Tag Archives: stocks

Another Example Of The "New" Microsoft Corporation

One of Satya Nadella’s objectives when he took the helm of Microsoft in Feb. of 2014 was to change its culture and, by extension, its less than flattering image. By the time Nadella was named

Have Copper ETFs Finally Bounced Back?

Copper prices underwent a stressful stretch for quite some time on a soft manufacturing sector in China, global growth worries, a stronger U.S. dollar and surplus supplies. The trouble deepened in 2015 as the greenback continued to gain strength on rising rate speculations in the country (read: Copper ETFs Tumble on China Growth Concerns ). However, the metal bucked the trend at the start of 2016 as the greenback softened slightly on tepid U.S. growth. Also, policy easing in China favored this struggling commodity. Notably, in a move to boost a waning economy, the People’s Bank of China (PBOC) cut reserve requirement ratio (Pending: RRR ) by 50 bps to 17% for all banks effective March 1 (read: ETFs to Gain from China’s Added Stimulus ). Now China matters the most for this metal as the country is the world’s biggest consumer of this industrial metal, accounting for roughly 40% of global copper demand. Also, the red metal has been witnessing shortage of supplies lately. In Chile – one of the key copper producing nations – copper output fell 14% year over year in January, marking the largest decline in a month in about five years. Not only this, production is expected to be on the subdued side even in February, per the sources . The reason for the output decline was worsening ore grade and reduced investment in the mining and power industries, per Reuters . All in all, analysts believe that ‘the commodities rout may be over’. While many are overseeing a likely decline in global output, the demand scenario is apparently firming. As per sources, China’s copper imports in February represented a 49% jump year over year. While this is clearly good news for those who are holding onto copper ETNs such as iPath Bloomberg Copper Subindex Total Return ETN (NYSEARCA: JJC ) — price of which has grown over 11.6% in the last one-month period – copper mining equities and the related ETFs became the biggest beneficiaries. Global X Copper Miners ETF (NYSEARCA: COPX ) – which tracks the Solactive Global Copper Miners Index – advanced over 44% in the above-mentioned period (as of March 10, 2016). Though a subtle turnaround can be noticed in the operating backdrop, copper exchange-traded products have a long way to go for solid improvement. As of now, ‘ Deutsche Bank analysts expect small surpluses this year and in the next, along with a deficit of 280,000 tons in 2018, 350,000 in 2019 and 280,000 in 2020’. So, investors can have a neutral outlook on copper-related exchange-traded products as indicated by a Zacks ETF Rank #3 (Hold) on JJC which has a High risk outlook. Link to the original article on Zacks.com

Virtus Plans To Roll Out Actively Managed Japan ETF

Last month, Bank of Japan’s (BOJ) move to impose a negative interest rate for the first time in its history took the markets by surprise (read: Japan ETFs to Buy on Negative Interest Rates ). The BOJ’s step will help the third-largest country in the world to get closer to its target inflation rate of 2% by the first half of next year and boost confidence and spur demand. The BOJ Governor Haruhiko Kuroda stated that there is no limit to efforts for easing monetary policy. The central bank may further expand asset purchases if required (read: Japan ETFs to Tap on Renewed Stimulus Hopes ). Encouraged by this, Virtus has recently filed for an actively managed ETF, Virtus Japan Alpha ETF (EJA) , targeting this market. While a great deal of the key information, such as expense ratio, was not available in the initial release, other important points were released in the filing. We have highlighted those below for investors who may be looking for a fresh out-of-oven play targeting Japan from Virtus should it pass regulatory hurdles: Proposed Fund in Focus As per the SEC filing , the fund will generally comprise securities of Japanese companies listed on the JPX-Nikkei 400 Total Return Index. Japan Tobacco Inc. ( OTCPK:JAPAY ), Takeda Pharmaceutical Company Limited ( OTCPK:TKPYY ), Toyota Motor Corporation (NYSE: TM ) and Nippon Telegraph and Telephone Corporation (NYSE: NTT ) are some of the top weighted stocks in the index. The fund’s basket will include approximately 80-100 stocks from the Index based on quantitative and qualitative factors such as cash flow return on invested capital, earnings quality and momentum, operational quality, corporate governance policies and capital stewardship. The proposed ETF looks to provide long-term capital appreciation. Although Virtus ETF Advisers LLC is the fund’s adviser, it has appointed Euclid Advisors LLC as sub-adviser. The fund’s investments will be managed by Euclid Advisors. The issuer may exit from any stock, if it believes that the stock has become overvalued or if the stock’s weightage in the portfolio is too large. How does it fit in a portfolio? This proposed product could be an interesting choice for investors seeking exposure to the Japanese market. This is because the prime minister, Shinzo Abe, has started implementing his stimulus program, popularly known as Abenomics, in an effort to lift the economy out of feeble growth and deflationary pressure. Abenomics is a combination of aggressive quantitative easing policies from BOJ, increased public infrastructure spending and a boost to exports. In such a scenario, a Japan focus seems to be a good idea. As such, the fund might be a great choice in a global slowdown. The fund does offer some diversification benefit through exposure to Japan markets. The product uses a bottom-up approach and fundamental analysis ensures the fund includes stable and sound companies. Can it succeed? The proposed ETF does not have any direct competitor as there are currently no actively managed Japan ETFs available to U.S. investors. The proposed fund, if approved, could give investors a new way to play the Japanese equity market. The product might charge higher fees from investors annually due to its unique strategy. However, there are quite a number of other Japan equity ETFs listed in the U.S. Of these, the ultra-popular fund, iShares MSCI Japan ETF (NYSEARCA: EWJ ) , has a total asset base of $17.7 billion. This fund tracks the MSCI Japan Index and holds 318 stocks in its basket. It trades in heavy volume of 46 million shares per day and charges 47 bps in annual fees. EJA could also face competition from Japan hedged funds – the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) with an asset base of $10.6 billion, the db X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) with AUM of $1.1 billion and iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) with AUM of $616.5 million. Thus, the proposed ETF, if launched, has a good chance of making a name for itself if it manages to generate returns net of fees greater than the passively managed products in the Japan equity ETF space. Virtus Japan Alpha ETF’s plan of using a bottom-up approach and fundamental analysis for stock selection is noteworthy, but its success is a huge factor of the returns it manages to generate. Link to the original post on Zacks.com Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.