Tag Archives: etfs

Cold Snap Warms Up Natural Gas ETFs

Natural gas prices were thwarted by sluggish trends with the energy market rout and a milder winter so far this year. Among the issues hurting the broader energy space, ample supplies and falling demand on global growth worries are primary. This, along with considerably warmer temperature in December (due to a protracted and stronger El Nino) played foul, taking natural gas futures to a 14-year low (read: No Winter Cheer for Natural Gas ETFs?). As a result, most of the exchange traded products tracking natural gas are in red this year defying seasonal strength. Normally, Arctic Chills give life to this commodity every winter. The cold snap boosts electricity demand across the region putting natural gas in focus. In fact, in 2014, the Polar Vortex caused natural gas prices to jump over 50%. Winter Storm Jonas to Rescue This year, the winter storm Jonas recently salvaged this besieged commodity. The whiteout struck on the East Coast, with icy temperatures and a snow emergency bolstering demand for natural gas for a valid reason. As almost 50% of Americans use natural gas for heating purposes, withdrawals in natural gas supplies push up the commodity’s prices. The U.S. Energy Information Administration also gave same cues on Thursday when it declared the largest weekly drawdown of gas from storage this winter, as per Wall Street Journal. Natural-gas prices went ‘above $5 per million British thermal units in parts of the Northeast for the first time since last winter’, as indicated by Wall Street Journal. If such sub-zero temperatures continue even after the snow storm, it will bring a great deal of luck for natural gas, albeit for the short term. ETF Impact In fact, an ETF tracking the natural gas futures – United States Natural Gas ETF (NYSEARCA: UNG ) -added about 0.13% on January 22. Investors should note that natural gas equities, such as First Trust ISE-Revere Natural Gas Index Fund (NYSEARCA: FCG ), were the real winner that added 5.2% on January 22. Below we highlight a couple of natural gas ETFs that investors could use to play if the U.S. economy remains snowed in the near term (see all Energy ETFs here). iPath Dow Jones-UBS Natural Gas ETN (NYSEARCA: GAZ ) This is an ETN option for natural gas investors. It delivers returns through an unleveraged investment in the natural gas futures contract plus the rate of interest on specified T-Bills. The product follows the Dow Jones-UBS Natural Gas Total Return Sub-Index. The note is less popular with AUM of $4.9 million. It is a high-cost choice, charging 75 bps in annual fees. GAZ is down 30.6% in the year-to-date frame and gained about 2% on January 22, 2016. FCG in Focus This product offers exposure to the U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. It follows ISE-REVERE Natural Gas Index and holds 30 stocks in its basket, which are well spread out across components (read: 5 ETFs Losing Half or More of Their Value in 2015 ). Southwestern Energy Company, Antero Resources Corporation and Gulfport Energy Corporation occupy the top three positions in the portfolio with a combined 16% of total assets. This indicates that no single company dominates the fund’s returns, preventing heavy concentration. The fund has a blended style and is diversified across various market cap levels with 53% in small caps, 31% in mid caps and the rest in large caps. The product has amassed $132.7 million in its asset base while sees solid volume of nearly 2.5 million shares per day. It charges 60 bps in annual fees from investors and has a Zacks ETF Rank of 3 (Hold) with a High risk outlook. The fund is down 13.7% so far this year (as of January 22, 2016). Bottom Line Though there have been some incredible price increases lately in the natural gas market despite weak demand-supply fundamentals, the commodity is due for a price reversal. The weather will likely warm up across the country with the advent of spring and natural gas demand will trip up then. This is truer in the light of the fact that present stockpiles are pretty higher than the five-year average and the year-ago level. So, investors solely relying on a weather play might proceed with a short-term notion. Original Post

3 Best-Ranked Small-Cap Growth Funds

Risky investors who prefer capital appreciation over dividend payouts may consider investing in small-cap growth mutual funds. Growth funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term. Meanwhile, small cap funds are good choices for investors seeking diversification across different sectors and companies. Small cap funds generally invest in companies having market cap less than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Less international exposure make small-cap funds less vulnerable to the stronger U.S. dollar. Though small-cap stocks are believed to provide greater returns, they are also expected to be more volatile than large and mid cap companies. Also, growth funds may experience more fluctuations than other fund classes. Below we share with you 3 top-rated, small-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth funds . Fidelity Advisor Small Cap Growth A (MUTF: FCAGX ) invests the lion’s share of its assets in common stocks of small cap growth companies. FCAGX invests in securities issued throughout the globe. FCAGX considers factors including financial strength and economic condition for investing in a company. The Fidelity Advisor Small Cap Growth A fund has a three-year annualized return of 10.3%. FCAGX has an expense ratio of 1.20% as compared to the category average of 1.33%. RidgeWorth Small Cap Growth Stock I (MUTF: SSCTX ) seeks growth of capital over the long run. SSCTX invests a large chunk of its assets in securities of small cap companies that are traded in the U.S. SSCTX invests in companies having market capitalizations within the range of in the Russell 2000 Growth Index. SSCTX may also invest in American Depositary Receipts. The RidgeWorth Small Cap Growth Stock I fund has a three-year annualized return of 4.7%. As of December 2015, SSCTX held 91 issues with 2.87% of its assets invested in Heartland Payment Systems Inc. BlackRock Small Cap Growth Equity Investor A (MUTF: CSGEX ) invests the major portion of its assets in equity securities of domestic companies having small size market capitalization. According to CSGEX advisors, companies with a market cap similar to those included in the Russell 2000 Index are considered small cap firms. CSGEX may also participate in IPO markets. The BlackRock Small Cap Growth Equity Investor A fund has a three-year annualized return of 5.8%. Travis Cooke is the fund manager of CSGEX since 2013. To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of funds .

Cold Snap Sparks Sudden Rally In Oil Price: ETFs Surge

After crashing to below the 12-year low in Wednesday’s trading session, oil price spiked nearly 21% over the past two days, representing the biggest two-day rally since September 2008. It has also extended its gains in the early trading session today with both U.S. crude and Brent trading above $32 per barrel (read: Oil Hits 12-Year Low: Short Energy Stocks with ETFs ). The steep increase came on the back of short covering, bargain hunting as well as freezing conditions and snowstorms in parts of the U.S. and Europe that boosted the short-term demand for heating oil. Notably, speculators’ short position in WTI dropped 8.4% for the week ended January 19, as per the data from U.S. Commodity Futures Trading Commission. In addition, weekly data from oil services firm Baker Hughes (NYSE: BHI ) showed that the number of rigs fell for the fifth consecutive week by 5 last week to 510, the lowest level since April 2010. Further, hopes of additional stimulus in Europe and Japan, and China comments on no plans to devalue the yuan boosted the confidence in the overall economy, thereby bolstering the case for global oil demand. ETF Impact The tremendous trading in oil sent the oil ETFs space into deep green in Friday’s trading session. In particular, the United States Diesel-Heating Oil ETF (NYSEARCA: UHN ) surged 10% followed by gains of 9.5% for the United States Brent Oil ETF (NYSEARCA: BNO ) , 8.6% for the PowerShares DB Oil ETF (NYSEARCA: DBO ) and 8.3% for the United States Oil ETF (NYSEARCA: USO ) . While the returns of these funds are tied to the oil price, they are different in some way or the other. This is especially true as UHN tracks the movement of oil prices while BNO provides direct exposure to the spot price of Brent crude oil on a daily basis through future contracts. DBO provides exposure to crude oil through WTI futures contracts and follows the DBIQ Optimum Yield Crude Oil Index Excess Return while USO seeks to match the performance of the spot price of light sweet crude oil WTI. Out of the four, USO is the most popular and liquid ETF in the oil space with AUM of $2.3 billion and average daily volume of 34 million. UHN is unpopular and illiquid with AUM of $2.5 million and average daily volume of just 3,000 shares. Further, USO is the least expensive, charging just 45 bps in fees per year from investors. Meanwhile, leveraged oil ETFs also shot up with the VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) and the ProShares Ultra Bloomberg Crude Oil ETF (NYSEARCA: UCO ) surging 24.6% and 16.8%, respectively. The former seeks to deliver thrice the returns of the daily performance of WTI crude oil while the latter tracks the two times daily performance of futures contracts on WTI crude oil. What Lies Ahead? Despite the steep gains, oil price is down 13% so far this year and the long-term fundamentals remain bearish (read: If the Oil Crash Continues, Buy These 5 ETFs to Outperform ). This is because oil production has risen worldwide with the the Organization of the Petroleum Exporting Countries (OPEC) continuing to pump near-record levels, and higher output from the U.S., Iran and Libya. The lift in oil sanctions in Iran would add a fresh stock of oil to the already oversupplied global market as the country is expected to increase its crude oil exports by half a million barrels a day immediately and a million barrels a day within a year of lifting the ban. On the other hand, demand for oil across the globe looks tepid given slower growth in most developed and developing economies. In particular, persistent weakness in the world’s biggest consumer of energy – China – will continue to weigh on the demand outlook. The negative demand/supply imbalance would push oil prices and the related ETFs further down at least in the short term. Link to the original post on Zacks.com