Tag Archives: stocks

ETFs In Focus With Continued Emerging Market Asset Outflow

Emerging markets have been struggling for quite some time now. China’s economic problems are at the heart of the emerging markets’ woes. This along with weak emerging market currencies, a strong U.S. dollar and falling oil prices have resulted in a massive sell-off in emerging market stocks for quite some time now. Last week was particularly disastrous for emerging market ETFs as outflows from these funds were approximately $1.17 billion, according to data put together by Bloomberg . Last week’s outflow along with outflow of $2.12 billion in the week before that brings total outflow till January third week to $3.9 billion. Outflows of this magnitude have not been witnessed since August 2015. As per etf.com, iShares MSCI Emerging Markets (NYSEARCA: EEM ) alone recorded net outflows of approximately $1.4 billion in the week ended January 22. According to Bloomberg, China and Hong Kong witnessed the biggest outflow, primarily from stock funds. Withdrawal from China and Hong Kong funds reached $328.1 million last week, compared with redemptions of $146.8 million in the previous week. After a series of downbeat data flows from China, investors are now skeptical of the country’s ability to deliver above-par growth numbers. Meanwhile, the recent currency devaluation has not helped its case. While it can be argued that a weaker currency may help strengthen China’s sagging economy given its high exports, the popularity of dollar-denominated debt among domestic companies in China will make it more expensive to service the obligations. These factors are encouraging investors to flee from China in order to avoid further losses. Taiwan experienced the second biggest outflow, all from stock funds. Investors pulled back $185.1 million from this country’s ETFs last week, piling upon the $302.8 million witnessed in the previous week. As the Taiwanese economy thrives on exports, investors could be exiting the market on fears of it losing out to China on currency competitiveness. Below we highlight three broader emerging market ETFs that have considerable exposure in China and Taiwan. These ETFs are expected to remain in focus if outflows from emerging markets continue in the coming days. BLDRS Emerging Markets 50 ADR ETF (NASDAQ: ADRE ) – 43% weight in China This ETF tracks the BNY Emerging Markets 50 ADR Index, which is capitalization-weighted and comprises approximately 50 emerging market-based depositary receipts. The fund has the highest exposure to China (43%), followed by Taiwan (14.5%). It has amassed roughly $108.6 million in its asset base while it trades in a volume of roughly 15,459 shares a day. It charges 30 bps in fees from investors per year and currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. SPDR S&P Emerging Asia Pacific ETF (NYSEARCA: GMF ) – 44.5% weight in China This ETF follows the S&P Asia Pacific Emerging BMI Index and offers exposure to the emerging economies of the region. It is a large cap centric fund, with the top two sectors – financials and information technology – collectively accounting for more than half of the portfolio. From a country look, the Chinese firms dominate the portfolio at 44.5%, followed by Taiwan (20.4%) and India (18.3%). The ETF has amassed $347.4 million in its asset base with average daily volume of 86,146. It charges 49 bps in annual fees. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. SPDR S&P Emerging Markets Dividend ETF (NYSEARCA: EDIV ) – 29% weight in Taiwan This ETF provides exposure to the stocks from emerging market countries that offer high dividend yields by tracking the S&P Emerging Markets Dividend Opportunities Index. Taiwan accounts for 29% of the portfolio while South Africa and Brazil round off the next two countries with double-digit allocation each. It has accumulated $204.7 million in its assets base and trades in average daily volume of roughly 123,646 shares. It charges 49 bps in fees per year and carries a Zacks Rank #3 with a Medium risk outlook. Original Post

Arista Violates Cisco Patents, Int’l Trade Commission Judge Rules

An International Trade Commission (ITC) judge Tuesday ruled against Arista Networks ( ANET ) in a patent infringement case brought by Cisco Systems ( CSCO ) that Cisco’s top lawyer called “the beginning of the end for Arista’s systemic copying of our intellectual property.” The stocks of both companies closed down similarly, with Arista down 2.7% to 57.64 and Cisco down 2.8% to 22.83. ITC Administrative Law Judge David Shaw issued a “Final Initial Determination” in favor of Cisco for 17 claims of Arista violating Section 337 of the Tariff Act but found no violation in 15 other claims.  The final determination will be available in 30 days, he said. The judge said that he “determined that a violation of Section 337 has occurred in the importation into the United States, the sale for importation, or the sale within the United State after importation, of certain network devices, related software and components.” Mark Chandler, Cisco’s general counsel, called the ruling only “the first of (ITC’s)  investigations into Arista.” He said that Arista violated three patents, one for externally managing router configuration data with a centralized database and two for violating private virtual local area network (VLAN) patents. He said that the judge’s order “foreshadows an exclusion order banning imports of all Arista switches (and) installs a challenging ITC review process for any new designs (the result of not bringing evidence of new designs to the ITC hearing).” Said an Arista spokeswoman: “Our primary focus is the continued supply of products to our customers. We respect the administrative process and the tireless work of the (judge) in this initial determination.” Two related lawsuits that Cisco brought against Arista are tracking in U.S. District Court. One awaits the ITC decision; the other, including a counterclaim against Cisco, is scheduled for jury selection in November. “Arista can no longer support claims to customers, resellers and the market that they created products from ‘a clean sheet of paper,’ ” Chandler posted on a Cisco blog. “The patents in question go to the core of Arista’s products. One of those found to infringe covers Cisco’s proprietary ‘SysDB.’ Arista’s CEO has previously referred to ‘SysDB’ as Arista’s ‘secret sauce’ and more recently, the architecture on which NetDB is built. “None of the patents have been proposed for or adopted as industry standards. And all patents that we asserted against Arista were invented either by Cisco employees who became Arista executives or by engineers who worked for Arista executives when employed at Cisco. “We seek fair competition but will take action against those who misappropriate our technology and use it to compete against us.” FBR Capital Markets analyst Daniel Ives, who covers both companies, said that such patent fights are “common across the technology landscape.” “Investors are laser focused (on whether) traditional stalwarts such as Cisco, IBM ( IBM ), and Oracle ( ORCL ), among others, can reinvigorate growth back into their stories,” Ives said. “The jury is still out on how this ruling will have implications across the tech space going forward.” Chandler said Arista has four options, to “withdraw the products … modify the products so they no longer infringe … face an exclusion order … (or) evade the ITC exclusion order.” With a market cap of $115.8 billion, Cisco is the largest member of IBD’s Computer-Networking industry group. Arista is the fourth largest, with a $3.9 billion market value. Image provided by Shutterstock .  

AQR To Close Top-Performing Alternative Funds To New Investors

AQR will be closing its Style Premia Alternative (MUTF: QSPIX ) and Style Premia Alternative LV (MUTF: QSLIX ) funds to new investors as of March 16. The funds, which posted respective gains of 8.76% and 4.02% in 2015, closed out the year as two of the top three multialternative funds in December. Clearly, they are not being closed due to poor performance – both funds finished in the top 3% of their Morningstar category for the recently concluded year. Instead, the funds are being closed to new investors because they’re nearing the maximum capacity of their strategies. QSPIX, with $2.2 billion in assets, and QSLIX, with $218 million, aren’t the only alternative funds AQR has had to close for this same reason: In June 2012, the firm closed the AQR Diversified Arbitrage Fund (MUTF: ADAIX ). The fund ranked in the top 2%, 41%, and 26% of its category from 2010 through 2012. In November 2012, AQR barred new investors from buying shares of its Risk Parity Fund (MUTF: AQRIX ). That fund launched in late 2010 and ranked in the top 2% and 11% in 2011 and 2012. And in September 2013, the AQR Multi-Strategy Alternative Fund (MUTF: ASAIX ) had to be closed, too. Today, the fund has a five-star rating from Morningstar, and it ranked in the top 2% of its category in 2015 (top 4% in 2014). The procedure for how AQR will wind down new investments in QSPIX and QSLIX, and how existing shareholders will be impacted, is outlined in a January 26 SEC filing . Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.