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Returning To Some Popular ETF Trades

The WisdomTree Japan Hedged Equity ETF is still among the top 10 asset gatherers. It might be easy to assume some of this year’s most popular ETF trades among professional investors are losing momentum. Recently slowing momentum for currency hedged ETFs does not mean investors should abandon the asset class altogether. By Todd Shriber, ETF Professor The WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEARCA: DBEF ) , are still the top two asset-gathering exchange traded funds on a year-to-date basis, having hauled in more than $28.6 billion combined. Additionally, the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) is still among the top 10 asset gatherers as well. However, with the dollar recently faltering as traders pare back expectations that the Federal Reserve will raise interest rates next month and with the euro and yen seeing safe-haven buying in the midst of turmoil across global financial markets, it might be easy to assume some of this year’s most popular ETF trades among professional investors are losing momentum. ‘Just’ $5.9 Billion “ETFs that hedge against currency risk have attracted just $5.9 billion since the end of June as a rally in the greenback slowed. That compares with the $41 billion they lured in the first six months of the year, when a surging dollar imperiled international returns for U.S. investors,” according to Bloomberg as of August 19. “Just” $5.9 billion is no small sum and it bears noting that DBEF, a currency hedged play on the widely followed MSCI EAFE Index, and HEDJ have added over $3.8 billion combined in the current quarter. Only the Vanguard S&P 500 ETF (NYSEARCA: VOO ) has added more new money this quarter than DBEF. The Currency-Hedged Asset Class Recently slowing momentum for currency hedged ETFs does not mean investors should abandon the asset class altogether. In fact, some market observers see opportunity with some of these funds, even as some professional investors get skittish about the dollar rally. “The trades everyone had on at the beginning of the year, and have either since abandoned or plan to this week, are likely the trades that work into year-end-that is, a steeper curve in fixed income, strong U.S. dollar, long Japanese and European equities currency hedged, etc.,” said Rareview Macro founder Neil Azous in a recent note. A German Example Azous highlighted the iShares Currency Hedged MSCI Germany ETF (NYSEARCA: HEWG ) , as a potential area of opportunity following the savage correction endured by Germany’s benchmark DAX. There is a DAX-tracking ETF here in the U.S., the Recon Capital DAX Germany ETF (NASDAQ: DAX ) . Even with Tuesday’s 3.1 percent gain, DAX is still down more than 5 percent over the past month. Azous noted that German stocks are further along in their correction phase than their broader European and U.S. counterparts. Perhaps the green light on the hedged Germany trade, at least for contrarians, is this anecdote: Investors are abandoning the trade. Including HEWG, there are three euro-hedged Germany ETFs trading in New York and all three have lost assets this quarter to the tune of over $55 million. Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

3 Safe-Haven ETFs To Watch On Market Correction

The global investing world, especially the risky assets, went into a tailspin recently on a host of factors including lack of transparency in the Fed tightening timeline, the rout in the Chinese economy and its repercussions in its stock market, the yuan devaluation earlier this month, an impending snap election in Greece, slowdown in the Japanese economy and an acute plunge in oil prices. In short, concerns over global growth are widespread, causing a correction in the global stock markets. The U.S. stock-index futures recorded the deepest weekly decline in about four years past week. The tumult was triggered off on August 11 when China devalued its currency yuan and eventually spread into almost all asset classes. Since then, the global market correction ate away over $5 trillion of equity value, per Bloomberg. Commodity prices dived to a 16-year low, and credit risk in Asia rose to the highest level since March 2014. Given these woes, risk-averse investors are treading cautiously as most are dumping stocks and junk bonds in favor of safe haven assets to protect their portfolio from capital erosion. Below we have highlighted three safe haven ETFs that investors can consider adding to their portfolio in the current volatility. These products are likely to gain should the turmoil worsen and volatility in the market continue to escalate. Treasury Bonds iShares 20+ Year Treasury Bond ETF (NYSEARCA: TLT ) Though U.S. treasuries were out of favor a few days back due to worries over Fed tightening, heightened global uncertainty brought this safe asset into the limelight. Dimming prospects of the sooner-than-expected Fed rate hike, global growth worries and severely low oil price which put a lid on global inflation led treasury valuation to soar. Yields on the U.S. benchmark 10-year notes slipped to 2.05% on August 21 from this year’s 2.50% high recorded on June 10 while yields on the U.S. benchmark 20-year notes plunged to 2.44% from the high of 2.98% on June 26. The ultra-popular long-term Treasury ETF – TLT – tracks the Barclays Capital U.S. 20+ Year Treasury Bond Index and has AUM of $4.92 billion. Expense ratio comes in at 0.15%. Holding 29 securities in its basket, the fund focuses on the top credit rating bonds with average maturity of 26.82 years and effective duration of 17.35 years. TLT was up 1.9% last week and 5.7% in the last one-month frame (as of August 21, 2015). The fund has a Zacks ETF Rank #3 (Hold). Apart from TLT, investors can also consider the 25+ Year Zero Coupon U.S. Treasury Index ETF (NYSEARCA: ZROZ ) and the Vanguard Extended Duration Treasury ETF (NYSEARCA: EDV ) . These two ETFs were up 2% and 2.9% in the last one week (as of August 21, 2015). In the last one-month frame, each of these two ETFs gained over 9.4%. Gold SPDR Gold Trust ETF (NYSEARCA: GLD ) Gold is often viewed as a safe haven asset to protect against financial risks, and has performed well lately (despite deteriorating fundamentals) on heightened market volatility. The metal logged the largest weekly gains (as of August 21, 2015) since January. Funds tracking the yellow metal, such as GLD, can be a good choice for investors seeking safety. GLD tracks the price of gold bullion measured in U.S. dollars. The fund is the most popular and liquid bet in its space with an asset base of $25.1 billion and an average trading volume of about six million shares a day. The fund charges 40 basis points as fees and gained more than 4% in the past one week and 6% in the last one-month frame (as of August 21, 2015). Apart from GLD, investors can also consider the iShares Gold Trust ETF (NYSEARCA: IAU ) , another popular choice in this space that returned almost similar to GLD last week. Both GLD and IAU have a Zacks ETF Rank #3 (Hold). Currency CurrencyShares Japanese Yen Trust ETF (NYSEARCA: FXY ) The Japanese currency, yen, is often considered a classic safe haven asset. Yen surged to a six-week high on August 21, 2015 as China-led worries wrecked havoc on the global equity and commodity markets. Also, reduced expectations of a September Fed rate hike dampened the dollar to some extent and boosted yen. The sentiment regarding risk-aversion was so strong that yen gained despite the ultra-loose monetary policy in Japan. Investors can target this currency via FXY, which measures the value of the yen against the price of the greenback. This $106 million-fund charges 40 basis points as fees. FXY was up 1.11% on August 21 and added 1.7% in the past week as of the same date. FXY has a Zacks ETF Rank #4 (Sell) as easy Japanese monetary policy will not favor the currency for long. In fact, the fund lost about 0.1% after hours. Link to the original post on Zacks.com

ETF Deathwatch For August 2015: 330 And Climbing

Eleven ETFs and ETNs came off of ETF Deathwatch this month because they are no longer with us. Five more escaped because they were able to show a sustained improvement in their health, although the two iShares ETFs in this category are scheduled to close in August. Even with these sixteen departures, the overall list has four more members than last month. The reason for this growth is the twenty new names being added. The ETF Deathwatch for August consists of 330 products (240 ETFs and 90 ETNs). Historically, the number of ETFs and ETNs on Deathwatch have shown strong correlation to new ETF launch activity. The theory behind this is simple: a large number of new ETFs coming to market must compete against the other new products as well as the established base. Even the above-average performers may fail to attract attention, as investors find it more and more difficult to stay abreast of current offerings. As launch activity dwindles and overall ETF assets grow, many of the better products begin to take hold and weaker ones close, forcing the quantity of products on Deathwatch to decrease. As with many economic realities, it comes down to supply and demand. If this historical relationship holds, then I expect the size of the ETF Deathwatch list to continue growing in 2015 since launch activity is on pace to be the third strongest year ever. Meanwhile, closure activity is on pace to set a new record, and hundreds more are not profitable for their sponsors and should be closed. I expect the next large wave of additions to ETF Deathwatch will be many of the recently hatched currency-hedged ETFs. As detailed in ETF Stats for July 2015 – Currency Hedging Jumps The Shark , the quantity of currency-hedged ETFs surged from 16 to 57 since the beginning of 2014. By the time August comes to a close, the number will be even higher. I suspect many of these funds will find their way to Deathwatch due to either lack of investor awareness or lagging performance when the dollar rally fades. The average asset level of products on ETF Deathwatch decreased from $6.9 million to $6.8 million, but the quantity of products with less than $2 million in assets rose from 57 to 62. The average age fell from 50.3 months to 49.7 months, although the number of products more than five years old increased from 105 to 110. Here is the Complete List of 330 Products on ETF Deathwatch for August 2015 compiled using the objective ETF Deathwatch Criteria . The 20 ETPs added to ETF Deathwatch for August: ALPS Emerging Sector Dividend Dogs ETF (NYSEARCA: EDOG ) Arrow DWA Tactical ETF (NASDAQ: DWAT ) Deutsche X-trackers Muni Infrastructure Revenue Bond ETF (NYSEARCA: RVNU ) Direxion Daily FTSE Developed Markets Bull 1.25x (NYSEARCA: LLDM ) Direxion Daily FTSE Emerging Markets Bull 1.25x (NYSEARCA: LLEM ) Direxion Daily S&P 500 Bull 1.25x (NYSEARCA: LLSP ) Direxion Daily Small Cap Bull 1.25x (NYSEARCA: LLSC ) ETFS Diversified-Factor Developed Europe (NYSEARCA: SBEU ) ETFS Diversified-Factor U.S. Large Cap (NYSEARCA: SBUS ) ETFS Zacks Earnings Large-Cap U.S. (NYSEARCA: ZLRG ) ETFS Zacks Earnings Small-Cap U.S. (NYSEARCA: ZSML ) ETRACS Wells Fargo MLP Ex-Energy ETN (NYSEARCA: FMLP ) iPath US Treasury 2-year Bear ETN (NASDAQ: DTUS ) iShares Global Inflation-Linked Bond (NYSEARCA: GTIP ) iShares MSCI International Developed Momentum Factor (NYSEARCA: IMTM ) iShares MSCI International Developed Quality Factor (NYSEARCA: IQLT ) Master Income ETF (NYSEARCA: HIPS ) ProShares Managed Futures Strategy (NYSEARCA: FUTS ) QuantShares Hedged Dividend Income (NYSEARCA: DIVA ) SPDR Barclays International High Yield Bond (NYSEARCA: IJNK ) The 5 ETPs removed from ETF Deathwatch due to improved health: UBS ETRACS Monthly Pay 2x Leveraged S&P Dividend ETN (NYSEARCA: SDYL ) Guggenheim BulletShares 2022 HY Corp Bond (NYSEARCA: BSJM ) iShares MSCI Emerging Markets Value Index ETF (NASDAQ: EVAL ) iShares MSCI Hong Kong Small-Cap (NYSEARCA: EWHS ) PowerShares KBW Property & Casualty Insurance (PBWP) The 11 ETPs removed from ETF Deathwatch due to delisting: CS X-Links 2x Monthly Merger Arbitrage ETN (NYSEARCA: CSMB ) CS X-Links HOLT Market Neutral Global Equity ETN (NYSEARCA: CSMN ) RBS China Trendpilot ETN (NYSEARCA: TCHI ) RBS Global Big Pharma ETN (NYSEARCA: DRGS ) RBS Oil Trendpilot ETN (NYSEARCA: TWTI ) RBS Rogers Enhanced Agriculture ETN (NYSEARCA: RGRA ) RBS Rogers Enhanced Commodity Index ETN (NYSEARCA: RGRC ) RBS Rogers Enhanced Energy ETN (NYSEARCA: RGRE ) RBS Rogers Enhanced Industrial Metals ETN (NYSEARCA: RGRI ) RBS Rogers Enhanced Precious Metals ETN (NYSEARCA: RGRP ) RBS US Large Cap Alternator ETN (NYSEARCA: ALTL ) Disclosure: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned. Share this article with a colleague