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Weekly ETF Asset Round-Up: Equity Tops, Bonds Lag

Last week, the U.S. economy injected a fresh lease of life into the market, which has lately been troubled by Chinese hard landing fears, stretched equity valuations, oil price worries and some downbeat global economic data. The bulls have once again taken the center stage mainly because of an oil-rebound, though uncertainty is prevalent. Let’s take a look at the ETF asset flow of last week to understand the changing perception of investors. Improvement in the U.S. job scenario, inflation, manufacturing, construction spending, and housing and consumer spending data along with a spike in oil prices resulted in huge money inflows into the U.S. equity funds last week as per etf.com (as of March 3, 2016). Asset Gainers As a result, the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) , an ETF that resembles the S&P 500 index, saw inflows of nearly $1.76 billion last week. This took the fund’s asset base to around $176.7 billion. The return of risk-appetite was also validated by asset gains in the junk bond ETF space. The space has long been downtrodden. This was because that this segment has huge exposure in the energy market and includes debt issued when oil prices were at lofty levels. Oil prices slid in early 2016, putting energy companies on the verge of default and pressure on junk bonds. However, recent risk-on sentiments in the market and an oil price recovery pushed investors to pour more than $1.16 billion and $1.13 billion in the SPDR Barclays High Yield Bond ETF (NYSEARCA: JNK ) and the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA: HYG ) last week. Investors’ interest in risky assets may be back, but probably not in a full-fledged way. As much as $1.31 billion asset inflows into the gold bullion ETF, the SPDR Gold Trust ETF (NYSEARCA: GLD ) , revealed this. Gold demand has been surging lately on a safety bid. Investors’ continued interest in the yellow metal tells us that not only is volatility still present, the recent rally may also lose momentum any time soon. Inflation-protected bond ETF the iShares TIPS Bond ETF (NYSEARCA: TIP ) also gathered about $529 million in assets as the U.S. inflation outlook brightened on a relatively subdued U.S. dollar and recuperating energy prices. Asset Losers The fixed income world saw outflows with the iShares Short Treasury Bond ETF (NYSEARCA: SHV ) topping the losers’ list, having shed about $1.22 billion in assets. Just as the U.S. economy started delivering upbeat data, talks over rate hikes were back on the table. This will surely hamper investors’ interest in short-term Treasury bond ETFs as further Fed hikes would have the worst impact on the short-end of the yield curve. Another short-term bond ETF, the iShares 1-3 Year Treasury Bond ETF (NYSEARCA: SHY ) , saw a $330.9 million reduction in assets. Ultra short-term investment grade bond ETFs including the PIMCO Enhanced Short Maturity Strategy ETF (NYSEARCA: MINT ) and the SPDR SSgA Ultra Short Term Bond ETF (NYSEARCA: ULST ) also lost $422.4 million and $179.7 million in assets, respectively, last week. Apart from short-term bond ETFs, intermediate bonds products like the iShares 3-7 Year Treasury Bond ETF (NYSEARCA: IEI ) and the SPDR Barclays Intermediate Term Treasury ETF (NYSEARCA: ITE ) saw assets worth $374.8 million and $230.6 million, respectively, gushing out of the funds. Original Post

Strategic Asset Management Launches New Global Long/Short Fund

The long/short “hedged” fund was pioneered in the late 1940s in response to the economic tumult of the prior two decades. The idea behind it was to reduce exposure to the fluctuations of the “market” by partially offsetting long positions with short ones. If the stock picker was good, this meant the fund could outperform during bull and bear markets, and the downside during the latter would be mitigated. Strategic Asset Management’s First Fund Global long/short equity funds take things a step further than Alfred Jones, “hedged” fund originator, was able to take them in 1949, when investors were largely constrained by national borders. Rather than limiting themselves to U.S. equities, global long/short equity funds are open to investments from all over the world, and the Strategic Global Long/Short Fund (MUTF: SGFAX ), just launched on February 23, employs this strategy with a split “value/growth” approach. The new fund is advised by Strategic Asset Management, Ltd., a Cayman Islands corporation, and its portfolio manager is Mauricio Alvarez, Chief Executive Officer of the Adviser. This appears to be the company’s first U.S. mutual fund. The fund’s investment objective is twofold: First, to provide attractive returns through a combination of long-term capital appreciation and current income. Secondarily, to preserve capital in down markets. In pursuit of these objectives, the fund takes long and short positions in U.S. and foreign equities across all capitalization levels, with at least 40% of assets invested in companies generating a majority of their revenue outside the U.S. Global Long/Short Exposure The fund’s long exposure is expected to range from 100% to 140%, with the use of leverage; while its short exposure is expected to range from 0% to 40%. This will leave the fund with a relatively high beta compared to other long/short equity funds. The average beta, relative to the S&P 500 Index, for funds with a track record of 3-years or more is 0.53. On the long side, a “top-down” security selection process is used to identify undervalued equities and/or equities with favorable growth characteristics. On the short side, the fund focuses more keenly on firms with deteriorating growth. Currently, the fund is available in A-class shares only, which have a 1.97% net-expense ratio and a $1,000 initial minimum investment. The prospectus also refers to C-class shares, but doesn’t list a ticker symbol. Their intended net-expense ratio is 2.72%, and they have the same $1,000 initial minimum. For more information, view the fund’s prospectus .

ETFs For Quick Profits From The Oil Rebound

Oil has been showing immense strength in recent weeks with prices bouncing from their recent lows. In fact, the price of oil jumped over 9% last week, with U.S. crude currently hovering above $36 per barrel and Brent oil trading above $39 per barrel at the time of writing. With this, U.S. crude prices are up nearly 33% and Brent oil is up 27% from their 12-year lows hit in mid-February. Inside The Surge The impressive gains came on the back of improving demand/supply dynamics, which are rebuilding investors’ lost confidence in the rebalancing of the oil market. First, talks over a deal by major oil producers to freeze oil output at the January level infused an air of optimism. Second, output from the Organization of the Petroleum Exporting Countries (OPEC) dropped by 79,000 barrels per day last month while U.S. production slipped by 25,000 barrels per day for the week ending February 26. The positive weekly data from oil services firm Baker Hughes (NYSE: BHI ), which showed that the number of rigs fell to the lowest level since December 2009, also supported the rally in oil price as it reflects that U.S. output will continue to decline in the coming weeks. Finally, the International Energy Agency (IEA) projects a sharp decline in oil production to 4.1 million barrels a day over the 2015 through 2021 period from 11 million barrels a day during 2009-2015. This is because a slew of capital spending cuts last year and another round of major cuts this year will continue to curb oil production and reduce global supply, and thereby lead to higher oil prices. On the demand front, the global outlook is looking bright. Abating fears of a recession in the U.S. following the recent encouraging data, and renewed optimism of growth in China, Europe and Japan could drive oil demand in the coming months. Given the fresh round of optimism and signs that the oil market may begin to tighten, many investors have turned bullish on the energy sector and are seeking to tap this opportunity. How to Play? For them, a leveraged play on energy could be an excellent idea as these could lead to huge gains in a very short time frame when compared to the simple products. Below, we have highlighted five leveraged energy ETFs that could be excellent picks for investors seeking to make large profits from the energy space in a short span: Direxion Daily Energy Bull 3x Shares ETF (NYSEARCA: ERX ) This fund creates a triple (3x or 300%) leveraged long position in the Energy Select Sector Index while charging 95 bps in fees a year. It is a popular and liquid option in the energy leveraged space with AUM of $545.2 million and average trading volume of 4.2 million shares. The ETF gained 20.1% over the past one week. ProShares Ultra Oil & Gas ETF (NYSEARCA: DIG ) This ETF seeks to deliver twice (2x or 200%) the daily performance of the Dow Jones U.S. Oil & Gas Index. It has been able to manage $151.4 million in its asset base with trades in a good volume of more than 302,000 shares per day on average. The product was up 12.9% in the same time frame. Direxion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares ETF (NYSEARCA: GUSH ) This fund offers triple exposure to the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It has accumulated $47.7 million in its asset base since its inception in late May 2015. Average daily volume is solid at around 913,000 shares while expense ratio is 0.95%. The product gained 57.7% over the past five trading sessions. ProShares Ultra Oil & Gas Exploration & Production ETF (NYSEARCA: UOP ) This product also tracks the S&P Oil & Gas Exploration & Production Select Industry Index, but offers twice the returns of the daily performance with the same expense ratio as that of GUSH. It has AUM of just $0.8 million and trades in a paltry volume of 2,000 shares. UOP was up over 28% in the same time frame. Direxion Daily Natural Gas Related Bull 3x Shares ETF (NYSEARCA: GASL ) This product seeks to deliver thrice the daily performance of the ISE Revere Natural Gas Index, which derives a substantial portion of its revenues from the exploration and production of natural gas. The fund has amassed $55.1 million in AUM and trades in heavy average daily volume of 2.2 million shares. Expense ratio comes in at 0.95%. The fund delivered whopping returns of 88.6% in the past five trading sessions. Bottom Line As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing – when combined with leverage – may make these products deviate significantly from the expected long-term performance figures. Still, for ETF investors who are bullish on the energy sector for the near term, either of the above products can be an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this corner of the investing world. Original Post