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ETF Deathwatch For February 2016: Here Come The Currency-Hedged ETFs

Last year, hedging was a popular strategy employed by new ETFs coming to market. I referred to it as a “land rush,” with sponsors throwing caution to the wind in their quest to achieve first-mover status. In my year-end summary , I identified 74 new ETFs following this theme. Of these, 57 have currency hedges, 12 use various equity hedges (mostly long/short portfolios), and five use interest-rate hedging to help mitigate the impact of rising interest rates on bond holdings. With no real investor demand for many of these funds, I predicted many would end up here on ETF Deathwatch. This month, more than half of the 25 products added to ETF Deathwatch are hedged ETFs. Two of the additions are interest-rate hedged, one is an equity-hedged fund, and ten use currency hedging. Additionally, two others are based on currency themes (strong U.S. dollar and weak U.S. dollar), although they do not use any direct currency hedging. At the end of 2015, there were 87 currency-hedged ETFs with a median asset level of just $5.25 million, well below the level required for profitability. If this supply glut wasn’t enough, funds using currency hedging 2.0 are now coming on stream. These second-generation currency-hedged ETFs automatically adjust their currency exposure based on market conditions. This is a feature I believe many investors will appreciate, and it will further reduce demand for funds using the old first-generation static approach to hedging. Thirteen products came off of ETF Deathwatch this month. Nine were the result of improved health, and four are no longer with us. The net increase of 12 puts the total count at 398, consisting of 295 ETFs and 103 ETNs. The average asset level of products on ETF Deathwatch dropped from $6.9 million to $6.3 million, and the quantity of products with less than $2 million jumped from 83 to 91. The average age decreased from 48.8 to 47.8 months, and the number of products more than five years old decreased from 137 to 134.Here is the Complete List of 398 ETFs and ETNs on ETF Deathwatch for February 2016 compiled using the objective ETF Deathwatch Criteria . The 25 ETFs and ETNs added to ETF Deathwatch for February: ALPS Enhanced Put Write Strategy (NYSEARCA: PUTX ) ALPS Sector Leaders (NYSEARCA: SLDR ) ALPS Sector Low Volatility (NYSEARCA: SLOW ) Deutsche X-trackers MSCI ACAP x-Japan Hedged (NYSEARCA: DBAP ) ELEMENTS S&P Commodity Trends Indicator ETN (NYSEARCA: LSC ) ETRACS ISE Exclusively Homebuilders ETN (NYSEARCA: HOMX ) GaveKal Knowledge Leaders Developed World (NYSEARCA: KLDW ) GaveKal Knowledge Leaders Emerging Markets (NYSEARCA: KLEM ) Global X SuperDividend Alternatives (NASDAQ: ALTY ) iShares Currency Hedged MSCI ACWI (NYSEARCA: HACW ) iShares Currency Hedged MSCI ACWI ex U.S. (NYSEARCA: HAWX ) iShares Currency Hedged MSCI Australia (NYSEARCA: HAUD ) iShares Currency Hedged MSCI Canada (NYSEARCA: HEWC ) iShares Currency Hedged MSCI EAFE Small-Cap (NYSEARCA: HSCZ ) iShares Currency Hedged MSCI Mexico (NYSEARCA: HEWW ) iShares Currency Hedged MSCI United Kingdom (NYSEARCA: HEWU ) iShares Interest Rate Hedged 10+ Year Credit Bond (NYSEARCA: CLYH ) iShares Interest Rate Hedged Emerging Market Bond (NYSEARCA: EMBH ) Market Vectors Morningstar International Moat (NYSEARCA: MOTI ) PureFunds ISE Big Data ( BDAT ) SPDR BofA Merrill Lynch Emerging Markets Corp Bond (NYSEARCA: EMCD ) WisdomTree Global ex-U.S. Hedged Dividend (NYSEARCA: DXUS ) WisdomTree International Hedged Equity (HDWM) WisdomTree Strong Dollar U.S. Equity (NYSEARCA: USSD ) WisdomTree Weak Dollar U.S. Equity (NYSEARCA: USWD ) The 9 ETPs removed from ETF Deathwatch due to improved health: Deutsche X-trackers Muni Infrastructure Revenue Bond (NYSEARCA: RVNU ) First Trust International Multi-Asset Diversified Income (NASDAQ: YDIV ) First Trust Low Duration Mortgage Opportunities (NASDAQ: LMBS ) FlexShares Credit-Scored US Corporate Bond (NASDAQ: SKOR ) iShares MSCI International Developed Value Factor (NYSEARCA: IVLU ) Oppenheimer ADR Revenue (NYSEARCA: RTR ) Sit Rising Rate ETF (NYSEARCA: RISE ) SPDR S&P 1500 Momentum Tilt (NYSEARCA: MMTM ) WisdomTree Europe Quality Dividend Growth (NYSEARCA: EUDG ) The 4 ETPs removed from ETF Deathwatch due to delisting: CS X-Links Commodity Benchmark ETN (NYSEARCA: CSCB ) Columbia Large Cap Growth (NYSEARCA: RPX ) Columbia Select Large Cap Growth (NYSEARCA: RWG ) Columbia Select Large Cap Value (NYSEARCA: GVT ) ETF Deathwatch Archives Disclosure: Author has no positions in any of the securities mentioned and no positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned. Original Post

What Do Twitter And Zynga Earnings Mean For Social Media ETF?

The Global X Social Media Index ETF (NASDAQ: SOCL ) is going through a rough patch. The ongoing tech rout, mainly instigated by overvaluation concerns amid broad-based gloom and a weak guidance issued by LinkedIn Corporation (NYSE: LNKD ) , was already there to punish the fund (read: LinkedIn Crashes: Should You Connect with Social Media ETF? ). Then, fresh woes emanated from the fourth-quarter earnings results from social networking site Twitter (NYSE: TWTR ) and social game developer Zynga (NASDAQ: ZNGA ) will likely compel investors to stay away from the social media ETF in the near term. Twitter’s Q4 in Detail The company’s fourth-quarter 2015 loss per share (excluding the stock-based compensation expense) of $0.07 was narrower than the Zacks Consensus Estimate of $0.13 loss per share. Including the stock-based compensation expense, the company posted a loss of $0.13 per share on a GAAP basis. This was narrower than the year-ago loss of $0.20 per share. The company’s non-GAAP earnings (excluding the stock-based compensation expense) were $0.16 per share, up 33.3% year over year. Revenues of $710.5 million in the quarter missed the Zacks Consensus Estimate of $718 million. Revenues were up 48.3% from the year-ago period. Absent the impact of negative currency translation, revenues grew 53%. The company finished the quarter with an average 320 million monthly active users (MAU). This indicated no change quarter over quarter and 9% year-over-year expansion. Although this is the first quarter that Twitter has seen no user growth sequentially, investors clearly could not digest the fact. The blow came in the form of guidance as well. Twitter anticipates total revenue between $595 million and $610 million for the first quarter of 2016, way below the Zacks Consensus Estimate which was pegged at $630 million prior to the release. Market Impact The soft MAU metric, an earnings miss and soft revenue guidance dampened investors’ mood as the stock tumbled 3% after hours. Year to date, the stock is down 35.3%. In the last one year, the stock has plunged about 70%. Twitter has a Zacks Rank #3 (Hold), which is subject to change post earnings release. The stock is a good growth and momentum play with a Zacks Style Score of ‘A’, but it lacks the value quotient as indicated by the score of ‘F’. There is a high chance that Twitter will decline in the coming trading sessions, especially given the ongoing correction in the online and social media space. Zynga’s Q4 in Detail GAAP loss per share (excluding the stock-based compensation expense) of $0.02 cents was narrower than the Zacks Consensus Estimate of $0.04 cents loss per share. Including the charges, GAAP loss was $0.5 per share, same as the year-ago quarter. Zynga’s revenues of $185.8 million beat the Zacks Consensus Estimate of $177 million. Zynga also failed to live up of analysts’ projection as it expects first-quarter 2016 revenues in the range of $160-$175 million, below the Zacks Consensus Estimate of $177 million. Market Impact Zynga also saw a landslide in its shares after hours with a 10.8% plunge. Year to date, the stock is down 20.5%. Though the stock currently has a Zacks Rank #3, it looks like that the rank is due for a downgrade. The stock is a decent momentum play with a Zacks Style Score of ‘A’, but its value and growth scores are not optimistic. Social Media ETF in Focus Notably, Twitter does not have a sizable exposure in the overall ETF world, with SOCL holding just 2.7% share in it. However, the company’s results are crucial to the entire social media sector. Plus, a freefall in the shares of Zynga – which accounts for about 3% of SOCL – will make matters worse. However, SOCL has strong long-term fundamentals and carries a Zacks ETF Rank #2 (Buy). So, investors having a strong gut for risks can play this dip. SOCL is down 19.3% so far this year (see all technology ETFs here). Link to the original post on Zacks.com

Lipper U.S. Fund Flows-February 3, 2016

By Tom Roseen Did we just see mutual fund investors turn on a dime? After yanking nearly $5 billion from their accounts the previous week, this past week’s data show estimated net flows of $2.1 billion into equity mutual funds-for their first positive flows week this year. Although the benchmark Dow Jones Industrial Average was up for the week, the scant 392 points probably wasn’t as important as a rising sentiment that 16,000 is as good a floor as any we’ll find in this market. But count equity exchange-traded funds’ (ETFs’) authorized participants among the unconvinced: they withdrew about $8.5 billion (net), backing out of the SPDR S&P 500 Trust ETF ( SPY , -$3.2 billion ) and the iShares Russell 2000 ETF ( IWM , -$1.2 billion ) , but they made modest contributions to the SPDR Gold Trust ETF ( GLD , +$758 million ) . Taxable bond mutual funds suffered their thirteenth weekly net outflows (-$523 million), but the week’s magnitude was the lightest yet. The Loan Participation Funds classification (-$333 million) notched its twenty-eighth consecutive week of outflows from mutual fund investors and High Yield Funds suffered outflows of $108 million as investors kept a wary eye on the junk sector. On the other hand, bond ETFs collected $671 million of inflows as the week’s biggest individual bond ETF inflows belonged to the iShares 7-10 Treasury Bond ETF ( IEF , +$412 million ) , while the iShares iBoxx $ Investment Grade Corporate Bond ETF ( LQD , -$423 million ) led the outflows list. Municipal bond mutual fund investors added $585 million to their accounts while the muni market gained 0.48% for the week-after the previous week’s little tumble. Money market funds saw outflows of $3.8 billion this past week, of which institutional investors pulled $4.2 billion and retail investors redeemed $400 million.