Tag Archives: etfs-and-funds

Best And Worst Q2’16: All Cap Blend ETFs, Mutual Funds And Key Holdings

The All Cap Blend style ranks third out of the twelve fund styles as detailed in our Q2’16 Style Ratings for ETFs and Mutual Funds report. Last quarter , the All Cap Blend style ranked third as well. It gets our Neutral rating, which is based on aggregation of ratings of 71 ETFs and 684 mutual funds in the All Cap Blend style. See a recap of our Q1’16 Style Ratings here. Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all All Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 4 to 3694). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the All Cap Blend style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings State Street SPDR S&P 5000 Buyback ETF (NYSEARCA: SPYB ), iShares Enhanced U.S. Large Cap ETF (NYSEARCA: IELG ), and ProShares Ultra Semiconductors (NYSEARCA: USD ) are excluded from Figure 1 because their total net assets are below $100 million and do not meet our liquidity minimums. Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings AMG Renaissance Large Cap Growth Fund ( MRLIX , MRLSX , MRLTX ), Jensen Quality Value Fund ( JNVIX , JNVSX ), and Hays U.S. Opportunity Fund (MUTF: HUOIX ) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums. ProShares UltraPro Dow30 (NYSEARCA: UDOW ) is the top-rated All Cap Blend ETF and Royce Special Equity Multi-Cap Fund (MUTF: RMUIX ) is the top-rated All Cap Blend mutual fund. Both earn a Very Attractive rating. ProShares Ultra Oil & Gas (NYSEARCA: DIG ) is the worst rated All Cap Blend ETF and Rydex Series Russell 2000 1.5x Strategy Fund (MUTF: RYAKX ) is the worst rated All Cap Blend mutual fund. Both earn a Very Dangerous rating. Nordstrom (NYSE: JWN ) is one of our favorite stocks held by RMUIX and earns a Very Attractive rating. Over the past decade, Nordstrom has grown after-tax profit ( NOPAT ) by 9% compounded annually. Over this time, the company has improved its return on invested capital ( ROIC ) from 9% in 2005 to 11% over the last twelve months. Nordstrom has also generated a cumulative $2.3 billion in free cash flow over the past five years. Despite the underlying fundamentals, JWN remains undervalued. At its current price of $51/share, JWN has a price-to-economic book value ( PEBV ) ratio of 0.9. This ratio means that the market expects Nordstrom’s NOPAT to permanently decline by 10%. If Nordstrom can grow NOPAT by just 5% compounded annually for the next decade , the stock is worth $94/share today – an 84% upside. Molson Coors Brewing Company (NYSE: TAP ) is one of our least favorite stocks held by VGPAX and earns a Dangerous rating. Since 2010, Molson Coors’ NOPAT has declined by 2% compounded annually. The company’s ROIC has fallen from 8% to 6% over this same time frame. Molson Coors has failed to generate positive economic earnings in any year of our model, which dates back to 1998. To justify its current price of $96/share, Molson Coors must grow NOPAT by 10% compounded annually for the next 11 years . This expectation seems overly optimistic given the company’s profit decline since 2010. Figures 3 and 4 show the rating landscape of all All Cap Blend ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Hot Launches

By Jeff Tjornehoj Click to enlarge With just $23.9 billion in net inflows this year, exchange-traded products (ETPs) are having their slowest start since the first five months of 2010 when only $18.7 billion in net inflows were made. But the industry continues to launch new products anyway and through this week (May 18) another 88 products have been unveiled. We took a look to see which ones have had the best luck attracting cash. Through May 18 the fastest-growing ETP is the SPDR SSGA Gender Diversity Index ETF (NYSEARCA: SHE ) , which tracks a market-cap weighted index of large U.S. companies that that exhibit gender diversity in their senior leadership positions; it’s attracted $264 million this year. Not too far behind in the asset race, the WisdomTree Dynamic Currency Hedged International Equity Fund (BATS: DDWM ) has brought in $238 million. This fund holds a basket of dividend-weighted stocks headquartered outside of the U.S. and Canada and dynamically hedges foreign currency exposure for U.S. dollar investors. While three others have managed to accumulate $50 million in assets so far, the rest of this year’s launches are still waiting for investors to find them: the remaining 81 launches this year collectively hold $700 million or just as much as these five.

Closed-End Funds: Still A Bargain

In a world in which very little is cheap and most mainstream stocks and bonds offer little in the way of expected returns, closed-end funds have been a fantastic source of value. I’ve been writing about closed-end funds for the better part of a year (see Closed-End Bond Funds Near Their Deepest Discounts Since 2008 ) and I’ve been very pleased with their performance in an otherwise choppy, directionless market. Yet I’ve noticed that some of the fantastic bargains I saw a year ago are starting to dry up. Or at least they’re not quite as juicy as they were. The 15% discounts to net asset value are now closer to about 10%. Though it may simply be a case of me getting spoiled. By any historical standard, closed-end funds are still exceptionally well priced. Patrick Galley, manager of the Rivernorth DoubleLine Strategic Income Fund, gave his thoughts to Barron’s this past week. (See 4 Closed-End Funds Yielding Up to 9% ): Q: Closed-end fund discounts have come in a lot since the beginning of the year. Aren’t they getting less attractive in general? A: Actually, closed-end fund discounts are still pretty attractive overall. In January and February they got so wide it was reminiscent of 2008. Fear was high and investors were dumping assets. Discounts got to the 98th percentile of the widest levels they’ve reached going back to 1996. They narrowed in March and April. Now they are at the 76th percentile of the widest levels. The averages are very much skewed by the muni-bond sector. Munis have had a good run and everyone wants them. Investors are chasing those past returns. They aren’t even looking at discounts and premiums. Meanwhile, taxable fixed-income spreads are still wide. As the examples I gave you show, a lot of them are still double-digit discount opportunities. 76th percentile is nothing to complain about. Sure, it was a lot more fun buying them at 2008-caliber discounts. But that’s really not normal, and every buying opportunity can’t be that good. So for the time being, I’ll plan on maintaining a solid allocation to closed-end funds in my Dividend Growth portfolio. The portfolio is up 13.5% year to date , and closed-end funds have certainly played their part in achieving those returns. This article first appeared on Sizemore Insights as Closed-End Funds: Still a Bargain Disclaimer : This site is for informational purposes only and should not be considered specific investment advice or as a solicitation to buy or sell any securities. Sizemore Capital personnel and clients will often have an interest in the securities mentioned. There is risk in any investment in traded securities, and all Sizemore Capital investment strategies have the possibility of loss. Past performance is no guarantee of future results.