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Consumer Confidence Rebounds: 2 Top-Ranked ETFs To Buy

Consumer Confidence Index – an important indicator of consumer sentiment – increased in the final month of 2015, rebounding strongly after its November decline. The Conference Board reported that the index rose to 96.5 from November’s upwardly revised reading of 92.6. It was also higher than the consensus estimate of 93.5. Meanwhile, consumers remained optimistic about the present economic environment and also confident of the economic scenario over the next six months. The Present Situation Index improved to 115.3 this month from last month’s level of 110.9. Also, the Expectations Index increased from November’s 80.4 to 83.9 in December. The survey showed that the share of consumers who believe that the current business conditions are “good” increased significantly to 27.3% in December from last month’s share of 25%. Also, the share of consumers who believe that there are “plentiful” job opportunities gained to 24.1% from 21%. Consumers who think that the job market will remain favorable also rose from 12% to 12.9%. Lynn Franco, Director of Economic Indicators at The Conference Board said: “As 2015 draws to a close, consumers’ assessment of the current state of the economy remains positive, particularly their assessment of the job market. Looking ahead to 2016, consumers are expecting little change in both business conditions and the labor market… but the optimists continue to outweigh the pessimists.” Favorable Economic Scenario Though the U.S. economy expanded at a slower pace of 2% in the third quarter compared with the 3.9% growth rate witnessed in the second, the economy remained steady for most part of the year whereas other major economies struggled with sluggish growth conditions. A gradual increase in consumer spending, which contributes nearly 75% to economic activity, along with healthy labor and housing market conditions boosted the U.S. economy through the year. Meanwhile, the lift-off that came this month after nearly a decade underlined the Fed’s, “confidence in the economy,” as cited by Fed Chair Janet Yellen herself. The Fed also indicated that “solid” consumer spending, a rebound in the housing market and strong business fixed investment played an important role in the decision (read: Top ETF Stories of 2015 ). 2 Consumer ETFs to Buy Consumer discretionary is considered to be one of the key sectors that attract a major portion of consumer spending, which is believed to increase at a gradual pace given the rise in confidence. Moreover, the slump in oil prices and strong labor market conditions will play an important role in boosting spending at least in the near term. The positives have been reflected in this year’s holiday season, with an e-commerce bonanza and a surge in last-minute shopping cheering the retailers. It has been reported that overall U.S. holiday retail sales (excluding autos and gas) climbed 7.9% year over year between Black Friday and Christmas Eve (read: Consumer ETFs & Stocks Riding High on Holiday Spirit ) Also, when the major benchmarks were grappling with manifold concerns, the consumer discretionary sector succeeded in posting healthy gains this year. As of Dec 30, 2015, the broader consumer discretionary sector – the Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ) – gained 9.4% in the year-to-date frame. In this scenario, we have highlighted two Zacks Rank #1 (Strong Buy) retail ETFs that are poised to gain from this favorable environment and investing in them may prove to be profitable in the near term. 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 in the top 10 holdings with 65.6% of assets – the top shares going to Wal-Mart (NYSE: WMT ), Home Depot (NYSE: HD ) and Amazon.com (NASDAQ: AMZN ). Sector wise, specialty retail occupies the top position with around 29% share with Internet & catalog retail occupying the next spot. The fund has amassed $159.7 million in its asset base while average daily volume is moderate at 65,153 shares. The product has an expense ratio of 0.35% with a Medium risk outlook. RTH returned 6.2% and 9.6% in the past three-month period and in the year-to-date frame, respectively. Vanguard Consumer Discretionary ETF (NYSEARCA: VCR ) This product tracks the S&P Retail Select Industry Index, holding 385 securities in its basket. The fund charges only 12 bps in fees. It is also heavily concentrated in the top 10 holdings with 40.7% of assets. Large cap stocks dominate more than half of the portfolio while the rest have been split between the other two market cap levels. Sector wise, specialty retail takes the top spot at 19% share while Internet & catalog retail and restaurants occupy the next two positions. XRT currently has $2 billion of AUM and average daily volume of nearly 175,000 shares. The fund has a Medium risk outlook. VCR returned 4.3% and 5.7% in the past three-month period and in the year-to-date frame, respectively. Link to the original article on Zacks.com

China ETF Investing: Will It Buoy Up Or Dip Down In 2016?

What a terrible start to the year 2016 for Chinese securities! After what the Chinese economy and securities went through in 2015, everyone thought that the New Year would unfold somewhat better days. But no one had predicted a trading halt on the key Chinese bourses, with the indexes diving 7%, to start the New Year. The decline was the worst single-day performance since the 8.5% decline on August 24, 2015, which was the root of the global market rout last summer (read: 5 China ETFs Up At Least 20% in Q4 ). The most recent massacre is being blamed on hints of further shrinkage in the Chinese manufacturing sector in December. The Caixin/Markit purchasing managers’ index declined to 48.2 in December, representing the 10th successive month of factory output contraction. The data was much worse than 48.6 in November and well below the market’s expectation for 48.9. To complicate the global trading scene, news of Saudi Arabia cutting off diplomatic ties with Iran joined China-led worries to start the year. Needless to say, global stocks followed the downing trend and volatility and safe haven assets like gold rose on January 4. Investors should note that this was the first trading halt on the Chinese indexes after the Chinese securities regulators introduced a “circuit breaker ” to calm the jittery market. Per the rule, a 5% one-day gain or loss in the CSI300 index (before 2:30 p.m.) will close trading in the country’s all equity indices for 30 minutes. Shifts of 7% plus would result in closed trade for the rest of the day. What’s in Store for 2016? China may be leaving no stone unturned to shore up its market and the economy, but there are a number of headwinds still facing the Chinese economy, including shadow-banking activities, credit crunch and money laundering from mainland China to other peripheral destinations like Macau (read: Should You Short China ETFs Despite Rate Cuts? ). A group of economists believe that the government’s excessive focus on anti-corruption activities may hold back GDP growth. This along with a weak domestic market and global growth worries hurting the export profile took investors’ worries over the Chinese economy to a delirious pitch. With no let-up in the downbeat data flows from the Chinese economy, investors have now started to doubt its ability to deliver above-par growth numbers. Most analysts are not hopeful of the Chinese market. UBS stayed very cautious on China and believes that “China’s stock markets will see no gain in 2016.” UBS expects the Chinese economy to contract from 2015’s projected growth of 6.9-7% to 6.2% in 2016. Weak corporate earnings as depicted by the worst earnings in the third quarter of 2015 in almost five years, deteriorating property construction, and overcapacity in industrial and mining sectors will drag down China’s economy and the markets, per barrons.com. In the third quarter, the decline in profits was pronounced in the energy (down 58%), material (down 34%) and transportation (down 10%) sectors. Per Credit Suisse, Chinese companies’ credit worthiness is also deteriorating. Coming to the savior circuit breaker, Deutsche Bank (NYSE: DB ) does not approve of this system and believes that this method will simply increase volatility in the market resulting in a liquidity crunch. Yet another brokerage house Goldman (NYSE: GS ) also sees no respite “after China New Year sell-off.” If this is not enough, analysts expect further sell-off ahead due to the looming expiry of a six-month lockup period on share sales by big shareholders. Notably, to arrest the market crash, the Chinese government banned investors with over 5% stake, from abandoning their shares for six months. Now these shareholders may start running out of Chinese stocks when the embargo is lifted on Friday, per BBC . Goldman Sachs expects this lockup to account for about 5.8% of the total A-share free-float market cap. ETFs Thrashed in New Year Almost the entire Chinese market was in the red on January 4 led by the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEARCA: CNXT ) (down 12.11%), the db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (NYSEARCA: ASHS ) (down 9.89%), the Market Vectors China ETF ( PEK ) (down 8.87%), the db X-trackers Harvest CSI 300 China A-Shares Fund ( ASHR ) (down 8.5%) and the Golden Dragon Halter USX China Portfolio (NYSEARCA: PGJ ) (down 4.62%). Is There Any Way to Win the Slump? All in all, China investing is full of risks. But it’s not that there is no silver lining. After all, the Chinese currency yuan received a privileged reserve currency status from IMF recently and joined the league of the major currencies, namely the U.S. dollar, pound, euro and yen. The GDP growth rate, though tapered from earlier years, is still way better than many emerging and developed economies. Plus, the economy is shifting mode from export-driven to consumption-oriented to ward off foreign issues. It’s just that the transition has been anything but smooth. China has not yet embarked on any outright policy easing. So, policymakers still have ways to check further weakening of the economy. Yes, these are all long-term phenomena. Over the short term, the market is expected to remain rocky. So, investors can have an inverse exposure to the Chinese market via the Direxion Daily CSI 300 China A Share Bear ETF (NYSEARCA: CHAD ) (up 8.76% on January 4), the ProShares UltraShort FTSE China 25 ETF (NYSEARCA: FXP ) (up 6.7%) and the ProShares Short FTSE China 50 ETF (NYSEARCA: YXI ) (up 3.5%). Link to the original post on Zacks.com

AlphaCentric Converts Hedge Fund Into New Managed Futures Mutual Fund

Managed futures funds provide investors with exposure to commodities, currencies, stocks, and bonds by investing in a range of securities, including futures, forwards, swaps and ETFs. Due to the trend following, long/short nature of their investment strategies, these funds have very low correlation to traditional asset classes. As markets continue to be volatile and correlations between asset classes continue to increase, managed future funds are gaining more and more interest. In fact, this category of funds has been the most popular single-strategy category of liquid alternative funds over the past year, pulling in $8.5 billion of assets over the twelve month period ending November 30, 2015, according to data from Morningstar. New AlphaCentric Fund While managed futures funds were available exclusively to high-net worth individuals and institutions in the past, today there more than 50 managed futures funds available as ’40 Act mutual funds, and on December 18, AlphaCentric and Integrated Managed Futures Corp (“IMFC”) added another to the growing roster: the AlphaCentric/IMFC Managed Futures Strategy Fund (MUTF: IMXAX ). Sub-advised by IMFC, the new fund differentiates itself from its peers by pursuing its investment objective of capital appreciation through IMFC’s proprietary investment program, which attempts to identify investment opportunities with limited downside and potentially large rewards. This investment program removes subjectivity and human emotion from the day-to-day decision-making process. The fund’s assets are allocated across asset classes using IMFC’s multi-factor models, which consider momentum, yield, value, relative buying power of different currencies, commodity cost of production and supply/demand statistics, price-to-earnings and -book ratios, the difference in yield between issuers or financial instruments, and more. The fund also maintains large cash positions as part of its investment strategy. Fund Details The AlphaCentric/IMFC Managed Futures Strategy Fund is available in three classes: A ( IMXAX ), C (MUTF: IMXCX ), and I (MUTF: IMXIX ). The Class I shares have been created through the conversion of a hedge fund (the Attain IMFC Macro Fund LLC) and will take on the performance track record of that fund dating back to March 10, 2014. The investment management fee for all shares of the fund is 1.75%, and the respective net-expense ratios are 2.24%, 2.99%, and 1.99%. The minimum initial investment for all three share classes is $2,500. Integrated Managed Futures Corp. will serve as the sub-advisor to the fund. Roland Austrup, Robert Koloshuk, and John Lukovich are listed in the fund’s prospectus as its portfolio managers. For more information, view a copy of the fund’s prospectus . Jason Seagraves contributed to this article.