Tag Archives: oud

ETF Update: Social Media Sentiment And Millennials Get Their Own Funds

Welcome back to the SA ETF Update. My goal is to keep Seeking Alpha readers up to date on the ETF universe and to gain some visibility, both for the ETF community and for me as its editor (so users know who to approach with issues, article ideas, to become a contributor, etc.). Every weekend, or every other weekend (depending on the reader response and submission volumes), we will highlight fund launches and closures for the week, as well as any news items that could impact ETF investors. There was a lot to cover from the last three weeks, so let’s dive right in. Fund launches for the week of April 18th, 2016 Guggenheim launches an ETF focused on low correlation (4/19): The Guggenheim Large Cap Optimized Diversification ETF (NYSEARCA: OPD ) is a smart beta fund designed to provide optimized diversification to the U.S. large-cap equity market. By investing in a portfolio of 100 to 120 holdings that have a lower correlation to a large-cap index the ETF hopes to deliver higher returns than a standard large-cap index. As described by William Belden, Guggenheim Managing Director and Head of ETF Business Development, in a press release, “combining differentiated return streams from lowly correlated stocks may provide the potential for attractive risk-adjusted returns.” Global X invests in Catholic values (4/19): The Global X S&P 500 Catholic Values ETF (NASDAQ: CATH ) offers investors a way to be sure their investments are considered acceptable under social responsibility standards, as designated by the United States Conference of Catholic Bishops. For further analysis on CATH, please read Religion Meets Investing In This New ETF , by Dave Dierking, and ETF Investing According To Your Religious Beliefs , by David Fabian. Sprott launches an ETF that watches social media for holdings (4/19): The Sprott BUZZ Social Media Insights ETF (NYSEARCA: BUZ ) tracks an index of U.S. stocks which rank highest in terms of bullish investor perception from insights derived from the social media collective. The “social media collective” being Twitter, Facebook, LinkedIn, YouTube, Flickr, Reddit, etc. “This ETF brings together the powerful combination of social media and big data analytics. Not only does the Index measure investor sentiment, it also identifies and ranks social media members who have historically been the most successful in their forecasting accuracy,” stated John Ciampaglia, Head of ETFs at Sprott, in a press release . For further analysis on BUZ, please read A New Social ETF With Seeking Alpha Data Used For Index Selections , by Brad Kenagy. Deutsche Asset Management expands its Comprehensive Factor ETF line up (4/19): The Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF (NYSEARCA: DEMG ) targets five factors for investing in emerging market equities: value, momentum, size, volatility and quality. This is following the path laid down by the Deutsche X-trackers Russell 1000 Comprehensive Factor ETF (NYSE: DEUS ) and the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (NYSE: DEEF ), which were both launched in 2014 and 2015 respectively. Amplify ETFs launches its first ETF (4/20): The newcomer is starting on a recent hot topic, online shopping. The Amplify Online Retail ETF (NASDAQ: IBUY ) targets an index of companies that generate at least 70% of their revenues from transactions in the online retail, online travel or online marketplace spaces. While the fund does cover international companies, 75% of the holdings will be weighted to domestic firms. For further analysis on IBUY, please read Amazon Is Not The Only Name In Online Retail , by Jane Edmondson. iShares launches an ETF for investing in positive global impact (4/22): The iShares Sustainable MSCI Global Impact ETF (NASDAQ: MPCT ) tracks an index of public companies whose products and services aim to address major social and environmental challenges. As stated by Jane Haines, Managing Director and Head of Equity Index Products for the Americas for MSCI, in a press release , “based on MSCI ESG Sustainable Impact Metrics , a new framework aligned with the Sustainable Development Goals (SDGS) adopted by the United Nations, the index weights securities by companies’ revenue exposure to sustainable impact themes and excludes companies that fail to meet minimum ESG standards.” Fund launches for the week of April 25th, 2016 Fund launches for the week of May 2nd, 2016 REX Shares launches 2 new VIX ETFs (5/3): The REX VolMAXX Long VIX Weekly Futures Strategy ETF (NYSEMKT: VMAX ) and the REX VolMAXX Inverse VIX Weekly Futures Strategy ETF (NYSEMKT: VMIN ) are actively managed funds that invest in near-month VIX futures. “We believe VMAX and VMIN are exactly what sophisticated investors have been asking for: exchange-traded funds that get closer to spot VIX,” said Greg King, Founder and CEO of REX Shares, in a press release . Weekly expirations for VIX futures were introduced by the CBOE in July 2015. For further analysis on VMAX and VMIN, please read Is The Holy Grail Of VIX Investing Finally Here? by Stephen Aniston. Global X targets millennial spending habits with a new fund (5/5): The Global X Millennials Thematic ETF (NASDAQ: MILN ) will track an index of stocks that have a high likelihood of benefiting from the rising spending power and unique preferences of the U.S. Millennial generation (birth years ranging from 1980-2000). Rather than focusing on a specific market category, MILN will invest across a broad range of industries that align with the spending trends of millennials. All companies included are domestic and have a market cap of at least $500 million, with an average daily turnover for the preceding six months of at least $2 million. This is the first ETF to give investors access to the spending habits of a generation, but now that the idea is out there I would be surprised if it was the last. Fund closures for the weeks of April 18th, 25th, and May 2nd 2016 Global X GF China Bond ETF ( CHNB) Horizons Korea KOSPI 200 ETF (NYSEARCA: HKOR ) Have any other questions on ETFs or ETNs? Please comment below and I will try to clear things up. As an author and editor I have found that constructive feedback is the best way to grow. What you would like to see discussed in the future? How can I improve this series to meet reader needs? Please share your thoughts on this first edition of the ETF Update series in the comments section below. Have a view on something that’s coming up or a new fund? Submit an article. 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.

Bespoke’s ETF Asset Class Performance Matrix – 5/6/16

Below is a look at our asset class performance matrix using key ETFs included in our daily ETF Trends (Subscription required) report. For each ETF, we include its performance in May, so far in Q2, and year to date. Equities are down across the board in May, with the worst pullbacks coming outside of the U.S. in countries like Brazil, Canada, Mexico, Spain, Russia and the U.K. In the U.S., major indices are down roughly 1% across the board, and sectors like Energy, Materials and Telecom are down 2%+. The Consumer Staples and Utilities sectors are the only ones higher so far this month. For Q2, the Nasdaq 100 (NASDAQ: QQQ ) and the Tech sector (NYSEARCA: XLK ) have been clear areas of pain, while the Energy sector is leading with a gain of 6%. Commodities are up nicely in Q2, with oil and silver leading the way. On a year-to-date basis, Brazil has posted a monstrous 33.85% gain. Gold and silver are the next best performers, with gains of 21.8% and 26.5%, respectively. The S&P 500 (NYSEARCA: SPY ) is as close to flat as it gets on the year with a gain of 26 basis points.

Difference Between Value Stocks And Growth Stocks

Analysts like to separate stocks into two categories: value and growth. What is the difference between value stocks and growth stocks, and which style provides better returns? There is no exact definition explaining the difference between value stocks and growth stocks, but each has its own distinct characteristics. In general, value stocks have low price ratios and growth stocks have high price ratios. Value stocks as a whole have been shown to outperform growth stocks over time. Future Expectations The low price ratios of value stocks are a result of investors being cautious about the future of the underlying companies. Similarly, the high price ratios of growth stocks are a result of investors being excited about the future of the underlying companies. While discussing mutual fund investing using either growth or value stocks, Fidelity says the following : Growth funds focus on companies that managers believe will experience faster than average growth as measured by revenues, earnings, or cash flow. The goal of value funds is to find proverbial diamonds in the rough; that is, companies whose stock prices don’t necessarily reflect their fundamental worth. In the stock market, companies are valued based on future expectations. Wonderful vs. Weak If a company’s growth begins to slow down or its profits start to decrease, the result will be a lower share price. Value stocks are typically companies with recently poor operating results and negative outlooks. The weak performance could be due to macroeconomic events or company specific challenges. It could be a temporary setback or a major loss of market share. If a company is growing and its profits are increasing rapidly, the result will be a higher share price. Growth stocks are typically companies with recently phenomenal operating results and bright futures. The wonderful performance could be due to a rising tide in a particular industry or great management of a specific company. If growth stocks are “wonderful” and value stocks are “weak”, how can value stocks be better investments than growth stocks? Value Premium It turns out that human nature causes value stocks to provide better long-term returns than growth stocks. People get too excited about growth stocks and too afraid of value stocks. While discussing the recent trend of investors moving away from value opportunities, Morningstar’s Ben Johnson said : What we’ve seen historically is that it’s exactly this sort of capitulation, this sort of behavioral function that may actually lead to the existence, the creation, the persistence of the value premium. Value exists because there are suckers on the other side of the poker table willing to take the flipside of the value bet. They are betting on growth or something else. Real, true, strong hands at that poker table, in all likelihood will continue for many years to come, to reap the benefits of that value bet, assuming that they are strong hands. The optimism towards growth stocks makes them overvalued. The pessimism toward value stocks makes them undervalued. Investors become overly confident about a growth stock’s future and overly scared about a value stock’s future. Herd Behavior Through a phenomenon called herd behavior, human nature causes a gap to occur between the value of a stock and its price. Herd behavior says that “individuals in a group will act collectively without centralized direction.” In Thomas Howard’s book, Behavioral Portfolio Management , he talks about how following the crowd is an evolutionary trait. It was beneficial at one point but now does more harm than good, especially in investing. Howard says: Doing the same thing as everybody else, the definition of social validation, also made sense thousands of years ago when life was full of danger. Since we lived in small groups then, we depended on others to sense danger and react instinctively. You didn’t want to be the slowest member of the group when fleeing the tiger. In contrast, today we frequently want to take positions different from the emotional crowd as a way to harness the price distortions resulting from collective behavior. Because the stock market is nothing more than a group of individual investors, herd behavior is a common occurrence. No investor wants to be left behind. As prices start climbing, everyone wants to jump on board. This results in the high valuations of most growth stocks. Once prices start falling, investors dump the underperforming stocks in mass. This results in the low valuations of value stocks. It’s important to refrain from following the crowd and to avoid investing in overvalued stocks rather than undervalued stocks. The Difference Between Value Stocks and Growth Stocks A summary of the difference between value stocks and growth stocks is: Value stocks are undervalued, out-of-favor companies with recently poor operating performance and slowing growth. Investors overreact to these stocks and value them lower than they should be. Growth stocks are overvalued, “hot” companies with recently great operating performance and rapid growth. Investors overreact to these stocks and value them higher than they should be. Understanding the difference between value stocks and growth stocks will allow investors to profit greatly over time.