Tag Archives: nyse

Tech ETFs That Braved The Storm In February

Among other reasons, the month of February 20 16 will be remembered for the broad-based sell-off in the tech space. In any case, a retreat from high-growth stocks kept this space off the radar, but the tension flared up when LinkedIn Corp. (NYSE: LNKD ) issued a lackluster guidance for the first quarter of 20 16 in early February (read: LinkedIn Crashes: Should You Connect with Social Media ETF? ). Along with LinkedIn, the famous FANGs (Facebook (NASDAQ: FB ), Amazon (NASDAQ: AMZN ), Netflix (NASDAQ: NFLX ) and Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) (i.e. Alphabet) were also hit hard. Notably, the famous four contributed a lot to last year’s tech surge. However, the bloodbath in these stocks dragged down the tech-laden Nasdaq exchange, forcing it to be the worst performing index among the top three U.S. indices. Nasdaq- 100 ETF (NASDAQ: QQQ ) was off over 1.8% in February while Technology Select Sector SPDR ETF (NYSEARCA: XLK ) lost about 1%. Apart from the LinkedIn-induced crash, overvaluation concerns, global growth issues and corporate recession were responsible for last month’s technology tantrum. Almost all ETFs catering to cyber security, the broader Internet, cloud computing and software were the hardest hit in the technology meltdown. Still, there are a few tech ETFs which dared the sell-off to end the month in the green. Below we highlight three such tech ETFs. iShares North American Tech-Multimedia Networking ETF (NYSEARCA: IGN ) – Up 6.8% This ETF provides a concentrated exposure to the domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 26 securities in its basket, Motorola (NYSE: MSI ) takes the top spot with a 9.5% allocation. This is followed by Qualcomm (NASDAQ: QCOM ) (9.35%) and Cisco Systems (NASDAQ: CSCO ) (8.7%). The product has a definite tilt toward small cap securities that account for 43%, followed by mid caps at 34%. It has accumulated $78.9 million in its asset base while sees a moderate volume of around 7 1,000 shares a day. Expense ratio comes in at 0.48%. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a high risk outlook. PowerShares S&P SmallCap Info Tech ETF (NASDAQ: PSCT ) – Up 3.8% This fund tracks the S&P SmallCap 600 Capped Information Technology Index. It has amassed $377.5 million in its asset base and trades in average daily volume of about 4 1,000 shares. The ETF charges 29 bps in fees per year from investors. Holding 102 securities in its basket, the product is well spread across securities with none holding more than 3.5 1% share (read: 5 Small Cap ETFs & Stocks that Beat Russell 2000 in 20 15 ). From an industry look, about one-fourth of the portfolio is allocated toward electronic equipment, followed by semiconductors ( 19.43%) and software ( 16.29%). The product has a Zacks ETF Rank of 2 or a ‘Buy’ rating with a high risk outlook (read: Top Tech ETFs of 20 15: The Best from a Winner ). First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV ) – Up 3. 1% This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $462.9 million in its asset base and trades in moderate volume of about 98,000 shares per day. The ETF charges 50 bps in annual fees and holds about 96 securities in its basket (read: ETFs to Tap on Cisco’s Upbeat Q4 Results ). Cisco occupies the top position in the fund, making up for roughly 8.23% of the assets followed by IBM (NYSE: IBM ) (8.04%) and Microsoft (NASDAQ: MSFT ) (8.0 1%). In terms of industrial exposure, the fund allocates nearly one-fifth portion in semiconductor and semiconductor equipment, followed by diversified telecom services ( 17%), software ( 15.52%), technology hardware, storage & peripherals ( 15.3%), and communications equipment ( 14.6%). Original Post

Where’s The Gold-Hedged S&P 500?

Back in 2010, there was a fair amount of hoopla generated by the launch of the E-TRACS S&P 500 Gold Hedged Index ETN (NYSEARCA: SPGH ) , a first-of-its kind product designed to smooth out bumps in a then-nascent equity market recovery. By tying together two historically divergent assets-gold and stocks-note holders should have been able to simulate S&P 500 returns hedged against the fluctuations of the U.S. dollar versus gold. Why “should have”? Well, that’s an interesting story. But let’s not get ahead of ourselves. First, you need to know that SPGH notes are unsecured debt obligations of BBB-plus-rated UBS AG (NYSE: UBS ) (Jersey). Um, that’s the Isle of Jersey, not the Garden State. You also should know that the SPGH offering was one of the Swiss bank’s most lightly subscribed ETN issues. In October, when a significant liquidity event occurred (more on that in a minute), more than 99 percent of SPGH notes issued remained in the hands of UBS Securities LLC, the bank’s selling agent. One of the reasons for the light interest was the note’s call feature. Starting in 2011, UBS AG had the right to redeem the notes at market value whenever it pleased. Note buyers, in effect, were forced to give away a put option of indeterminate length with an unknown strike price. No wonder interest was sparse. Then came that liquidity event. Last fall, UBS AG announced it was suspending issuance of new notes in a wide swath of its ETRACs ETNs, including SPGH. The notes continued to trade on the NYSE Arca mart and UBS Securities LLC could still sell from its inventory the 3.9 million notes it already held. But no matter; the announcement had a chilling effect on already frozen sales. Then, the ETN dropped off the securities masters of retail brokerages and financial websites. Just try to pull up a quote for SPGH on, say, TD Ameritrade’s (NASDAQ: AMTD ) platform or on Yahoo! Finance nowadays. You get nuthin’. Zip. Nada. Bupkes. And that’s too bad. The notes’ intrinsic value has shot up recently as the equity market faltered and gold finally found a bid. The index underlying the SPGH notes was up 12 percent in January versus a 4 percent gain in the S&P 500. And, in February, the correlation between gold and stocks grew even more negative (see the chart below). Click to enlarge Obviously, the value of these notes can’t be realized by new investors. Oh, sure, you can still find a two-way market posted on NYSE Arca, but you’d have a hard time getting a trade executed if your broker won’t recognize the security. Still, there is hope for those who’d like a self-balancing stock-and-gold package. There’s a new gold-hedged S&P 500 product-this time a fund, not a note-awaiting launch. The REX Gold Hedged S&P 500 ETF (NYSE Arca: GHS) will track virtually the same index as SPGH while carrying lower annual expenses. And it won’t expose holders to the risk of dealing with a capricious debt-issuing bank. Details can be found at www.rexetf.com . Brad Zigler is REP./WealthManagement’s Alternative Investments Editor. Previously, he was the head of marketing, research and education for the Pacific Exchange’s (now NYSE Arca) option market and the iShares complex of exchange traded funds.

ProShares Re-Configures Its Managed Futures ETF Effort

The managed futures category is one of three liquid alternative categories in 2015 to experience net positive inflows over the course of the year (the other being multi-alternative funds and volatility funds). However, nearly all of the flow in the category is going to mutual funds rather than exchange traded funds, of which there are only four (soon to be three) in the managed futures space. However, this isn’t preventing ProShares from making its second attempt at having a successful product in the market. Back in October 2014, the firm launched its first managed futures ETF, the ProShares Managed Futures Strategy (NYSEARCA: FUTS ), which was structured as a commodities pool. As a result, the ETF issued shareholders a K-1 for tax reporting – not the most desirable feature for ETF investors. Just recently however, ProShares announced that it would be liquidating FUTS and that trading in the ETF will be halted prior to the market open on March 21. In its place, the firm has launched a new ETF: the ProShares Managed Futures Strategy ETF (FUT). “Managed futures strategies have the potential to deliver positive returns in both rising and falling markets,” said ProShares Advisors’ CEO Michael L. Sapir, in a recent statement announcing the launch of the new ETF. “With their low correlation to both stocks and bonds, managed futures strategies can help diversify a stock and bond portfolio.” What’s Different? There are two main differences between the new fund and the old fund. The new fund is structured as an open-ended mutual fund under the Investment Act of 1940, similar to a bulk of other ETFs. In fact, ETF.com notes that many fund companies have been shying away from managed futures funds structured as commodity pools, presumably due to their added tax complexity. This change means that the new fund will issue a 1099 rather than a K-1. That’s a big improvement for anyone looking to keep their tax filings simple (that’s on a relative basis!). The second difference is that the new fund is an actively managed fund, meaning that the advisor can actively manage positions in the portfolio and not be tied solely to what the underlying index is holding. Here again, this is a positive change that will give ProShares a bit of leeway to enhance returns and/or manage certain holdings in a way that will ideally be beneficial to shareholders. What’s the Same? Most significantly, the underlying index of the two funds is the same, which is the S&P Strategic Futures Index . This index, as described by ProShares, uses “an innovative risk-weighting methodology so that each commodity, currency, and fixed income position contributes an equal amount of estimated risk to the overall portfolio when it rebalances monthly.” Now, as an active ETF, the fund will have latitude to deviate from the index. In addition to the underlying index, the portfolio manager, Ryan Dofflemeyer, and the expense ratio, 0.75%, also remain the same. Other Managed Futures ETFs Two other managed futures ETFs are available for investors. The largest and oldest is the WisdomTree Managed Futures Strategy ETF (NYSEARCA: WDTI ) with an inception date of January 5, 2011 and just over $200 million in assets. The second oldest is the $12.3 million First Trust Morningstar Managed Futures Strategy Fund (NYSEARCA: FMF ), which was launched on August 1, 2013. Jason Seagraves contributed to this article.