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ETF Stats For February 2015 – Actively Managed Assets Jump 10%

The ETF industry roared back in February after beginning the year with a negative start in January . Twenty-two new products came to market during the month and seven shuttered operations. Assets jumped 5.3% to $2.1 trillion, which by our calculations allowed month-end assets to close above the $2 trillion mark for the first time. Readers should note that we exclude fund-of-fund assets in our calculations to avoid double counting. As such, our year-end 2014 data put assets just a sliver short of that threshold. February’s net addition of 15 active listings brought the year-to-date count back into positive territory at plus five. The month’s launches were heavily skewed with 21 ETFs and just one ETN coming to market. Additionally, six of the seven closures were ETNs, putting month-end listings at 1,667 consisting of 1,462 ETFs and 205 ETNs. Actively managed ETFs saw four additions and one closure. Their count now stands at 123, which is a decline of two for the year. However, actively managed assets surged 10.6% for the month, are up 13.0% year-to date, and now total $19.5 billion. ETFs with more than $10 billion of assets increased by two and now number 49. Although they represent less than 3% of products, they hold more than 58% of industry assets. Products with $1 billion or more in assets increased by nine to 259 and have a better than 89% market share. The smallest 830 products (nearly half) account for just 1% of assets. Trading activity plunged more than 28% with just $1.3 trillion worth of ETFs and ETNs changing hands. There were only 19 trading days in the month, which only partially accounts for the decline. The quantity of products averaging more than $1 billion a day in trading activity dropped from twelve to eight, yet they still accounted for 48.7% of industry dollar volume. February 2015 Month End ETFs ETNs Total Currently Listed U.S. 1,462 205 1,667 Listed as of 12/31/2014 1,451 211 1,662 New Introductions for Month 21 1 22 Delistings/Closures for Month 1 6 7 Net Change for Month +20 -5 +15 New Introductions 6 Months 98 6 104 New Introductions YTD 34 1 35 Delistings/Closures YTD 23 7 30 Net Change YTD +11 -6 +5 Assets Under Mgmt ($ billion) $2,058 $27.6 $2,085 % Change in Assets for Month +5.3% +5.4% +5.3% % Change in Assets YTD +4.3% +2.7% +4.3% Qty AUM > $10 Billion 49 0 49 Qty AUM > $1 Billion 254 5 259 Qty AUM > $100 Million 765 39 804 % with AUM > $100 Million 52.4% 19.5% 48.2% Monthly $ Volume ($ billion) $1,282 $50.2 $1,333 % Change in Monthly $ Volume -28.6% -28.2% -28.6% Avg Daily $ Volume > $1 Billion 7 1 8 Avg Daily $ Volume > $100 Million 80 3 83 Avg Daily $ Volume > $10 Million 296 12 308 Actively Managed ETF Count (w/ change) 123 +3 mth -2 ytd Actively Managed AUM ($ billion) $19.5 +10.6% mth +13.0% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in February (sorted by launch date): RevenueShares Global Growth Fund (NYSEARCA: RGRO ) , launched 2/2/15, holds about 100 securities based on two main selection criteria. First, 5 developed and 5 emerging countries will be chosen by selecting those with the highest percentage growth of their year over year GDP from the prior 2 quarters, with each country getting a 10% weighting. Second, the top 10 revenue-producing companies in each country are weighted by revenue, but they are limited to a 5% portfolio allocation. The expense ratio will be capped at 0.70% until 11/25/15 ( RGRO overview ). ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN (NYSEARCA: SMHD ) , launched 2/4/15, is an exchange-traded note that provides 2x (200%) leveraged exposure (reset monthly) to an index of small-cap stocks having dividend yields that are relatively high compared to other small-cap stocks in the U.S. market. The ETN pays a variable monthly coupon linked to two times the cash distributions paid by index constituents. SMHD has an estimated yield of 16.8% and sports an expense ratio of 0.85% ( SMHD overview ). Fidelity MSCI Real Estate Index ETF (NYSEARCA: FREL ) , launched 2/5/15, is designed to represent the performance of the real estate sector in the U.S. equity market. The fund will not hold all of the positions in the underlying index, MSCI USA IMI Real Estate Index, but will instead select a representative sample of securities that collectively has an investment profile similar to the index. Investors will pay 0.12% annually to own this fund ( FREL overview ). ProShares Russell 2000 Dividend Growers ETF (NYSEARCA: SMDV ) , launched 2/5/15, invests in the companies of the Russell 2000 Index with at least 10 consecutive years of dividend growth. The fund will hold a minimum of 40 stocks equally weighted, and right now it holds 55. The top sectors represented in the fund are Financials and Utilities, each at about 23%. SMDV has an estimated yield of 2.4% and expects to pay dividends quarterly. The fund’s expense ratio will be capped at 0.40% until 9/30/16 ( SMDV overview ). ProShares S&P MidCap 400 Dividend Aristocrats ETF (NYSEARCA: REGL ) , launched 2/5/15, will invest in the companies of the S&P 400 MidCap Index that have at least 15 consecutive years of dividend growth. The fund will hold a minimum of 40 stocks equally weighted, and right now it holds 47. Financials leads the sector lineup at nearly 30%, and the next closest is Materials at 17%. The estimated yield for REGL is 1.8%. The fund’s expense ratio will be capped at 0.40% until 9/30/16 ( REGL overview ). SPDR S&P 500 Buyback ETF (NYSEARCA: SPYB ) , launched 2/5/15, provides exposure to companies in the S&P 500 that have high buyback ratios compared to other stocks. The fund may either hold all of the positions in the underlying index, S&P 500 Buyback Index, or it could instead select a representative sample of securities that collectively has the same risk and return characteristics of the Index. The Index provides exposure to the 100 companies in the S&P 500 that have the highest buyback ratio in the last 12 months, and currently the fund holds 101 positions. The fund sports a 0.35% expense ratio ( SPYB overview ). Guggenheim S&P High Income Infrastructure ETF (NYSEARCA: GHII ) , launched 2/11/15, invests in 50 high-yielding securities of companies in developed markets that engage in various infrastructure-related industries. Sector representations in the fund include Utilities 50.2%, Industrials 33.2%, and Energy 16.7%. Investors will pay 0.45% annually to own this fund ( GHII overview ). KraneShares FTSE Emerging Markets Plus ETF (BATS: KEMP ) , launched 2/13/15, invests in large- and mid-cap companies in emerging market countries and weights the country allocations by gross domestic product. As of the end of 2014, the largest markets represented were China (43.5%), India (17.7%), Brazil (5.2%), Mexico (4.5%), and Russia (3.9%). The fund’s largest holding at 17.5% is KraneShares Bosera MSCI China A ETF (NYSEARCA: KBA ), and it has a 0.68% expense ratio ( KEMP overview ). ProShares Ultra Gold Miners (NYSEARCA: GDXX ) , launched 2/13/15, seeks a daily return that is 2x (200%) the daily performance of an index made up of publicly traded companies involved in gold and silver mining. Companies whose revenues lean toward silver mining are limited to 20% of the holdings. Canada has the largest geographic allocation at 60%. The expense ratio will be capped at 1.11% until 9/30/16 ( GDXX overview ). ProShares Ultra Junior Miners (NYSEARCA: GDJJ ) , launched 2/13/15, seeks a return that is 2x (200%) the daily performance of an index made up of micro- and small-cap companies involved in gold and silver mining that generate at least 50% of their revenues from those activities. Companies whose revenues lean toward silver mining are limited to 20% of the holdings. Canada takes top billing in the geographic allocation at 64%. The expense ratio will be capped at 1.12% until 9/30/16 ( GDJJ overview ). ProShares UltraShort Gold Miners (NYSEARCA: GDXS ) , launched 2/13/15, seeks a daily return that is 2x inverse (-200%) the daily performance of the same index underlying GDXX. The expense ratio will be capped at 0.95% until 9/30/16 ( GDXS overview ). ProShares UltraShort Junior Miners (NYSEARCA: GDJS ) , launched 2/13/15, seeks a daily return that is 2x inverse (-200%) the daily performance of the same index underlying GDJJ. The expense ratio will be capped at 0.95% until 9/30/16 ( GDJS overview ). AdvisorShares Pacific Asset Enhanced Floating Rate ETF (NYSEARCA: FLTR ) , launched 2/19/15, is an actively managed ETF designed to produce a high level of current income. The ETF invests in senior secured and unsecured floating rate loans, secured second lien floating rate loans, and other floating rate debt securities of domestic and foreign issuers. The portfolio manager can choose to invest as little as 80% of the fund or can leverage the portfolio up to 130%. Although the fund is focused on income, an estimated yield is not currently provided on the fund’s website. The expense ratio will be capped at 1.10% until at least 2/13/16 ( FLTR overview ). Sit Rising Rate ETF (NYSEARCA: RISE ) , launched 2/19/15, has an objective to profit from rising interest rates by using futures contracts and options on futures on 2-, 5-, and 10-year U.S. Treasury securities. The underlying index targets a negative 10 year duration, making it an inverse bond fund. The weighting of the instruments are expected to be from 30% to 70% for the shorter duration securities and 5% to 25% for those with 10 year maturities. RISE will issue K-1 tax reports instead of the easier to use 1099. It has an expense ratio of 1.64% based on the breakeven analysis in the prospectus ( RISE overview ). Greenhaven Coal Fund (NYSEARCA: TONS ) , launched 2/20/15, is designed to track the daily price movements of coal futures. The fund will hold an equal number of futures contracts in each of the three months making up the closest calendar quarter. The positions will be rolled over to the next calendar quarter four times a year. TONS will issue K-1 tax reports instead of the more investor friendly 1099. Based on the breakeven analysis in the prospectus, the expense ratio will be 1.23% ( TONS overview ). SPDR DoubleLine Total Return Tactical ETF (NYSEARCA: TOTL ) , launched 2/24/15, is an actively managed income fund designed to provide investors with maximum total return. The fund’s manager, Jeffrey Gundlach, invests in fixed income securities of any credit quality and may include mortgage-backed securities, high yield securities, foreign-denominated instruments, and securities tied to emerging market countries. TOTL characteristics include a current yield of 4.8% and a duration of 3.1 years. The fund’s expense ratio will be capped at 0.55% until 10/31/16 ( TOTL overview ). Tuttle Tactical Management U.S. Core ETF (NASDAQ: TUTT ) , launched 2/25/15, is an actively managed fund-of-funds seeking to deliver relative returns during market uptrends and capital preservation during market downtrends. The fund will combine multiple, uncorrelated tactical strategies. The top two holdings are iShares 7-10 Year Treasury Bond (NYSEARCA: IEF ) at 26.6% and Pimco Enhanced Short Maturity (NYSEARCA: MINT ) at 20.0%. TUTT sports a 1.34% expense ratio ( TUTT overview ). iShares U.S. Fixed Income Balanced Risk ETF (BATS: INC ) , launched 2/26/15, is an actively managed ETF investing in U.S. dollar denominated investment-grade and high-yield fixed-income securities. The portfolio will be designed so that, in the aggregate, the fund’s exposure to credit spread risk and interest rate risk should be equal. In order to achieve the balanced goal, the fund may take short or long positions in U.S. Treasury futures. The fund is currently leveraged with a 25% short position in cash and/or derivatives. The expense ratio will be capped at 0.25% until 2/29/16 ( INC overview ). Lattice Developed Markets (ex-US) Strategy ETF (NYSEARCA: RODM ) , launched 2/26/15, invests in a broad range of companies showing favorable valuation, momentum, and quality characteristics that are located in major developed markets of Europe, Canada, and the Pacific Region. There are currently about 340 holdings. Japan leads the country allocation at 18.6%, and the U.K. follows with 13.7%. Investors will pay 0.50% annually to own this fund ( RODM overview ). Lattice Emerging Markets Strategy ETF (NYSEARCA: ROAM ) , launched 2/26/15, strives to balance risk across emerging market countries, currencies, and companies. It will provide increased exposure to smaller, more locally driven emerging economies and enterprises that have encouraging valuation, momentum, and quality characteristics. ROAM sports a 0.65% expense ratio ( ROAM overview ). Lattice U.S. Equity Strategy ETF (NYSEARCA: ROUS ) , launched 2/26/15, will invest in large-cap U.S. equities that have solid valuation, momentum, and quality characteristics. Financials leads the sector allocation at 19.2%, and Information Technology comes in second at 16.1%. ROUS has an expense ratio of 0.35% ( ROUS overview ). Arrow QVM Equity Factor ETF (NYSEARCA: QVM ) , launched 2/27/15, consists of 50 equally weighted domestic equities selected based on a combined ranking score of their quality, value, and momentum characteristics. To be considered, stocks must have daily dollar volume above $1 million for the last three months and at least a $5 share price. The portfolio is constructed at the end of January and July and is rebalanced quarterly to maintain equal weighting. The expense ratio will be capped at 0.65% until 5/31/16 ( QVM overview ). Product closures/delistings in February : WisdomTree Euro Debt (NYSEARCA: EU ) PowerShares DB 3x Italian T-Bond Futures ETN (NYSEARCA: ITLT ) PowerShares DB 3x Long USD Index Futures ETN (NYSEARCA: UUPT ) PowerShares DB 3x Short USD Index Futures ETN (NYSEARCA: UDNT ) PowerShares DB Italian T-Bond Futures ETN (NYSEARCA: ITLY ) PowerShares DB US Deflation ETN (NYSEARCA: DEFL ) PowerShares DB US Inflation ETN (NYSEARCA: INFL ) iShares moved its four allocation ETFs to its Core lineup effective February 2. Deutsche Bank and Invesco ended their agreement to market DB issued ETNs under the PowerShares brand. The 26 ETNs were renamed effective 2/24/15. The role of “managing owner” for 11 PowerShares DB ETFs transferred from Deutsche Bank to Invesco effective 2/25/15 resulting in the temporary suspension of creation units on the affected funds. Creations were resumed by the following day. The only disruption we noted was PowerShares DB Oil Fund (NYSEARCA: DBO ) traded with about a 3.5% premium for a few hours the morning of 2/25/15. Previous monthly ETF statistics reports are available here . Disclosure covering writer, editor, publisher, and affiliates: 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.

Are Mexico ETFs Ready For A Rebound?

After sluggish growth over the last several months, Mexican economy has started picking up steam of late, on positive sentiments building up on a slew of encouraging indicators. This is especially true as Mexican industrial production expanded 3% year over year in December, up from 1.8% annual growth in November and above the market expectation of 2.7%. Both construction and manufacturing activities improved substantially buoyed by strong U.S. demand for Mexican exports. The job market is also showing signs of improvement as unemployment dropped to 3.8% in December from 4.3% a year-ago month. This trend is likely to continue in the coming months. With this, Latin America’s second largest economy is expected to have grown above 2% in 2014, up from 1.4% in 2013. It will likely pick up to 3.5% this year, according to economists polled by the Bank of Mexico. The HSBC Mexico Manufacturing Purchasing Managers’ Index rose to 56.6 in January from 55.3 in December, representing the best performance in more than two years. Further, annual inflation eased sharply to 3.08% in the first half of January, well below 4.08% in December and the Reuters’ expectation of 3.45%, according to the latest data from Mexico’s national statistics. This suggests that inflation could reach the central bank’s 3% target by midyear. However, a slump in Mexican currency could act as a major headwind and might raise inflationary pressures in the coming months. Notably, the peso has fallen to a five-year low and has lost more than 12% against the U.S. dollar since the start of September. The drop in global oil prices coupled with international market volatility and the prospect of a U.S. interest rate hike later in the year pose major risks to the currency and economic growth (read: Can Energy ETFs Regain Fervor on Capital Spending Cuts? ). In order to cope with declining oil prices, the Mexican government reduced the spending budget by $8.3 billion for this year. Most of the 2015 cuts will be seen in the energy sector and state-owned oil company, Pemex, which generates one third of the revenues for the country. The central bank also plans to review spending in 2016 and beyond. The move will aid in narrowing deficits without increasing taxes and lower public debt to GDP in the coming years. Investors should note that public debt rose to 41% of GDP in 2014, up from 39% in 2013. Apart from these, being an export-oriented economy, Mexico is a huge beneficiary of the strong U.S. economic recovery, probably stronger than many other countries in the world. This is because the United States is Mexico’s largest trading partner with the latter exporting more than 75% of commodities to the former. Moreover, a slumping peso is actually benefiting exporters and the manufacturing industry by making goods more competitive, resulting in soaring stock prices. Given these bullish fundamentals, investors could tap the potential strength of the economy in the form of ETFs with lower levels of risk and diversification benefits. Below are three funds targeting the second biggest economy of Latin America: iShares MSCI Mexico Capped ETF (NYSEARCA: EWW ) This fund is by far the most popular and liquid ETF in the Latin American space with AUM of $1.8 billion and average daily volume of more than 2.3 million shares a day. It tracks the MSCI Mexico IMI 25/50 index and holds 60 securities in its basket. The fund charges 49 bps in fees per year from investors. The product is heavily concentrated on the top firm – America Movil (NYSE: AMX ) – accounting for 17.1% share while other firms hold less than 8%. The ETF is well spread across a number of sectors with consumer staples, financials, telecom, materials, industrials, and consumer discretionary all making up for double-digit exposure. The fund has lost nearly 1% in the year to date time frame and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. Deutsche X-trackers MSCI Mexico Hedged Equity ETF (NYSEARCA: DBMX ) This product offers exposure to the Mexican equity markets while at the same time hedges against any fall in the peso against the U.S. dollar by tracking MSCI Mexico IMI 25/50 US Dollar Hedged Index. The fund holds 57 securities with the largest allocation to the top firm – AMX – at 17.4%. Other firms do not make up for more than 8.20% share in the basket (read: 3 ETFs to Fight Against Global Currency War ). From a sector look, telecom accounts for the largest share at 29.7% closely followed by financials (21.8%), consumer staples (16.4%) and industrials (12.4%). The fund has amassed $4.8 million in its asset base while trades in light volume of about 3,000 shares. It charges 50 bps in fees per year and is down 2.4% so far this year. DBMX has a Zacks Rank of 2 or ‘Buy’ rating with a Low risk outlook. SPDR MSCI Mexico Quality Mix ETF (NYSEARCA: QMEX ) This fund offers exposure to the 32 Mexican stocks that have value, low volatility and quality factor strategies. This is done by tracking the MSCI Mexico Quality Mix A-Series Index. This ETF is also highly concentrated on AMX at 16.7% and other firms hold less than 8% of total assets (read: SPDR Launches Quality ETFs Targeting Mexico, Korea and Taiwan ). Further, it is skewed toward the consumer staples sector, which makes up for 31.9% share. Other sectors make up for a nice mix in the portfolio. The fund has accumulated $2.4 million in AUM since its debut five months ago. It charges 40 bps in fees per year from investors and trades in paltry average daily volume of 3,000 shares. The product has lost 1.7% in the year to date time frame.

TECO Energy: Exiting TECO Coal To Drive The Stock Significantly Higher

Summary TECO Energy is strategically exiting its TECO Coal business in order to boost earnings. We believe the stock should trade at a premium valuation compared to its peers post TECO Coal divestiture. Investors should buy the stock at the current price in order to maximize gains. The shares of TECO Energy (NYSE: TE ), an energy-related holding company with regulated electric and gas utilities in Florida and New Mexico, have fallen significantly post its unimpressive fourth-quarter 2014 earnings few days ago. Furthermore, reduction in sale price of its TECO Coal subsidiary to Cambrian Coal by $30 million was also responsible for the correction in the stock. However, we believe the correction offers a decent entry point to long-term investors as TECO Energy is expected to be an interesting growth story post the TECO Coal divestiture. TE data by YCharts Investment Thesis The investment thesis is primarily based on TECO Energy’s future growth in net income following the divestiture of TECO Coal that is seeing operating losses with coal markets continuing to weaken. The company’s other three subsidiaries, such as Tampa Electric, Peoples Gas System and New Mexico Gas Co. or NMGC, are growing impressively. Exiting TECO Coal will boost the company’s overall bottom-line significantly. TECO Energy’s electricity sales for 2015 by Tampa Electric, one of its key subsidiaries, should rise modestly as a result of thriving Florida economy, particularly the Hillsborough County, Tampa Electric’s primary service territory. The electricity sales pattern in the Tampa area is bouncing back to the pre-economic downturn level, which is positive for TECO shareholders since most of the company’s earnings come from Tampa Electric. In addition to the electricity business, the stronger Florida economy is also responsible for sales growth of TECO’s Peoples Gas System unit by around 2-3% yearly driven by stronger commercial and industrial customer growth. Further, TECO Energy’s acquisition of NMGC in September is also expected to drive earnings due to healthy customer growth supported by large presence of oil and gas industries in New Mexico. Fundamental Analysis We believe TECO should trade at a premium in terms of EV/EBITDA compared to its peers, such as Southern Company (NYSE: SO ), American Electric Power (NYSE: AEP ), Exelon (NYSE: EXC ), and Edison International (NYSE: EIX ) as a result of favorable economic conditions in the states it operates. Dominion Resources (NYSE: D ), which operates in Virginia and North Carolina, is trading at a significant premium compared to the peer group due to its favorable jurisdiction, and TECO can also trade closer to such valuation post its TECO Coal exit. TE EV to EBITDA (Forward) data by YCharts Assuming normal weather in 2015, TECO’s 2015 EBITDA is expected to see around 15% year-over-year growth, and should be around $1 billion. As a result, enterprise value should be around 13 billion at 13x forward EV/EBITDA, the valuation at which Dominion Resources is trading. However, 13x forward EV/EBITDA might be too optimistic and we feel 10x is a more reasonable valuation, at which TECO’s enterprise value should be around 10 billion, and market cap should be close to $6.5 billion. We believe the stock is heading toward $27.70 based on 10x forward EV/EBITDA. Potential Risks If Florida’s economic conditions and housing markets see any weakening going ahead, Tampa Electric’s or Peoples Gas System’s earnings could be negatively impacted, resulting in negative returns for TECO shareholders. Since Florida is exposed to extreme weather conditions including hurricanes, investors should be prepared for volatility in the share price due to temporary reduction in the company’s earnings as a result of any damage to the company’s facilities. Since the company operates in a highly regulated environment, if it earns return on equity above allowed ranges, earnings could be subject to regulatory review and eventually might be reduced. Conclusion The current year is going to be TECO’s first full-year of ownership of NMGC, and the company expects it to be EPS-accretive in the first full-year. However, we believe NMGC will be a sustainable growth driver for the company. NMGC’s bottom-line growth coupled with TECO’s strategic exiting of the TECO Coal business should be considered long-term positive for the stock. Investors are advised to buy the stock at the current price. Business relationship disclosure: The article has been written by a BB Research stock analyst. BB Research is not receiving compensation for it (other than from Seeking Alpha). BB Research has no business relationship with any company whose stock is mentioned in this article. Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.