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Top And Flop Zones Of Q1 And Their ETFs

The start of 2016 was the worst ever for the broader financial market, thanks to the twin attacks of the China meltdown and the oil price crash that sparked off fresh fears of a global slowdown. Additionally, a strong dollar, geopolitical tensions in the Middle East, weak corporate earnings, uncertain timing of the next interest rates hike, weakness in many developed and developing economies, and concerns over the health of the global banks added to the chaos. A slew of worries sent the major U.S. bourses into correction territory from the recent peaks, with the S&P 500 and Dow Jones plunging more than 14% (as of February 11). However, the stocks staged a nice comeback in the back half of the first quarter, recouping all the losses made in the quarter. Both the S&P 500 and Dow Jones are now in the green, having logged 1% and 1.7% gains, respectively, from a year-to-date look. This is largely thanks to extra easing policies in Europe and Japan, stabilization in the Chinese economy, and receding fears of recession in U.S. Further, the rebound in oil price from its 12-year low and the Fed’s dovish comments infused a fresh lease of life in the stock markets. All these have increased the appeal for riskier assets lately, leading to a bullish trend in stocks, though bouts of volatility are still showing up. That being said, most corners of ETF investing have performed exceptionally well, while a few areas are lagging. Below, we have highlighted the best and worst zones of Q1 and their ETFs in detail. Best Zones Metal Mining ETFs Global uncertainty and financial market instability have brought back the lure for metals across the globe, boosting their demand. Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains compared to their bullion cousins in a rising metal market. While all the ETFs in the mining space have enjoyed smooth trading, the PureFunds ISE Junior Silver ETF (NYSEARCA: SILJ ) is the biggest winner, having surged about 71% in value. This product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. In total, the fund holds about 24 securities in its basket, with the largest allocation going to the top three firms – First Majestic Silver Corp. (NYSE: AG ), MAG Silver Corp. (NYSEMKT: MVG ) and Pan American Silver (NASDAQ: PAAS ). These firms combine to make for 40.3% of the fund’s assets. Canadian firms take the lion’s share at 82%, while the U.S., Peru and the United Kingdom take the remainder. The fund has managed assets worth $9.2 million and trades in a paltry volume of less than 18,000 shares a day. It charges 69 bps in annual fees. Natural Resource ETFs The natural resource segment gained immense strength in the first quarter, with robust performances in its chemical business as well as the metals & mining, and steel industries. A growing automotive market, a solid residential construction market and increasing production are boosting growth. Further, the impressive rebound of oil price from the 12-year lows hit in mid-February raised the appeal for these products. All these combinations have given a huge boost to the new ETF – the SPDR S&P North American Natural Resources ETF (NYSEARCA: NANR ) – that has accumulated $744.2 million in AUM in just three months of its debut, while surging 17% in the first quarter. Volume is solid, with the fund exchanging 490,000 shares in hand on average. The ETF offers a well-balanced exposure to the basket of natural resources companies in the energy, materials, and agriculture industries. It tracks the S&P BMI North American Natural Resources Index, charging investors 35 bps in fees and expenses. Holding 60 securities in its basket, it is highly concentrated on the top two firms – Chevron (NYSE: CVX ) and Exxon Mobil (NYSE: XOM ) – with over 9% share each. Other firms hold less than 6.2% of assets. Materials make for half of the portfolio, closely followed by 45% in energy and the rest in consumer staples. Gold ETFs After posting the third annual loss in 2015, gold is heading for its biggest quarterly gain in nearly 30 years , having risen more than 15% in the first quarter. This is especially thanks to global growth concerns, the Fed’s cautious stance on rate hikes, and the adoption of negative interest rates by most countries that resulted in risk-off trade, increasing the safe-haven appeal across the board. In particular, the PowerShares DB Gold ETF (NYSEARCA: DGL ) has been leading in this corner of the ETF world, gaining nearly 15.6%. The fund seeks to track the DBIQ Optimum Yield Gold Index Excess Return, which consists of futures contracts on gold, plus the interest income from the fund’s holdings of US Treasury securities. It has amassed $218.2 million in its asset base, while it trades in moderate volume of 64,000 shares, thereby resulting in additional cost in the form of a wide bid/ask spread beyond the expense ratio of 0.78%. The product has a Zacks ETF Rank of 3 or “Hold” rating with a Medium risk outlook. Worst Zones Biotechnology ETFs Being a high-growth and high-beta sector, biotechnology has been hit hard by the global market rout seen in January and early February. Further, sector-specific issues, including increased regulatory scrutiny over high drug prices, political uncertainty surrounding healthcare reform, soft enrollment in public health insurance exchanges, and continued deceleration in earnings growth intensified the woes. While all the ETFs in this space saw terrible trading, the BioShares Biotechnology Clinical Trials ETF (NASDAQ: BBC ) stole the show, plunging over 36% in the first quarter. The ETF provides exposure to the companies that have a primary product in Phase I, II, or III of FDA trials by tracking the LifeSci Biotechnology Clinical Trials Index. Holding 90 small cap stocks in its basket, the fund is widely spread out, as each firm holds no more than 2.23% share. BBC has accumulated $27.6 million in its asset base and charges fees of 85 bps per year. It trades in a light volume of 11,000 shares a day and has a Zacks ETF Rank of 3. Natural Gas ETFs Natural gas price has been on a wild swing since the start of the year, dropping in early March to levels not seen in 18 years on expanding supply and falling global demand. A mild winter in the U.S. and EU also dented the demand from heating for natural gas. As a result, the ETFs tracking natural gas futures have been hit, with the iPath DJ-UBS Natural Gas Total Return Sub-Index ETN (NYSEARCA: GAZ ) shedding 30.5%. The note delivers returns through an unleveraged investment in the natural gas futures contract plus the rate of interest on specified T-Bills. It follows the Bloomberg Natural Gas Subindex Total Return Index. The product is unpopular and illiquid, with AUM of $5.1 million and average daily volume of 53,000 shares. Its expense ratio came in at 0.75%. Solar ETFs Solar stocks have also been victims of investors’ shift from the high-beta space and vicious oil trading given investors’ misconception that oil price and solar market fundamentals are directly related to each other. Even the encouraging industry trends, including higher panel installations, the historic Paris climate deal, the U.S. tax credit extension, and Obama’s ‘Climate Action Plan failed to revive growth in the sector. As such, the Guggenheim Solar ETF (NYSEARCA: TAN ), which offers exposure to the global solar industry, tumbled about 26%. The product follows the MAC Global Solar Energy Index and holds 29 securities in its basket, with the largest allocation going to the top three firms, which combined to make up for 21.9% share. American firms dominate the fund’s portfolio at nearly 55.9%, followed by China (17.9%) and Hong Kong (15.0%). The product has amassed $224 million in its asset base and trades in good volume of around 184,000 shares a day. It charges investors 70 bps in fees per year. Original Post

5 Best-Performing Real Estate Mutual Funds Of Q1 2016

As the first quarter is drawing to a close, the housing industry remains firmer than what most believed. New residential construction was impressive in February, while rise in new single home sales indicated that there is momentum in the housing market. In March, the NAHB/Wells Fargo housing market index that reflects home builders’ sentiment continued to remain above the 50 mark, indicating improvement. Add to this low mortgage rates and strong employment report and you know why they sound so confident. Banking on these positive trends in the real estate industry, it will be wise to bet on fundamentally solid funds from this space. Upbeat New Residential Construction After a crippling east coast storm affecting housing starts in January, new residential construction bounced back in February as the spring selling season kicked off. Housing starts rose to 1.18 million in February from 1.12 million January, way above analysts’ estimates. Both privately owned housing starts for single-family and multifamily moved north. Starts also rose across all the geographies except for the Northeast. Builders are allocating more resources to multifamily construction to benefit from the current upbeat rental market. Moreover, construction outlay had already touched the highest level in January since Oct. 2007. In January, spending also rose a whopping 10.4% year over year. Building permits are a precursor to construction activity. It indicates the future growth of housing activities. While permits remained unchanged in January, it fell slightly in February. However, permits for single-family residences actually increased from 728,000 in January to 731,000 in February. New Residential Sales Gain, Sentiment Steady Sales of single family home in the U.S. rose 2% to a seasonally adjusted annual rate of 512,000 units in February. January’s sales figure was also revised up to 502,000 units. This is good news for the housing sector as new home sales account for about 9.2% of the housing market. Pending home sales also increased 3.5% from January to a seven-month high of 109.1 in February. This gain follows a 3.1% loss in January. Pending sales indicate upcoming sales activity. A sale is considered pending when the contract has been signed but the transaction hasn’t closed. Existing home sales, on the other hand, turned out be a bit disappointing in February. Sales of existing homes came in at 5.08 million, down 7.1% from January’s figure. Even though it’s a drop in numbers, it has followed January’s strongest rise in sales in six months at 5.47 million. Meanwhile, The National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI) remained flat at 58 in March. While it’s the lowest level in eight months, it’s still a good number. The index has remained well above the 50 mark for several months indicating a steady recovery. Top 5 Real Estate Funds of Q1 2016 As discussed above, most of the data related to homebuilding released this quarter suggest that housing activity is improving. This is borne out by the fact that the Real Estate SPDR (NYSEARCA: XLRE ) has gained 2.8% on a year-to-date basis. Moreover, historically low mortgage rates are expected to give the real estate industry a boost. Bankrate, Inc. (NYSE: RATE ) reported that in March the 30-year fixed rate mortgage dipped to a range of 3.56% to 3.6%. In February, the rate was at 3.65%. Further, jobs data in February painted a solid picture of the labor market, which will eventually increase demand for more residential complexes. The U.S. economy added 242,000 jobs in February, handily beating January’s upwardly revised job number of 172,000. Additionally, the unemployment rate in February remained unchanged at 4.9%. Residential investment also jumped 10.1% in the fourth quarter, compared with a rise of 8.2% in the third. It also surged 8.9% in 2015, exceeding 2014’s gain of only 1.8%. Moreover, democratic presidential candidates Hillary Clinton and Bernie Sanders have already promised to increase infrastructure investment in the future. Given these positive trends in the real estate industry, it will be prudent to invest in funds related to the housing space. Funds have been selected over stocks, since funds reduce transaction costs for investors and also diversify their portfolio without the numerous commission charges that stocks need to bear. Here we have selected five such real estate funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy), have given highest year-to-date return, offer minimum initial investment within $5000, carry a low expense ratio and possess no-sales load. Fidelity Real Estate Investment Portfolio (MUTF: FRESX ) invests the majority of its assets in securities of companies engaged in the real estate industry and other real estate-related investment. FRESX’s year-to-date return is 5.6%. FRESX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 0.78% is lower than the category average of 1.29%. AMG Managers Real Estate Securities (MUTF: MRESX ) invests a major portion of its assets in stocks of companies principally engaged in the real estate industry, including Real Estate Investment Trusts. MRESX’s year-to-date return is 4.7%. MRESX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 1.16% is lower than the category average of 1.29%. PIMCO Real Estate Real Return Strategy D (MUTF: PETDX ) seeks to achieve its investment objective by investing in real estate-linked derivative instruments backed by a portfolio of inflation-indexed securities and other Fixed Income Instruments. PETDX’s year-to-date return is 3%. PETDX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 1.14% is lower than the category average of 1.29%. T. Rowe Price Real Estate (MUTF: TRREX ) invests a large portion of its assets in the equity securities of real estate companies. TRREX’s year-to-date return is 1.9%. TRREX carries a Zacks Mutual Fund Rank #1 and the annual expense ratio of 0.76% is lower than the category average of 1.29%. TIAA-CREF Real Estate Securities Retirement (MUTF: TRRSX ) invests a large portion of its assets in the securities of companies that are principally engaged in or related to the real estate industry, including those that own significant real estate assets. TRRSX’s year-to-date return is almost 1%. TRRSX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 0.77% is lower than the category average of 1.29%. About Zacks Mutual Fund Rank By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past, but are also expected to outperform going forward. Pick the best mutual funds with the help of Zacks Rank. Original Post

Successful ETF Launches Of Q1

The ETF industry is growing by leaps and bounds irrespective of whether the markets are on a bull or bear run. Thanks go largely to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and low cost. In fact, ETFs are now considered as a preferred investment vehicle across the globe over mutual funds and hedge funds. U.S. ETFs have gathered about $2.2 billion of capital so far in 2016, as per etf.com . Though it is much lower than $59 billion inflows seen in the year-ago period, both existing and new issuers remain active in binging innovative products to the market. About 37 ETFs have been launched in the first quarter, taking the total number of ETFs to 1,863 and total assets to over $2.1 billion. Below, we highlight four ETFs that have gathered maximum attention from investors and have a huge potential to dominate the market in the coming months. SPDR SSGA Gender Diversity Index ETF (NYSEARCA: SHE ) Several researches found that companies that have female employees in the top brass have a tendency to outperform the market. As per the latest study from market index provider MSCI , companies with boardrooms featuring “strong female leadership” have generated 36.4% greater return on equity since 2009 than male-dominated companies. A new study by Quantopian, a Boston-based trading platform, has revealed that companies with female CEOs in the Fortune 1000 generated 226% better returns than the S&P 500 over the past 12 years (read: Women Leaders ETFs Head to Head: WIL vs. SHE ). Given the long history of outperformance, investors have shown their eagerness to add female-centric companies to their portfolio. This is easily depicted by the successful debut of SHE, which has attracted nearly $265 million in assets since its inception on International Women’s Day. It is the most popular ETF launch of Q1. The fund offers exposure to the companies that have managed to recruit and retain women in leadership positions by tracking the SSGA Gender Diversity Index. Holding 140 stocks in its basket, it is moderately concentrated in the top firms with each holding less than 6.6% share. In terms of sector, financials, healthcare, information technology, consumer discretionary, and industrials occupy the top five positions with double-digit exposure each. The fund charges 20 bps in annual fees and trades in solid volume of 310,000 shares a day on average. PowerShares DWA Tactical Multi-Asset Income Portfolio (NASDAQ: DWIN ) Amid heightened uncertainty and volatility, investors are seeking to employ strategies that could fetch higher returns with lower risk to their portfolio. This has raised the appeal for multi-asset ETFs, which offer huge diversification benefits by investing across different asset classes having low correlations with each other. These products aim to provide a high level of current income with stability and potential for long-term appreciation while they simultaneously avoid the downside risk of specific asset classes (read: Multi-Asset ETFs to Counter Volatility ). As a result, DWIN has become extremely popular among investors in its first month of debut having amassed $35.5 million in AUM. It is a fund of five funds and tracks the Dorsey Wright Multi-Asset Income Index, which seeks to capitalize on seven different income-producing market segments including corporate bonds, emerging market debt, dividend stocks, MLPs, REITs, and preferred shares based on relative strength and current yield criteria. Currently, each of the five ETFs in the basket accounts for around 20% of the assets, making the portfolio highly diversified. The fund is quite expensive, charging 69 bps in fees and expenses while volume is light at around 40,000 shares. ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (NYSEARCA: MLPZ ) This is a leveraged ETN targeting the MLP corner of the broad energy segment. It delivers twice (2x or 200%) the returns of the monthly performance of the S&P MLP Index. Launched on February 8, the note is catching investors’ eye amid wild swings in oil prices. This is because most MLPs, which are engaged in the processing and transportation of energy commodities such as natural gas, crude oil, and refined products, are best positioned to withstand the decline in oil prices and be the major beneficiaries of an oil boom in the long term. These have relatively consistent and predictable cash flows, making them safer and less risky than other plays in the broader energy space. Additionally, the leveraged factor tacked on it is encouraging investors to make big gains on quick turns in oil prices. MLPZ has gathered about $34.9 million in its asset base since its inception but trades in light volume of about 30,000 shares. Expense ratio comes in at 0.95%. ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B (NYSEARCA: MLPQ ) MLPQ is also a leveraged MLP ETN launching on February 8 and providing two times exposure but tracks the Alerian MLP Infrastructure Index. It saw slightly lower inflows of $34.7 million and even lower average daily volumes than MLPZ. However, it charges lower fees by 10 bps. Link to the original post on Zacks.com