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Forget Broader Retail; Bet On Online Retail ETFs

Retail earnings in the first-quarter earnings season and retail sales data for April were completely diverging, with the former mauling investor sentiment and the latter ushering in sweet surprises. The reason for this deviation was disappointing results from several traditional brick-and-mortar operators, while web-based shopping surged. In a nutshell, consumers’ purchasing pattern is changing. Department stores like Macy’s (NYSE: M ), Kohl’s (NYSE: KSS ), J.C. Penney (NYSE: JCP ), Nordstrom (NYSE: JWN ) and many others soured investor mood this earnings season. With this, while many started to wonder if consumers are running short of cash and doubt economic well-being, a 1.3% jump in retail sales (sequentially) in April cleared all misconceptions. As per Trading Economics , sales growth was witnessed in 11 out of the 13 major categories. Sales at motor vehicle and parts (up 3.2%), gasoline stations (2.2%) and non-store retailers (2.1%) were the major growth drivers. In fact, April retail sales beat economists’ forecast of a 0.8% rise . Online Retailers Crushing Earnings Estimates The online e-commerce behemoth Amazon (NASDAQ: AMZN ) came up with stellar Q1 results. The company trumped the Zacks Consensus Estimate on both lies by wide margins. Higher-than-expected results were credited to increased demand for quick-turnaround delivery and gadgets like the Kindle and Echo as well as a fast-growing cloud computing business. Another top player in this field, eBay Inc. (NASDAQ: EBAY ), beat on both lines. In fact, the company partnered with BigCommerce to benefit online retailers. Chinese e-commerce giant Alibaba Group’s (NYSE: BABA ) revenues came in higher than our estimate, though profitability was a letdown. This clearly explains online-retailers’ edge over the mall-based retailers. Inside the Rise of Online Retailers As of now, online retail sales make up one-tenth of total retail and about 5% of annual e-commerce revenue in the U.S. The space is developing fast with the increased usage of smartphones and other mobile Internet devices. As per Statista , in 2013, 41.3% of global internet users had purchased products online; the figure is expected to grow to 46.4% by 2017. More than the U.S., the real growth opportunities lay in the underpenetrated emerging markets. Forget Retail, Be Bullish on Online Retail This situation makes it crucial to have a pure-play online ETF. Amplify Exchange Traded Funds thus launched a new product, namely the Amplify Online Retail ETF (NASDAQ: IBUY ), about a month ago. Except this, it is hard to get targeted exposure to online retail. But several consumer discretionary and internet funds serve this idea to a large extent. Below, we highlight all of them in detail. IBUY in Focus This new fund holds about 44 stocks and charges 65 bps in fees. The fund is heavy on the U.S. (75%), followed by China (8%). The fund’s top three holdings are Overstock.com (NASDAQ: OSTK ), Del and Wayfair (NYSE: W ). No stock accounts for more than 3.39% of the portfolio. Emerging Markets Internet & Ecommerce ETF (NYSEARCA: EMQQ ) The fund gives exposure to the internet and ecommerce sectors of emerging economies. Its top three holdings are Tencent ( OTCPK:TCEHY ) (8.47%), Alibaba (8.36%) and Naspers ( OTCPK:NPSNY ) (6.8%). The fund charges about 86 bps in fees. Since Goldman sees a boom in the Chinese internet segment, this ETF is worth a look given its notable exposure to the Chinese e-commerce segment. Apart from these two, investors can also look at the First Trust Dow Jones Internet Index ETF (NYSEARCA: FDN ), with considerable exposure on Amazon (11.93%) and eBay (3.69%). Among the broad retail ETFs, the VanEck Vectors Retail ETF (NYSEARCA: RTH ) deserves a look, as it invests about 15.43% weight in Amazon. Original Post

Buy 3 Best-Rated Diversified Bond Mutual Funds Now

Mutual funds having a significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds, which maintain a portfolio of bonds issued across a wide range of market sectors, also reduces sector-specific risk. Moreover, investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove to be relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive. Below we share with you three best-ranked diversified bond mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. PIMCO Fixed Income SHares M (MUTF: FXIMX ) seeks to maximize total return with capital preservation. FXIMX may invest 100% of its assets in mortgage- and other asset-backed securities that are believed to provide a fixed level of income. These securities include commercial mortgage-backed securities, collateralized mortgage obligations and mortgage pass-through securities. The PIMCO Fixed Income SHares M fund returned 7% over the past one year. Curtis A. Mewbourne is the fund manager of FXIMX since 2009. Voya Intermediate Bond Fund A (MUTF: IIBAX ) invests a major portion of its assets in investment-grade bonds including corporate, government and mortgage bonds. IIBAX seeks to provide maximum total return. The Voya Intermediate Bond A fund returned 2.7% in the last one-year period. IIBAX has an expense ratio of 0.66% compared to the category average of 0.82%. PIMCO Investment Grade Corporate Bond Fund A (MUTF: PBDAX ) seeks total return along with capital preservation. PBDAX invests a large portion of its assets in investment grade debt securities of varying maturities that may be represented by derivative instruments. PBDAX may invest a maximum 15% of its total assets in junk bonds, rated B or higher by Moody’s. The PIMCO Investment Grade Corporate Bond A fund returned 2.8% over the past one year. As of December 2015, PBDAX held 1111 issues with 17.05% of its assets invested in Cdx Ig25 5y Ice. Original Post

Want To Stay Away From Puerto Rico? Bet On These Muni ETFs

The present rocky investing backdrop has made muni bond ETFs winners along with Treasury bonds. Most of the muni bond ETFs are in the green in the year-to-date frame, and many have hit a 52-week high in the last few days. But do these deserve such love given Puerto Rico’s debt crisis? It is widespread news in the muni bonds investing world that Puerto Rico – a big issuer of muni bonds – runs a high risk of default. In early May, Puerto Rico defaulted on $367 million in debt . Buried under recession for years, the island now bears a huge debt load of $72 billion and requires restructuring . A year ago, Charles Schwab’s data revealed that Puerto Rico’s debt obligation reached as high as 95% of its economic output. This was surprisingly higher than 2.4% of the median debt load for the 50 U.S. states. Needless to say, investing in Puerto Rico muni bonds or ETFs that are heavy on these bonds require a strong risk appetite. This does not mean that investors should shy away from entire array of muni bond ETFs. After all, munis are safer bets than corporate bonds and yield better than Treasuries. Notably, the yield on the 10-year Treasury note has slid 48 bps to 1.76%, and the yield on the long-term 30-year bonds has seen a 39 bps plunge to 2.59% this year (as of May 17, 2016). Usually, the interest income from munis is free from federal tax and occasionally even state taxes, making them particularly intriguing to investors falling in the high tax cohort looking to cut their tax burden. With the Fed still having a patient attitude on the rate hike issue this year, the higher yield nature of the munis should quench the thirst for current income. So, risk-averse investors can definitely play muni bond ETFs that are devoid of Puerto Rico exposure. Below, we highlight a few such options. Notably, all the below mentioned ETFs hit a 52-week high on May 17, 2016. iShares National AMT-Free Muni Bond ETF (NYSEARCA: MUB ) MUB has a trailing 12-month yield of 2.33%. The product provides access to more than 3000 municipal bonds with higher credit quality. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook. SPDR Nuveen Barclays Municipal Bond ETF (NYSEARCA: TFI ) The $1.90 billion ETF holds 882 bonds in its portfolio. The fund charges 23 bps in fees and yields 1.85% annually (as of May 17, 2016). Moreover, this fund houses higher investment-grade bonds. TFI has a Zacks ETF Rank #3 with a Medium risk outlook. VanEck Vectors AMT-Free Long Municipal Index ETF (NYSEARCA: MLN ) Devoid of any meaningful exposure to Puerto Rico, the top priorities of this fund are California (18.8%) and New York (13%). It yields 3.16% annually (as of May 17, 2016). More than half of the portfolio is high-quality in nature. MLN has a Zacks ETF Rank #3 with a High risk outlook. VanEck Vectors AMT-Free Intermediate Municipal Index ETF (NYSEARCA: ITM ) The fund replicates the performance of the medium-duration bonds. New York (16.4%), California (15.5%) and Texas (10.3%) have a double-digit exposure in the fund. ITM yields 2.22% annually (as of May 17, 2016). Investment-grade bonds make up a major share of the fund. It has a Zacks ETF Rank #3 with a High risk outlook. Original Post