Tag Archives: nasdaq

VC Fundraising Hits 10-Year High Despite Startup Doubts

Venture capital firms raised $12 billion in the first quarter — the largest amount in 10 years and double the amount raised in the previous two quarters combined — despite growing doubts about startup valuations. The amount raised is a promising sign for entrepreneurs and startups that rely on venture capital funding to launch their companies and expand. The $12 billion was up 59% year over year and more than double that of the previous quarter, said the National Venture Capital Association, which reported numbers tallied by Thomson Reuters. It was the most raised in a quarter since $14.3 billion in Q2 2006. “While it’s unlikely for this strong pace to continue, we do expect this to be a solid fundraising year when all is said and done,” said Bobby Franklin, CEO of the National Venture Capital Association, in a statement. Investors in venture capital funds include pension funds, endowments, insurers, banks, corporations and rich individuals hoping to get above-average returns on their investments. Venture capital firms receive annual management fees as they invest in startups. The funded portfolios are typically active for about 7 to 10 years until profit is distributed to the portfolio investors. Venture capital firms also keep a percentage of the gains. The funding provided to venture capital firms comes even as the value of some highly valued startups has declined and as the market for initial public offerings has cooled. But the overall rate of return from VC portfolios is better than what it might seem. The 10-year return by venture funds for the period ended Sept. 30 was 11% versus 6.8% for the S&P 500 index and 7.9% for the Nasdaq composite, according to Cambridge Associates, a provider of investment advice and research. The largest recipient of funds in Q1 was Founders Fund VI portfolio, which raised $1.3 billion. The Founders Fund venture capital firm was launched by Peter Thiel, a founder of PayPal ( PYPL ) and an early investor in Facebook ( FB ). Founders Fund is an investor in SpaceX, which has a multi-billion dollar contract to resupply the International Space Station. SpaceX also has numerous contracts for the launching of satellites. Founders Fund is also an investor in accommodations listing provider Airbnb and music streaming service provider Spotify. The second- and third-largest funding amounts, both receiving $1.2 billion, went to Norwest Venture Partners XIII and Accel Growth Fund IV.

Dual ETF Momentum April Update

Scott’s Investments provides a free “Dual ETF Momentum” spreadsheet, which was originally created in February 2013. The strategy was inspired by a paper written by Gary Antonacci and available on Optimal Momentum . Antonacci’s book , Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk, also details Dual Momentum as a total portfolio strategy. My Dual ETF Momentum spreadsheet is available here and the objective is to track four pairs of ETFs and provide an “Invested” signal for the ETF in each pair with the highest relative momentum. Invested signals also require positive absolute momentum, hence the term “Dual Momentum.” Relative momentum is gauged by the 12-month total returns of each ETF. The 12-month total returns of each ETF is also compared to a short-term Treasury ETF (a “cash” filter) in the form of the iShares Barclays 1-3 Treasury Bond ETF (NYSEARCA: SHY ). In order to have an “Invested” signal, the ETF with the highest relative strength must also have 12-month total return greater than the 12-month total returns of SHY. This is the absolute momentum filter, which is detailed in depth by Antonacci, and has historically helped increase risk-adjusted returns. An “average” return signal for each ETF is also available on the spreadsheet. The concept is the same as the 12-month relative momentum. However, the “average” return signal uses the average of the past 3, 6, and 12-month (“3/6/12″) total returns for each ETF. The “invested” signal is based on the ETF with the highest relative momentum for the past 3, 6 and 12 months. The ETF with the highest average relative strength must also have an average 3/6/12 total returns greater than the 3/6/12 total returns of the cash ETF. Portfolio123 was used to test a similar strategy using the same portfolios and combined momentum score (“3/6/12″). The test results were posted in the 2013 Year in Review and the January 2015 Update . Below are the four portfolios along with current signals: Return Data Provided by Finviz Click to enlarge As an added bonus, the spreadsheet also has four additional sheets using a dual momentum strategy with broker specific commission-free ETFs for TD Ameritrade, Charles Schwab, Fidelity, and Vanguard. It is important to note that each broker may have additional trade restrictions and the terms of their commission-free ETFs could change in the future. Disclosure: None