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ETF Stats For July 2015 – Currency Hedging Jumps The Shark

Thirty-seven new ETFs and ETNs were launched in July and fifteen closed. The changes leave the listed count at 1,764, consisting of 1,570 ETFs and 194 ETNs. With sixteen new currency-hedged ETFs coming to market, including three half-hedged funds, it would be easy to conclude that a bubble in currency-hedged ETFs exists. The first currency-hedged ETF arrived in 2006 with little fanfare. Four-and-a-half years later at the end of 2010, there were only two such products. Then, as the US Dollar started to rally, sponsors brought out a dozen more currency-hedged ETFs over the next three years. Then, the flood gates opened. Sponsors unleashed 14 currency-hedged ETFs in 2014 and 28 so far this year, with sixteen arriving in July. Today, there are 57 currency-hedged ETFs. In July, BlackRock (NYSE: BLK ) rolled out 12 new currency-hedged fund-of-funds under the iShares brand. These ETFs simply hold the unhedged-international ETFs that have been around for years and then overlay a currency hedge, which essentially shorts the foreign currency through the use of currency forwards. The most popular iShares international ETFs are now available in two versions: traditional unhedged and 100% currency hedged. Anyone following currencies knows there are periods when the US Dollar is trending stronger against other currencies and periods when the opposite is true. There are times to hedge and there are times to not hedge. Index IQ released a white paper stating its case for a 50% currency hedge . It concluded that a 50% hedge was the hedge of least regret. Index IQ launched three new international ETFs in July with a static 50% currency hedge. Others looking at the Index IQ data might conclude that a 60/40 ratio is optimal for one currency and a 43/57 split might be better for another. The possible combinations are endless. In my opinion, the iShares solution is the better one – give investors both unhedged and 100% hedged ETFs and let them tailor their own hedge ratio. The quantity of ETNs listed for trading has dropped below 200 for the first time since October 2011. The number of ETNs peaked at 218 in August 2012 and now stands at 194. Investors have consistently preferred ETFs over ETNs because ETFs do not carry the credit risk of ETNs. For the month, industry assets grew 1.4% to $2.13 trillion. The quantity of ETFs with more than $10 billion in assets increased from 50 to 54, and these 3.1% of the listings control 60% of the assets. Trading activity approached $1.6 trillion in July, and the nine ETFs that averaged more than $1 billion a day in trading accounted for the majority (52.8%) of all trading activity. July 2015 Month End ETFs ETNs Total Currently Listed U.S. 1,570 194 1,764 Listed as of 12/31/2014 1,451 211 1,662 New Introductions for Month 36 1 37 Delistings/Closures for Month 0 15 15 Net Change for Month +36 -14 +22 New Introductions 6 Months 142 5 147 New Introductions YTD 155 5 160 Delistings/Closures YTD 36 22 58 Net Change YTD +119 -17 +102 Assets Under Mgmt ($ billion) $2,109 $24.9 $2,134 % Change in Assets for Month +1.5% -8.7% +1.4% % Change in Assets YTD +6.9% -7.4% +6.7% Qty AUM > $10 Billion 54 0 54 Qty AUM > $1 Billion 263 4 263 Qty AUM > $100 Million 779 38 817 % with AUM > $100 Million 49.6% 19.6% 46.3% Monthly $ Volume ($ billion) $1,526 $61.7 $1,588 % Change in Monthly $ Volume +3.6% +14.7% +4.0% Avg Daily $ Volume > $1 Billion 8 1 9 Avg Daily $ Volume > $100 Million 87 5 92 Avg Daily $ Volume > $10 Million 307 10 317 Actively Managed ETF Count (w/ change) 133 +4 mth +8 ytd Actively Managed AUM ($ billion) $20.8 +3.0% mth +20.7% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in July (sorted by launch date): ALPS Sector Leaders ETF (NYSEARCA: SLDR ), launched 7/1/15, seeks to deliver an equally weighted sector investment with a primary goal of growth and diversification. The strategy starts with the S&P 500 as its universe and then selects the five highest growth securities from each of nine sectors of the market. The holdings are equally weighted at the stock and sector level to provide diversification and avoid sector bias. SLDR has an expense ratio of 0.40%. ALPS Sector Low Volatility ETF (NYSEARCA: SLOW ), launched 7/1/15, is aimed at investors seeking to add an equally weighted sector allocation to their portfolio with goals of low volatility and diversification. The universe used is the S&P 500, and the five lowest volatility securities in each of nine sectors are selected. To provide diversification and avoid sector bias, the positions are equally weighted at both the stock and sector levels. The ETF sports an expense ratio of 0.40%. iShares Currency Hedged MSCI ACWI ETF (NYSEARCA: HACW ), launched 7/1/15, is a fund-of-funds designed to track the investment results of a global index composed of large- and mid-capitalization equities in both developed and emerging markets while mitigating exposure to fluctuations between the value of the component currencies and the US Dollar. The ETF holds the unhedged iShares MSCI ACWI ETF (NASDAQ: ACWI ) and then adds currency forwards to manage the currency risk. The expense ratio is 0.36%. iShares Currency Hedged MSCI ACWI ex U.S. ETF (NYSEARCA: HAWX ), launched 7/1/15, is a fund-of-funds seeking to track an index of international large- and mid-capitalization equities in both developed and emerging markets (excluding the US) while reducing the impact of changes between the value of the underlying currencies and the US Dollar. The ETF holds the unhedged iShares MSCI ACWI EX US ETF (NASDAQ: ACWX ) and then adds currency forwards to manage the currency risk. Investors will pay 0.36% annually to own this fund. iShares Currency Hedged MSCI Australia ETF (NYSEARCA: HAUD ), launched 7/1/15, is a fund-of-funds investing in large- and mid-capitalization Australian equities while hedging exposure to the Australian Dollar. The ETF holds the unhedged iShares MSCI Australia ETF (NYSEARCA: EWA ) and then adds currency forwards to manage the currency risk. HAUD has an expense ratio of 0.51%. iShares Currency Hedged MSCI Canada ETF (NYSEARCA: HEWC ), launched 7/1/15, is a fund-of-funds seeking to track an index of Canadian large- and mid-capitalization stocks while reducing the impact of changes in value of the Canadian Dollar. The ETF holds the unhedged iShares MSCI Canada ETF (NYSEARCA: EWC ) and then manages the currency risk with forwards. The expense ratio is 0.51%. iShares Currency Hedged MSCI EAFE Small-Cap ETF (NYSEARCA: HSCZ ), launched 7/1/15, is a fund-of-funds investing in small-capitalization equities from developed markets, excluding the US and Canada, while mitigating the impact of fluctuations between the value of the component currencies and the US Dollar. The ETF holds the unhedged iShares MSCI EAFE Small-Cap ETF (NYSEARCA: SCZ ) and then adds currency forwards to manage the currency risk. The ETF sports an expense ratio of 0.43%. iShares Currency Hedged MSCI Italy ETF (NYSEARCA: HEWI ), launched 7/1/15, is a fund-of-funds designed to track large- and mid-capitalization Italian equities while hedging exposure to value fluctuations between the Euro and the US Dollar. The ETF holds the unhedged iShares MSCI Italy Capped ETF (NYSEARCA: EWI ) and then adds currency forwards to manage the currency risk. Investors will pay 0.48% annually to own this ETF. iShares Currency Hedged MSCI Mexico ETF (NYSEARCA: HEWW ), launched 7/1/15 is a fund-of-funds investing in Mexican large- and mid-capitalization stocks while hedging exposure to changes in value of the Mexican Peso. The ETF holds the unhedged iShares MSCI Mexico Capped ETF (NYSEARCA: EWW ) and then manages the currency risk with forwards. HEWW has an expense ratio of 0.51%. iShares Currency Hedged MSCI South Korea ETF (NYSEARCA: HEWY ), launched 7/1/15, is a fund-of-funds designed to track large- and mid-capitalization South Korean equities while mitigating exposure to fluctuations in the South Korean Won. The ETF holds the unhedged iShares MSCI South Korea Capped ETF (NYSEARCA: EWY ) and then adds currency forwards to manage the currency risk. The expense ratio is 0.62%. iShares Currency Hedged MSCI Switzerland ETF (NYSEARCA: HEWL ), launched 7/1/15, is a fund-of-funds seeking to track an index of Swiss large- and mid-capitalization equities while reducing the impact of changes in value between the Swiss Franc and the US Dollar. The ETF holds the unhedged iShares MSCI Switzerland Capped ETF (NYSEARCA: EWL ) and then manages the currency risk with forwards. The ETF sports an expense ratio of 0.51%. iShares Currency Hedged MSCI Spain ETF (NYSEARCA: HEWP ), launched 7/1/15, is a fund-of-funds seeking to track an index of Spanish large- and mid-capitalization equities while hedging exposure to changes in value between the Euro and the US Dollar. The ETF holds the unhedged iShares MSCI Spain Capped ETF (NYSEARCA: EWP ) and then manages the currency risk with forwards. Investors will pay 0.51% annually to own this fund. iShares Currency Hedged MSCI United Kingdom ETF (NYSEARCA: HEWU ), launched 7/1/15, is a fund-of-funds investing in large- and mid-capitalization United Kingdom equities while reducing the impact of value fluctuations between the British Pound and the US Dollar. The ETF holds the unhedged iShares MSCI United Kingdom ETF (NYSEARCA: EWU ) and then adds currency forwards to manage the currency risk. HEWU has an expense ratio of 0.48%. ALPS Enhanced Put Write Strategy ETF (NYSEARCA: PUTX ), launched 7/7/15, is an actively managed ETF seeking total return, but with an emphasis on income as the source of that total return. The strategy is to sell listed one-month put options on the SPDR S&P 500 ETF (NYSEARCA: SPY ) and invest the proceeds in a portfolio of investment grade debt securities. The expense ratio is 0.75%. First Trust NASDAQ CEA Cybersecurity ETF (NASDAQ: CIBR ), launched 7/7/15, focuses on companies engaged in the cybersecurity segment of the technology and industrials sectors. Component companies are involved in the building, implementation, and management of security protocols in an attempt to provide protection of the integrity of data and network operations for private and public networks, computers, and mobile devices. The ETF sports an expense ratio of 0.60%. Compass EMP US Large Cap High Dividend 100 Volatility Weighted Index ETF (CDL), launched 7/8/15, will invest in the common stock of the 100 highest dividend yielding stocks in a universe of the 500 largest US companies. To be selected, a company must have positive earnings in each of the four most recent quarters. Securities are weighted based on their volatility, with lower readings resulting in higher weights. The ETF’s expense ratio will be capped at 0.35% until June 30, 2017. Compass EMP US Small Cap 500 Volatility Weighted Index ETF (NASDAQ: CFA ), launched 7/8/15, takes volatility-weighted positions in the largest 500 US companies whose market capitalization is less than $3 billion. To be eligible, a company must have positive earnings in each of the four most recent quarters. Volatility is measured utilizing daily prices changes over the past 180 days, and securities are ranked on that criteria. The ETF’s expense ratio will be capped at 0.35% until June 30, 2017. Compass EMP US Small Cap High Dividend 100 Volatility Weighted Index ETF (CSB), launched 7/8/15, selects 100 of the highest dividend yielding stocks from among the 500 largest US companies with a market capitalization of less than $3 billion. Only companies with positive earnings in each of the four most recent quarters will be considered. Weightings are determined based on each security’s volatility. The ETF’s expense ratio will be capped at 0.35% until June 30, 2017. GaveKal Knowledge Leaders Developed World ETF (NYSEARCA: KLDW ), launched 7/8/15, seeks to transform Gavekal’s concept of the Knowledge Effect into portfolio alpha utilizing companies in developed markets. The Knowledge Effect is the propensity of innovative companies to experience excess returns, resulting from the inability of investors to adequately evaluate companies that invest heavily in producing knowledge. The strategy attempts to capture this market inefficiency using a proprietary methodology which capitalizes corporate knowledge investments, measures firm performance on a knowledge-adjusted basis, and selects investments on the basis of knowledge intensity. The ETF sports an expense ratio of 0.75%. GaveKal Knowledge Leaders Emerging Markets ETF (NYSEARCA: KLEM ), launched 7/8/15, is designed to translate Gavekal’s concept of the Knowledge Effect into gains for investors utilizing equities in emerging markets. The Knowledge Effect is the propensity of innovative companies to experience excess returns, resulting from the inability of investors to correctly evaluate companies that invest heavily in producing knowledge. The strategy attempts to capture this market inefficiency by using a selection model that adjusts each company’s reported financial data by treating intangible investments (items such as research and development, brand development, and employee training expenses) identical to tangible investments. Investors will pay 0.95% annually to own this fund. Principal EDGE Active Income ETF (NYSEARCA: YLD ), launched 7/9/15, is an actively managed fund seeking to provide current income by investing in six income-producing asset classes. Holdings will be allocated among equities and fixed income securities (both investment grade and non-investment grade) domiciled across the world, including emerging markets. No yield information is provided. The expense ratio will be capped at 0.85% until 10/31/16. WisdomTree Barclays U.S. Aggregate Bond Enhanced Yield Fund (AGGY), launched 7/9/15, has a strategy to divide the Barclays US Aggregate Bond Index into 20 subcomponents and then allocate among them to produce more yield while keeping risk characteristics similar to the index. Average yield to maturity is currently about 3.0%. AGGY will cap its expense ratio at 0.12% until December 31, 2016. WisdomTree International Hedged Equity Fund (HDWM), launched 7/9/15, will provide exposure to dividend-paying companies in 21 developed countries, the US and Canada are excluded, while hedging exposure to fluctuations between the US Dollar and foreign currencies. The United Kingdom currently has the highest allocation at 23.3%, with Japan coming in next at 14.2%. Weightings are determined by annual dividends. The ETF sports an expense ratio of 0.35%. Global X SuperDividend Alternatives ETF (NASDAQ: ALTY ), launched 7/14/15, is designed to give investors access to alternative investments that generate high income. The ETF looks for opportunities among the highest dividend yielding securities in a variety of alternative investment classes, such as MLPs, infrastructure companies, REITs, mortgage REITs, emerging market debt, currency trading, business development companies (“BDCs”), private equity, asset and mortgage backed securities, and option-writing strategies. The strategy may utilize a fund-of-fund approach and has a current allocation of about 25% to Global X SuperDividend REIT ETF. ALTY leads all the other introductions this month with a very high expense ratio of 3.03% (0.75% management fee + 2.28% acquired fund fees). Market Vectors Morningstar International Moat ETF (NYSEARCA: MOTI ), launched 7/14/15, invests equal weights in 50 non-US companies that Morningstar’s equity research team believes are attractively priced and have sustainable competitive advantages for at least 10-20 years. A momentum screen is used to exclude the bottom 20% of universe securities with the worst 12-month momentum scores. Equities are selected by ranking the ratio of the issuer’s stock price to a modified price determined by a proprietary valuation model. The expense ratio is capped at 0.56% until 2/1/17. O’Shares FTSE U.S. Quality Dividend ETF (NYSEARCA: OUSA ), launched 7/14/15, selects the stocks of large- and mid-capitalization dividend-paying companies in the US that meet certain requirements for quality, low volatility, and dividend yield. The high quality and low volatility requirements are intended to help avoid equities that have undergone significant declines in price. OUSA currently holds 142 securities with the largest sector weightings in consumer goods and health care at around 17% each. Investors will pay 0.48% annually to own this fund. ETRACS 2xMonthly Leveraged S&P MLP Index ETN (MLPV), launched 7/15/15, is an exchange traded note linked to the monthly compounded 2x (200%) leveraged performance of a group of master limited partnerships (MLPs) and publicly traded limited liability companies (LLCs) engaged in aspects of the mining, production, storage, or transportation of mineral or natural resources. Current annual yield is about 11.5%, with coupon payments expected quarterly. MLPV has an expense ratio of 0.95%. PureFunds ISE Big Data ETF ( BDAT ), launched 7/16/15, provides the market with exposure to companies engaged in big data and analytics. These companies generate products and services that allow for the creation, management, and analysis of data sets that are very large (volume), diverse (variety), or rapidly generated and integrated (velocity). Not surprisingly, Google tops the holdings list at 7.3%. The ETF sports an expense ratio of 0.75%. PureFunds ISE Mobile Payments ETF ( IPAY ), launched 7/16/15, was created to give investors an easy method to focus on companies in the mobile payments industry. Sub-segments represented include credit card networks, infrastructure and software, processors, and solution providers. Visa, MasterCard, American Express, and PayPal top the holdings list at around 6% each. IPAY’s expense ratio is 0.75%. WisdomTree Strong Dollar U.S. Equity Fund (USSD), launched 7/21/15, seeks to invest in US companies that derive more than 80% of their revenue from within the country’s borders in an effort to minimize exposure to companies with significant revenue from exports that are vulnerable to a strengthening US Dollar. The strategy attempts to further that goal by biasing the weighing process to companies with a higher correlation to the US Dollar. Investors will pay 0.33% annually to own this ETF. WisdomTree Weak Dollar U.S. Equity Fund (USWD), launched 7/21/15, invests in US companies that derive less than 60% of their revenue from within the country’s borders in an effort to maximize exposure to companies with significant revenue from exports that are more likely to benefit from a weakening US Dollar. The strategy attempts to further that goal by tilting the weighing process to companies with a lower (more negative) correlation to the US Dollar. USWD has an expense ratio of 0.33%. IQ 50 Percent Hedged FTSE Europe ETF (NYSEARCA: HFXE ), launched 7/22/15, purchases large- and mid-capitalization equities in developed European countries and then hedges against about half of the risk associated with fluctuations in the value of the component currencies and the US Dollar. United Kingdom leads the country allocation at 32%, and the top sector is financials at 23%. The ETF sports an expense ratio of 0.45%. IQ 50 Percent Hedged FTSE International ETF (NYSEARCA: HFXI ), launched 7/22/15, invests in large- and mid-capitalization equities in developed countries, excluding North America, and then hedges against 50% of the changes in value between the underlying currencies and the US Dollar. Japan is on top of the country allocations at 23%, and financials leads the sector allocation at 25%. HFXI’s expense ratio is 0.35%. IQ 50 Percent Hedged FTSE Japan ETF (NYSEARCA: HFXJ ), launched 7/22/15, buys Japanese equity securities of large- and mid-capitalization companies and then reduces the exposure to rate changes between the Japanese Yen and US Dollar to about half. Consumer goods (24%) and industrials (21%) lead the sector allocations. Investors will pay 0.45% annually to own this ETF. iShares Interest Rate Hedged 10+ Year Credit Bond ETF (NYSEARCA: CLYH ), launched 7/23/15, is an actively managed find-of-funds seeking to provide exposure to long-term US investment grade bonds while mitigating interest rate risk. The ETF will hold iShares 10+ Year Credit Bond ETF (NYSEARCA: CLY ) to represent its bond investments, and then take short positions in interest rate swaps to manage the interest rate risk. The yield is currently listed at 2.39%. The expense ratio will be capped at 0.30% until February 28, 2017. iShares Interest Rate Hedged Emerging Markets Bond ETF (NYSEARCA: EMBH ), launched 7/23/15, is an actively managed fund-of-funds with an objective of providing investors access to emerging market bonds while reducing the interest rate risk. The fund will hold US Dollar-denominated, emerging market bonds by purchasing iShares JPMorgan USD Emerging Markets Bond ETF (NYSEARCA: EMB ), and subsequently shorting interest rate swaps to help control the interest rate risk. The expense ratio is capped at 0.50% until February 28, 2017. iShares Currency Hedged Global ex USD High Yield Bond ETF (NYSEARCA: HHYX ), launched 7/30/15, is a fund-of-funds designed to give investors access to Euro, British Pound, and Canadian Dollar denominated, high yield corporate bonds while mitigating exposure to fluctuations between the value of the component currencies and the US Dollar. The ETF will hold iShares Global ex-USD High Yield Bond ETF (BATS: HYXU ) and purchase forwards to manage the currency risk aspect. Yield is currently posted at 3.75%, and the expense ratio is 0.43%. Product closures/delistings in July: CS X-Links 2x Monthly Merger Arbitrage ETN (NYSEARCA: CSMB ) CS X-Links HOLT Market Neutral Global Equity ETN (NYSEARCA: CSMN ) RBS China Trendpilot ETN (NYSEARCA: TCHI ) RBS Global Big Pharma ETN (NYSEARCA: DRGS ) RBS Gold Trendpilot ETN (NYSEARCA: TBAR ) RBS NASDAQ 100 Trendpilot ETN (TBDQ) RBS Oil Trendpilot ETN (NYSEARCA: TWTI ) RBS Rogers Enhanced Agriculture ETN (NYSEARCA: RGRA ) RBS Rogers Enhanced Commodity Index ETN (NYSEARCA: RGRC ) RBS Rogers Enhanced Energy ETN (NYSEARCA: RGRE ) RBS Rogers Enhanced Industrial Metals ETN (NYSEARCA: RGRI ) RBS Rogers Enhanced Precious Metals ETN (NYSEARCA: RGRP ) RBS US Large Cap Alternator ETN (NYSEARCA: ALTL ) RBS US Large Cap Trendpilot ETN (NYSEARCA: TRND ) RBS US Mid Cap Trendpilot ETN (NYSEARCA: TRNM ) Product changes in July: WisdomTree China ex-Financials Fund (NASDAQ: CHXF ) underwent an extreme makeover, becoming the WisdomTree China ex-State-Owned Enterprises Fund (CXSE) effective July 1 ( press release ). Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEARCA: DBEZ ) was renamed the Deutsche X-trackers MSCI Eurozone Hedged Equity ETF ( DBEZ ) effective July 7. BlackRock, Bloomberg, State Street, Tradeweb, and leading broker dealers on July 27 announced a Market Standard Methodology for Fixed Income ETFs to enable bond buyers to calculate key metrics for fixed income ETFs. Announced Product Changes for Coming Months: AdvisorShares Accuvest Global Long/Short ETF (NYSEARCA: AGLS ) will close with its last day of trading on August 7. BlackRock will close 18 iShares ETFs with August 21 set as the last day of trading. The iShares MSCI USA ETF (NYSEARCA: EUSA ), a capitalization-weighted fund, will undergo an extreme makeover on August 31 becoming the iShares MSCI USA Equal Weighted ETF ( EUSA ). The iShares iBonds Sep 2015 AMT-Free Muni Bond ETF (NYSEARCA: IBMD ) is scheduled to mature and will cease trading after the market closes on September 1. The iShares Japan large-Cap ETF (NYSEARCA: ITF ), based on the S&P/TOPIX 150 Index, will undergo an extreme makeover on September 4 becoming the iShares JPX-Nikkei 400 ETF ( ITF ). Direxion will perform reverse splits on six of its leveraged ETFs effective September 10. ProShares UltraShort Telecommunications (NYSEARCA: TLL ) will close with its last day of trading being September 14. Van Eck Global plans to acquire Yorkville MLP ETFs ( press release ) and hopes to close the transaction in the fourth quarter. Previous monthly ETF statistics reports are available here . Disclosure covering writer: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned. Share this article with a colleague

Best Performing Aggressive Growth Funds Of Q2 2015

Aggressive growth funds’ second-quarter performance did not justify its characteristic of high capital gains. Except for the top 2 gainers, none of the funds could cross a 4% return in the second quarter of 2015. However, a higher number of non-aggressive growth funds posted returns over 4%. Gains for certain growth funds such as the Driehaus Micro Cap Growth Fund (MUTF: DMCRX ) and the Berkshire Focus Fund (MUTF: BFOCX ) soared as much as 10.7% and 9%. While average gains for the top growth funds performers of second quarter 2015 reached 6.8%, the average gain for top 10 aggressive growth funds was 3.2%. However, it was a tough second quarter for the broader markets. Markets had a dismal run in the second quarter, wherein the S&P 500 and Dow declined 0.2% and 0.9%; however, the NASDAQ did gain 1.8%. Just 41% of mutual funds could manage to finish in the green in the second quarter. This is less than half of the 81% gains scored by mutual funds in the first quarter. These losses, however, owed a lot to the selloff on the eve of the quarter’s end. Of the 289 funds under the study, 124 funds finished in the green while 3 funds had a breakeven return. The average gain for these 124 funds stood at 1.5%. As for the remaining 161 funds that finished in negative territory, the average loss was 1.1%. (Note: This number includes the same funds of varied classes) Aggressive Growth Funds Investors looking for the highest capital gains should look no further than investing in aggressive growth mutual funds. These funds invest in companies that show high growth prospects, but also comes with the risk of share price fluctuations. This category of funds also invests heavily in undervalued stocks, IPOs and relatively volatile securities in order to profit from them in a congenial economic climate. Securities are selected on the basis of their issuing company’s potential for growth and profitability. This category of instruments has a strong positive correlation with market movements and provides good returns during a market upswing. Such performance is achieved by investing in securities issued by companies with strong growth potential and in IPOs which are often resold quickly at a handsome profit. Many aggressive growth mutual funds may also invest in options to achieve their goal of high returns. Best Performing Below we present the top 15 aggressive growth mutual funds with best returns of Q2 2015: Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5000 have been excluded. Q2 % Rank vs. Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. An interesting thing about the list of top gainers is that the 15 funds are all from different fund families. Certain major names include the Federated Kaufmann Fund A (MUTF: KAUAX ), the American Century Ultra Fund A (MUTF: TWUAX ), the Rydex NASDAQ-100 Fund Inv (MUTF: RYOCX ), the Fidelity New Millennium Fund (MUTF: FMILX ) and the Franklin Growth Opportunities Fund Adv (MUTF: FRAAX ). These are respectively from Federated , American Century , Guggenheim Investments , Fidelity and Franklin Templeton . While, KAUAX and FMILX carry a Zacks Mutual Fund Rank #4 (Sell), TWUAX, RYOCX and FRAAX hold a Zacks Mutual Fund Rank #3 (Hold). Talking of fund families, not many fund families had strong second-quarter performance. The best gain for a Franklin Templeton mutual fund lagged Fidelity’s best gain of 11.6% . Separately, Vanguard had a dismal second quarter and their best gain was just 3.8%; however, it should be noted that Vanguard has more passive funds than other fund families. Meanwhile, funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) are the Hartford Growth Opportunities Fund A (MUTF: HGOAX ), the Wasatch Ultra Growth Fund (MUTF: WAMCX ) and the White Oak Select Growth Fund (MUTF: WOGSX ). Separately, the Cambiar Aggressive Value Fund Inv (MUTF: CAMAX ), the Baron Partners Fund Adv (MUTF: BPTRX ) and the Jacob Micro Cap Growth Fund (MUTF: JMCGX ) hold a Zacks Mutual Fund Rank #2 (Buy). Original Post

Those Are Your Favorite Dividend Growth Funds? Try This One Instead

Summary SCHD feels like it doesn’t get much coverage in the dividend investing world, but it is one of the best ETFs in the space. SCHD offers the lowest expense ratio and the one of the better distribution yields. When I was browsing a list by Morningstar, I noticed they were not very interested in the expense ratios or the distribution yields. A few charts showing expense ratios and dividend yields may help you analyze which ones would make sense for you. It seems like the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD ) is never in the news. That isn’t a bad thing, but is interesting when I look at some of the ETFs that are getting mentioned by big companies. I recently ran across an article on Morningstar that left me a little curious. The author, apparently speaking for Morningstar, was giving their take on “Our Favorite Dividend Growth Funds and ETFs.” She is a director of personal finance and the author of a book on how to succeed when investing in mutual funds . If anyone should understand the importance of low expense ratios and high distribution yields, she would have the background for it. Of course, I don’t know her and have no grudge, but I was hoping for higher quality when Morningstar decided to publish it. The article included the following funds: T. Rowe Price Dividend Growth Fund (MUTF: PRDGX ) Vanguard Dividend Growth Fund (MUTF: VDIGX ) Vanguard Wellington Fund (MUTF: VWELX ) Hartford Dividend and Growth Fund (MUTF: IHGIX ) WisdomTree U.S. Dividend Growth ETF (NASDAQ: DGRW ) iShares Core Dividend Growth ETF (NYSEARCA: DGRO ) iShares Select Dividend ETF (NYSEARCA: DVY ) Vanguard Dividend Appreciation ETF (NYSEARCA: VIG ) Vanguard Dividend Appreciation Index Fund (MUTF: VDAIX ) It did not include SCHD, which I think should have been one of the top contenders. Let’s talk about the things that actually matter when comparing ETFs with similar investing goals. Remember that this is a discussion of dividend funds, so allocations may be different but there should be quite a bit of overlap. Expense Ratios The expense ratios on an ETF (or mutual fund) are one of the very first things an investor should consider. When I’m considering funds for my portfolio a high expense ratio is pretty much an automatic rejection. When buying an ETF you are making the assumption that the market is reasonably efficient and that your best bet for limiting your risk and finding success is to diversify your investments. If you don’t believe that to at least some extent then there is no reason to invest in either unless it was a requirement of an attractive retirement plan. The point is simple. Expense ratios literally eat your investment. The only reason to pay the expense ratio rather than to buy the individual stocks is for the benefit of being able to buy them all at once with less work and fewer transaction charges. Some investors may be willing to pay a high premium to acquire the most talented that is running “the best” fund. However, the premise that an individual investor can determine which manager will be most successful without ever meeting the manager is absurd. I’m not a believer in the market being perfectly efficient. I cover small cap mREITs and the price movements I’ve seen have convinced me that the small cap companies in the sector are anything but indicative of an efficient market. That is precisely the reason I choose to focus so much of my analysis on a small corner of the market. When a market is small it is expected to have significantly more opportunities for superior analysis because there are fewer experts in the field searching for a market failure. How often were expense ratios mentioned? Only once in identifying one of the reasons VIG was a top choice. The actual expense ratios were not stated for any of the funds. Since those expense ratios matter, I built a chart to display them: As you might guess, I’m fairly partial to SCHD and VIG as my choices for the best dividend growth funds. Distribution Yield Even though the market regularly moves up, many investors find themselves significantly underperforming the S&P 500. One major reason that actual realized returns for investors frequently underperform the market (besides expense ratios) is that as a group investors are terrible at knowing when to buy and sell. If investors as a group regularly understood when to sell, the market would be absurdly stable and herd mentalities would be avoided. I’m not giving myself some kind of self-serving analyst credit there either. Analysts aren’t good at calling the bottom or the top of the markets either. When it comes to winning by market timing, the best solution is to not play the game. Focus on buying ETFs but not selling them. If an investor is simply using a buy and hold strategy for the core of their portfolio the worst they can do is buy at a market top. One of the reasons for using a dividend growth portfolio is that the investor can hopefully live off the dividends eventually. Being able to do that encourages them to avoid selling their shares when the market crashes. I don’t know when the next crash will happen, but I’m fairly confident that most of us will live to see it. The last thing I would want is to be selling off the portfolio during the crash. This is a human error. It is not something intrinsic to the stocks or the ETF that holds them. It is a human mistake that panic leads to a sell off. Being able to live off the dividends prevents that mistake. Living off the dividends requires a stronger distribution yield. The distribution yields were mentioned zero times in the article on Morningstar, but I think they are very important for encouraging good investor decisions. Here is a chart of the expense ratios: Conclusion SCHD has the lowest expense ratio and the second highest distribution ratio. How can anyone skip past SCHD when consider dividend growth ETF investments? On the other hand, IHGIX had a very high expense ratio (over 1%) and a low distribution yield. That does not automatically make it a terrible investment, but it would concern me and certainly deserves to be mentioned when the stock is being suggested as one of the “favorites” for the dividend growth space. When I looked at the prospectus I noticed there were some fairly hefty charges on buying into the fund as well including a very nice dealer commission. No thanks, IHGIX is clearly not for me. For the investors that want to pick a dividend growth ETF, it would be wise to start with determining precisely what you want out of the fund. I always start with low costs. That means a low expense ratios and a preference for free to trade. If you’re convinced that you can handle selling small amounts off to create your own dividend yield without buying into a full scale panic, then distribution yield won’t be as important. I don’t think that dividend stocks are inherently better, but I think many investors would benefit by being protected from themselves. Perhaps the question should be, if an investor does not find dividend growth stocks superior and does not mind selling off portions of their portfolio, why would they be searching for a dividend growth ETF in the first place? Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SCHD over the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: Information in this article represents the opinion of the analyst. All statements are represented as opinions, rather than facts, and should not be construed as advice to buy or sell a security. Ratings of “outperform” and “underperform” reflect the analyst’s estimation of a divergence between the market value for a security and the price that would be appropriate given the potential for risks and returns relative to other securities. The analyst does not know your particular objectives for returns or constraints upon investing. All investors are encouraged to do their own research before making any investment decision. Information is regularly obtained from Yahoo Finance, Google Finance, and SEC Database. If Yahoo, Google, or the SEC database contained faulty or old information it could be incorporated into my analysis.