated utility mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) as we expect these mutual funds to outperform their peers in the future. AllianzGI Global Water Fund A (MUTF: AWTAX ) seeks long-term capital growth. AWTAX invests a major portion of its assets in common stocks of companies that are represented in the S&P Global Water Index, the NASDAQ OMX US Water or Global Water Indices or the S-Network Global Water Index, or are involved in water-related activities. AllianzGI Global Water A is a non-diversified fund and has a three-year annualized return of 3.6%. Andreas Fruschki is the fund manager since 2008. Kinetics Alternative Income Fund C (MUTF: KWICX ) invests a large portion of its assets in the Alternative Income Portfolio, a series of Kinetics Portfolios Trust that holds a portfolio of primarily fixed-income securities. KWICX seeks to provide current income. Kinetics Alternative Income Fund C is a non-diversified fund and has a three-year annualized return of 1.3%. As of September 2015, KWICX held 327 issues, with 11.58% of its total assets invested in the iShares 1-3 Year Credit Bond. American Century Utilities Fund Inv (MUTF: BULIX ) seeks current income and capital appreciation. BULIX invests a major portion of its assets in equities related to the utility industry. BULIX’s portfolio is based on qualitative and quantitative management techniques. In the quantitative process, stocks are ranked on their growth and valuation features. American Century Utilities Fund is a non-diversified fund and has a three-year annualized return of 9.9%. BULIX has an expense ratio of 0.67% as compared to the category average of 1.25%. Putnam Global Telecommunication Fund B (MUTF: PGBBX ) invests a large portion of its assets in both mid and large capitalization companies across the world. PGBBX generally invests in securities of companies that are part of the telecommunication industry. Putnam Global Telecommunication B is a non-diversified fund and has a three-year annualized return of 6.5%. Vivek Gandhi is the fund manager since 2008. Original post