Tag Archives: transactionname

How Greece Is Impacting The Financial Markets

From my perspective, the greater risk to investors is not their relative exposure to the country of Greece in their portfolios, but their relative exposure to other countries. I contend that international stocks, particularly within Europe and also including certain emerging markets, are an attractive asset class for risk-adjusted return potential over the intermediate- to long-term. Any pullbacks in international equity strategies (and European-based strategies in particular) as a result of the ongoing Greek drama, may present an attractive entry point, or re-entry point, for some investors. A lot of the volatility witnessed across global stock markets thus far in 2015 can be attributed to the ongoing soap opera involving Greece, the European Union and the International Monetary Fund. Greece, arguably the most notorious of the P.I.I.G.S. (Portugal, Italy, Ireland, Greece and Spain) countries, has been confronting a mountain of debt issues – currently estimated at 320 billion Euros – within the country for years. If that number is not staggering enough, consider these other economic statistics plaguing the country of Greece: Gross Domestic Product has fallen by 25% since 2010 A Debt-to-GDP ratio of 177% An unemployment Rate of 27% More than 20% of the Greek population is over the age of 65 – making it the world’s 5th oldest nation – and only 14% of the population is under the age of 15 (Data sources: BBC News, ECB, IMF, Green National Statistics Agency, Bloomberg.) With Greece in need of another bailout, or debt restructuring, to avoid defaulting on a significant repayment to the IMF at the end of June (and more to come thereafter), and Greece Prime Minister Tsipras opposing additional austerity measures (ex. pension cuts and potential increases to the age of retirement for these purposes in Greece) that may be a part of any new debt deal, many market participants are now bracing for the increased likelihood that Greece will leave the Euro – whether on their own or at the request of the EU. Germany, as the largest member of the EU, which Greece reportedly owes $56 billion alone, is showing signs of diminished interest in saving Greece again. This dubious view is shared elsewhere in Europe which suggests that this standoff may remain until the end of June deadline. While it is unknown if either party will blink first, or if the proverbial can will be kicked further down the road, we, at Hennion & Walsh, believe that it is appropriate for investors to consider the impact that a Greece exit from the Euro (now being referred to by many as the Grexit) would have on their portfolios and financial markets overall. Using a couple of the larger and more popular international equity exchange-traded funds below, including one Europe-specific strategy, as proxies, it would appear as though investors may not actually have that much exposure to Greece if they are investing in international equities through these types of product structures. FTSE Europe ETF (NYSEARCA: VGK ) has a 0.07% allocation to Greece as of May 31, 2015, according to Morningstar. iShares MSCI EAFE ETF (NYSEARCA: EFA ) has a 0.00% allocation to Greece as of May 31, 2015, according to Morningstar. From my perspective, the greater risk to investors is not their relative exposure to the country of Greece in their portfolios but rather their relative exposure to other countries that may be impacted by either a Greek default or a further extension of credit to this debt-burdened country. To this end, any funds “saved” by not allowing for any future Greece bailouts could be applied to additional quantitative easing measures or other economic stimulus programs within the Eurozone. It is worth noting that the fear of contagion throughout the Eurozone also adds to the volatility in the region each time a potential Grexit is in the headlines. I contend that international stocks, particularly within Europe and also including certain emerging markets, are an attractive asset class for risk-adjusted return potential over the intermediate-longer term. I would even suggest that having Greece ultimately leave the Euro would provide some certainty to international investors and relieve Europe of one of the anchors holding down their own economic recovery. Thus, any pullbacks in international equity strategies, European-based strategies in particular, as a result of the ongoing Greek drama may present an attractive entry point, or re-entry point, for some investors. Disclosure: Hennion & Walsh Asset Management currently has allocations within its managed money program consistent with the investment theme discussed in this article. This post is for educational purposes only and should not be considered as a solicitation to purchase or sell any of the securities or investment themes mentioned. International investments have their own unique set of risks that should be understood before considering an investment. As a reminder, all investment decisions in our view should be made consistent with an investor’s financial goals, tolerance for risk and investment timeframe. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) 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.

Fund Watch: BMO, JPMorgan, Active Alts, Deer Park And Hanlon

By DailyAlts Staff In this edition of Fund Watch, new filings from: BMO (NYSE: BMO ) Global Long/Short Equity Fund Active Alts Long/Short U.S. Equity Fund JPMorgan (NYSE: JPM ) Diversified Return Hedged International Equity ETF Deer Park Total Return Credit Fund Hanlon Tactical Dividend Momentum Fund Hanlon Managed Income Fund BMO Global Long/Short Equity Fund On June 12, BMO Funds, Inc. filed paperwork with the Securities and Exchange Commission (SEC) announcing its plan to launch the BMO Global Long/Short Equity Fund . The fund, which will be available in investor- and institutional-class shares, as well as a pair of R classes intended for eligible retirement plans, will pursue an investment objective of capital appreciation through taking long and short positions in equity securities based in the U.S. and abroad, with at least 40% of its assets invested in non-U.S. companies. The fund’s investments will be selected using a combination of bottom-up and top-down analysis, with long investments in fundamentally strong firms with good balance sheets; and short positions in fundamentally weak firms. Jay Kaufman, Ernesto Ramos and David Rosenblatt will be the fund’s portfolio managers. Active Alts Long/Short U.S. Equity Fund For investors more interested in domestic long/short exposure, ETF Issuer Solutions (ETFis) plans to launch the Active Alts Long/Short Equity Fund (Pending: LGSH ) (an exchange traded fund, or ETF), according to a June 8 filing with the SEC. The fund’s objective will be long-term capital appreciation with an emphasis on income, and it will pursue these ends by means of a bottom-up security-selection approach. Sub-advisor Active Alts will attempt to identify large- and mid-cap companies with good management and improving fundamentals for the fund’s long positions, and the opposite for its short positions. The fund’s investment strategy involves keeping both gross and net exposure below 100% under normal circumstances. A few fund details are as follows: Management fee of 1.55% Expense ratio of 1.85% Exchange listing: NASDAQ The fund will be managed by Brad Lamensdorf, founder of Active Alts. The firm has also filed, via ETFis, for the the Short Squeeze Fund . JPMorgan Diversified Return Hedged International Equity ETF On May 29, JP Morgan filed a Form N-1A with the SEC announcing its plan to launch the JPMorgan Diversified Return Hedged International Equity ETF later this year. The ETF is designed to track the FTSE Developed ex-North America Diversified Factor 100% Hedged to USD Index, which was developed to represent international stock performance with foreign-currency risk hedged out. The ETF’s holdings will be selected using a rules-based, proprietary factor methodology, with an emphasis on relative valuation, price momentum, low volatility, and specific market capitalization. Holdings may include large- and mid-cap stocks from developed countries, and equity positions are rebalanced quarterly. Deer Park Total Return Credit Fund Northern Lights Trust Fund filed paperwork with the SEC on June 8, announcing the intended launch of the Deer Park Total Return Credit Fund, a nontraditional bond mutual fund. Sub-advisor Deer Park Road Management – led by portfolio managers CEO Michael Craig-Scheckman and CIO Scott Burg – will pursue capital appreciation and current income by investing primarily in asset-backed securities ( ABS ) backed by real estate. This includes mortgage-backed securities (MBS) of residential and commercial varieties, and may include subprime investments. Deer Park will attempt to derive portfolio returns through fundamental analysis and security selection, seeking to identify and capitalize on attractive investment opportunities in the MBS and ABS markets. Hanlon Tactical Dividend Momentum Fund Two Roads Shared Trust plans to launch the Hanlon Tactical Dividend Momentum Fund by August 12, according to paperwork filed with the SEC on May 29. The fund is expected to go live within 75 days of the filing date. The Hanlon Tactical Dividend Momentum Fund seeks capital appreciation and current income, and it will pursue these ends by following a rules-based strategy that includes sector tactical overlay and ranking selection elements. The fund will track a custom index composed of stocks from each of the nine economic sectors in the U.S. economy, and it will use tactical algorithms to determine what sectors, and dividend-paying stocks within those sectors, are the most attractive stocks to buy. Hanlon Managed Income Fund As part of that same filing as above, Two Roads Trust also announced the pending launch of the Hanlon Managed Income Fund, which will attempt to provide current income, capital appreciation, and positive risk-adjusted returns by investing primarily in ETFs, including “long-inversed” products that mimic short-selling. The fund will use technical analysis and trend-following to tactically manage its holdings, attempting to avoid large drawdowns, and when the market signals a pending correction, the fund is designed to “go defensive.”

Fight Rising Yield With These High Yield ETFs

A flurry of strong U.S. economic indicators, especially the better-than-expected May job growth number which is one of the key gauges of the Fed policy determination, set the stage for a September timeline for the Fed rate hike. This, along with rising supplies of debt securities pushed the yield on the benchmark 10-year Treasury note to this year’s high of 2.42% on June 9. In such a backdrop, yield-loving investors might be looking for ways to beat the benchmark Treasury yield and yet enjoy decent capital gains. For them, we highlight some ETF choices that provide extra yield and might be in focus once the Fed puts an end to the rock-bottom interest rate environment. Senior Loan ETFs Senior loans are issued by companies with below investment grade credit ratings. In order to make up for this high risk, senior loans normally have higher yields. Since these securities are senior to other forms of debt or equity, senior loans give protection to investors in any event of liquidation. As a result, default risk is low in this type of bonds, even after belonging to the junk bond space. Moreover, senior loans are floating rate instruments and provide protection from rising interest rates. In a nutshell, relatively high-yield opportunity coupled with protection from the looming rise in interest rates post Fed tightening should help the fund to perform better in the second half of 2014. PowerShares Senior Loan ETF (NYSEARCA: BKLN ) The most popular and liquid fund in this space is BKLN with AUM of $5.7 billion. The fund tracks the S&P/LSTA U.S. Leveraged Loan 100 Index and holds 115 securities in its basket. It has weighted average maturity of 4.71 and average days to reset of just over 35. Though senior loans account for a hefty 83.7% of the assets, high yield securities also make up for 9% share in the basket. The product charges an expense ratio of 65 bps a year and pays out an attractive dividend yield of 3.95%. The ETF has added nearly 1% in the year-to-date timeframe (as of June 9, 2015). Preferred Stock ETFs Preferred stocks are hybrid securities having the characteristics of both debt and equity. The preferred stocks pay the holders a fixed dividend, like bonds. These types of shares normally get priority over equity shares both in case of dividend payments as well as at the time of liquidation if the company fails. Preferred stocks are thus relatively stable and usually exhibit a low correlation with other income generating assets. These products are interest rate sensitive – lesser than the bond space though – but a high yield opportunity might present them as potential bets once the Fed hikes rates. iShares S&P U.S. Preferred Stock ETF (NYSEARCA: PFF ) PFF is perhaps the biggest and the most popular name in the preferred stock ETF space. With total assets of $13.3 billion, it is one of the largest funds in this category. The ETF charges 47 basis points in fees. The fund has returned 1.83% so far this year (as of June 9, 2015) and pays out 6.09% per annum as dividends. The ETF holds 302 securities in all and eliminates concentration risk by allocating a mere 15% of its total assets in its top 10 holdings. Business Development ETFs Business Development Companies (BDCs) are firms that give loan to small and mid-sized companies at relatively higher rates and often grab debt or equity stakes in those companies. BDCs dole out high cash payments together with captivating the equity performance of the borrower. The U.S. law obliges BDCs to hand out more than 90% of their annual taxable income to shareholders. Market Vectors BDC Income ETF (NYSEARCA: BIZD ) The ETF looks to invest in a variety of BDCs which are traded in the American market by tracking the Market Vectors U.S. Business Development Companies Index. The ETF has $82.5 million in AUM. In total, BIZD invests in 29 firms with a relatively high level of concentration in the top names. Ares Capital and American Capital account for 14.6% and 9.9% of total assets, respectively. The fund yields 8.29% annually (as of June 9, 2015) and is up about 3% year to date. Originally posted on Zacks.com