Tag Archives: nasdaq

GDX: Gold’s Resurgence Can Keep Rising

By Brenton Garen and Tom Lydon An obvious though still impressive beneficiary of gold’s resurgence this year is the gold mining industry and its corresponding exchange traded funds. That includes the Market Vectors Gold Miners ETF (NYSEArca: GDX ) , the largest and most heavily traded gold miners ETF. GDX is up 50% year-to-date. Not only is that good for one of the best performances among non-leveraged ETFs, it also puts GDX up nearly three times as much as ETFs that hold physical gold. That does not mean GDX and rival gold miners ETFs are perfect investments, not when the industry still faces headwinds. Strategists point out that costs keep rising, which has narrowed profit margins among gold miners. Recent mine closures have not improved margins. Current mining operations are also facing deteriorating ore grades. The recent decline in energy prices and depreciating currencies where local miners operate have also had minimal beneficial impact on cash costs. Gold is seeing greater support from safe-haven demand after currency devaluations across Asia added to investment demand for a better store of value than paper currencies or stocks and bonds. Gold assets look more attractive in a low interest rate environment as the precious metal is more competitive against assets that pay low interest, like bonds. Additionally, if the Fed holds off on further rate hikes, it would suggests the economy is not as strong, which would also help gold attract safe-haven demand. “I believe this could be due to the fact that the cash cost of mining the yellow metal has not only been constantly below the gold price, but also falling. For miners, any increase in the price of gold can push the income as well as profit margins even higher,” according to a Seeking Alpha analysis of GDX. Supporting miners and GDX is the dollar, which has quickly weakened. The greenback is being weighed down on speculation that ongoing uncertainty may force the Federal Reserve to refrain from hiking interest rates in the near future. Consequently, a weaker USD makes alternative assets like metals more attractive . Market Vectors Gold Miners ETF Click to enlarge Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

Inside PowerShares’ New Multi-Asset ETF

The recent market upheaval triggered by global growth worries left investors baffled about which investment to tap. While equities have lost their appeal this year, fixed income securities have gained. In the equities spectrum, dividend stocks beat out other equity securities. Meanwhile, some country ETFs outperformed. With uncertainties likely to be in place in the coming days, investors can choose strategies that can reduce risk in their portfolio. And a multi-asset portfolio does a great job in accomplishing this goal. By investing in multi-asset ETFs, investors do not have to worry about the threats emanating from single-asset class picking. This is why PowerShares has rolled out a multi-asset ETF, PowerShares DWA Tactical Multi-Asset Income Portfolio (NASDAQ: DWIN ), which follows a ‘fund of funds’ approach. DWIN in Focus The new ETF looks to track the Dorsey Wright Multi-Asset Income Index. The index chooses investments from a cluster of income strategies on the basis of parameters like relative strength and current yield. The product holds five ETFs in the basket. The ETF will charge investors 69 basis points a year for this exposure. The Fund and the Index are primed for monthly rebalancing. PowerShares High Yield Equity Dividend Achievers Portfolio (NYSEARCA: PEY ), PowerShares Preferred Portfolio (NYSEARCA: PGX ), PowerShares Build America Bond Portfolio (NYSEARCA: BAB ), PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEARCA: PCY ) and PowerShares Global Short Term High Yield Bond Portfolio (NYSEARCA: PGHY ) constitute the fund at the current level with weights of 20.88%, 20.81%, 20.35%, 18.99% and 18.97%, respectively (read: 4 Multi-Asset ETFs to Lower Portfolio Risk ). How This Fits in a Portfolio? DWIN could be an interesting choice for those seeking a broad income play. The fund offers mixed exposure ranging from equities to bonds to the alternative assets. Multi asset ETFs are funds that invest in a combination of diverse asset classes such as investment grade and high yield bonds, domestic and international markets stocks, preferred stocks, REITs and MLPs. These funds offer great diversification benefits by investing across different asset classes and provide a high level of current income with stability and potential for long-term appreciation. In the present low-yield environment, a look at high-income products seems feasible. By investing in diverse asset classes which have low correlations with conventional asset classes, the fund will likely reduce volatility and offer stability to the portfolio. Moreover, a fund-of-funds approach seems a great strategy in minimizing the portfolio risks. Can it Succeed? There is still a desire for such securities despite a good number of choices already in the space. So, the fund has scope for growth in this field (see all the Zacks ETF Categories here ). Still, the fund could face competition from Arrow Dow Jones Global Yield ETF (NYSEARCA: GYLD ), which has amassed over $89 million in assets. It costs investors 75 bps in annual fees. Among others, the popular multi-asset income ETFs – Guggenheim Multi-Asset Income ETF (NYSEARCA: CVY ), iShares Morningstar Multi-Asset Income ETF (BATS: IYLD ) and SPDR SSgA Income Allocation ETF (NYSEARCA: INKM ) – may also give stiff competition to the newbie. Notably, CVY, IYLD and INKM charge 65 bps, 60 bps and 70 bps in fees, respectively. Since the newly-launched fund charges in line with its peers, only a sizable yield can draw investors’ interest. Original Post