Tag Archives: zacks funds

Why Invest In Dividend Aristocrat ETFs Now?

There is hardly a market scenario where dividend investing fails to soothe jittery investors’ nerves. Though many thought that the bull market for dividend investing will end with the start of the Fed policy tightening and the resultant rise in bond yields, in reality, the popularity of dividend investing has shot up in recent times. This was because of the sharp rise in global growth issues, which is why equity markets are running a high risk of volatility and bond yields remained in check despite the Fed liftoff. The demand for safe havens and value investing has lit up. Investors hungry for yields are running to high-yielding options in the quest for regular current income, which can make up for capital losses. Agreed, benchmark yield-beating options will be in focus given the ongoing Fed policy tightening. But in the present volatile market, dividend aristocrats – which are more stable, mature and profitable companies consistently raising dividends or going for high payouts – may serve up investors’ objective more efficiently. Why Dividend Aristocrats Are Superior Bets Now? These dividend aristocrat companies are generally apt for value investing. Since volatility is expected to pull the string ahead, what could be a better option than superior dividend investing for capital appreciation and some smart yields? In a market crash, these dividend aristocrats stand out and even navigate through volatility. As per the latest study carried out by Reality Shares, companies that initiated or hiked their dividends have beaten those that kept their dividends same, paid no dividend at all, or cut or scrapped dividends in the 1999-2015 time frame. This can be corroborated by the gains during the above-mentioned period, as dividend initiators and growers earned 5.4% return, the highest among the dividend players. All dividend payers took the second spot with 4.29% gains, followed by 1.92% gains enjoyed by dividend distributors with the same dividends. However, no-dividend payers or dividend cutters and scrappers recorded losses of 0.8% and 5.99% respectively, as per the document. Below, we highlight four dividend aristocrat ETFs which may give a relatively stable performance in the coming months amid further Fed rate hike bets, developed market woes and China’s hard-landing fears, and the occasional global market rout. Vanguard Dividend Appreciation ETF (NYSEARCA: VIG ) VIG follows the Dividend Achievers Select Index, which is composed of common stocks of high-quality companies that have a record of increasing dividends for at least 10 years. The $18.2 billion fund is currently home to 179 securities. The ETF is heavy on Industrials (22.4%) and Consumer Goods (21.6%). With an expense ratio of 0.10%, this is one of the cheapest funds in this space. It yields 2.46% annually, and was down 6.7% in the last one year (as of January 11, 2016). VIG has a Zacks ETF Rank #2 (Buy). SPDR Dividend ETF (NYSEARCA: SDY ) This fund provides exposure to the 101 U.S. stocks that have been consistently increasing their dividend every year for at least 25 years. It follows the S&P High Yield Dividend Aristocrats Index, and has amassed $12 billion in AUM. Volume is solid, exchanging more than 765,000 shares in hand, while the expense ratio comes in at 0.35%. The product is widely diversified across components, as each security accounts for less than 2.46% of total assets. Financials is the top sector, taking up one-fourth of the portfolio, while Industrials (14.7%), Consumer Staples (13.9%), and Utilities (12%) round off the next three spots. The fund was down nearly 10.4% in the last one year (as of January 11, 2016). SDY yields 2.80% and has a Zacks ETF Rank of 3 (Hold). Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD ) This $2.9 billion fund tracks the Dow Jones U.S. Dividend 100 Index, which measures the performance of high dividend-yielding U.S. stocks that have a record of consistently paying dividends. The 106-stock fund charges a meager 7 bps in fees. Consumer Staples is the fund’s focus sector with about 23% exposure, followed by IT (19.3%). SCHD yields 3.13% annually (as of January 11, 2016) and lost 7.1% in the last one year. It also has a Zacks ETF Rank #3. WisdomTree U.S. Dividend Growth ETF (NASDAQ: DGRW ) This fund tracks the WisdomTree U.S. Dividend Growth Index and offers diversified exposure to U.S. dividend-paying stocks with both growth and quality characteristics. It has gathered $594.5 million in its asset base. The ETF charges 28 bps in fees per year from investors. DGRW holds 300 securities in its basket, with each holding less than 4.16% share. From a sector look, it provides double-digit allocation to Consumer Discretionary (20.11%), IT (19.48%), Industrials (19.23%), Consumer Staples (18.59%) and Healthcare (14.95%). The fund has shed 6.1% in the year-to-date time frame and has a Zacks ETF Rank of 3. Original Post

3 Best-Ranked Mid-Cap Value Mutual Funds

Mid-cap value mutual funds provide excellent opportunities for investors looking for returns with lesser risk by gaining exposure to stocks that are available at a discounted price. While large companies are normally known for stability and the smaller ones for growth, mid caps offer the best of both the worlds, allowing growth and stability simultaneously. Companies with market capitalization between $2 billion and $10 billion are generally considered mid-cap firms. Meanwhile, value mutual funds are those that invest in stocks trading at discounts to book value, plus having low price-to-earnings ratio and high dividend yields. Value investing is always a very popular strategy, and for a good reason. After all, who doesn’t want to find stocks that have low P/Es, a solid outlook, and decent dividends? However, not all value funds solely comprise companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. Below, we share with you 3 top-rated mid-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Lord Abbett Mid Cap Stock Fund A (MUTF: LAVLX ) seeks capital growth. LAVLX invests heavily in securities of undervalued companies having medium size market capitalization. LAVLX invests in companies located throughout the globe. LAVLX may also invest in ADRs. The Lord Abbett Mid Cap Stock A fund has a three-year annualized return of 8.3%. As of September 2015, LAVLX held 79 issues, with 2.58% of its assets invested in Hartford Financial Services Group Inc. (NYSE: HIG ). Sterling Capital Mid Value Fund A (MUTF: OVEAX ) invests the lion’s share of its assets in equity securities of undervalued mid-cap companies. According to the advisors, a mid-cap company is defined as one with market capitalization within $1 billion to $30 billion. OVEAX predominantly invests in common stocks of both domestic and foreign firms that are traded in the U.S. The Sterling Capital Mid Value A fund has a three-year annualized return of 10.2%. OVEAX has an expense ratio of 1.19% as compared to the category average of 1.21%. Federated Absolute Return Fund A (MUTF: FMAAX ) seeks positive return consistent with low level of correlation with the U.S. equity market. FMAAX invests in both equity and debt securities of both U.S. and non-U.S. issuers. FMAAX focuses on acquiring securities that are believed to be mispriced or misperceived. The Federated Absolute Return A fund has a three-year annualized return of 3.5%. Dana L. Meissner is the fund manager of FMAAX since 2009. Original Post

Long/Short ETFs To Brave This Wild Market

What similarity between summer 2015 and winter 2016! The China-driven sell-off that crushed the global investing world last August-September suddenly starts chiming to start the new year. Basically, a wavering Chinese economy and the consequent burst of the Chinese stock market on the one hand and the Fed policy tightening as well as massive crashes in oil prices on the other sent the global markets into a difficult state. The contagion effect of the double whammy was strong enough to make global equities see the most horrible start to a year in 16 years. Grave economic releases out of China and heightened volatility in its stock market caught the global markets off guard lately. There was a trading halt on the key Chinese bourses, with the indexes diving 7% to start the new year. The decline was the worst single-day performance since the 8.5% decline on August 24, 2015, which was the root of the global market rout last summer. Hints of further shrinkage in the Chinese manufacturing sector in December were held responsible for the bloodbath in the market. The Caixin/Markit Purchasing Managers’ Index (PMI) for China declined to 48.2 in December, representing the 10th successive month of factory output contraction. The data was worse than the prior 48.6 and well below the market’s expectation for 48.9. Additionally, China’s central bank guided the yuan to a five-year low in offshore trading on Wednesday, which raised expectations of further weakness in the Chinese economy as well as sparked off fears of a currency war among export-centric Asian nations. If this was not enough, news of Saudi Arabia cutting off diplomatic ties with Iran joined China-led worries to start the year. While investors somehow started to digest fears of a hard landing in China, things seemed unsteady even in the U.S. Despite the Fed liftoff in December, subdued inflation is still a concern. From this global trend, we can easily say that the macroeconomic environment is anything but steady. Asian shares are approaching their largest weekly decline in over four years . Added to this, oil prices are stubbornly low, having slipped to below $34/barrel level lately on supply glut and global growth worries. The continued downward pressure on oil prices crushed several oil-rich nations during this course. Brent crude tested an 11-year low, while WT has seen a 7-year low in the first week of 2016. For the top U.S. ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) lose over 5.8%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) shed over 6% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) move down by 7.5% in the last five trading sessions (as of January 7, 2016). So, it would be wise for investors to settle on safe ETFs while playing the U.S. Safety and value should be the investment mantra in this stormy market. If caution is the keyword, investors can take a look at these three long/short ETFs which beat the aforementioned broader U.S. ETFs in the first week of 2016. QuantShares U.S Market Neutral Anti-Beta ETF (NYSEARCA: BTAL ) Investors who want to shift their focus to investing in low-beta stocks during this uncertain market environment can consider adding BTAL ETF to their portfolio. This fund tracks the Dow Jones U.S. Thematic Market Neutral Anti-Beta Total Return Index, which is an equal-weighted, dollar-neutral, sector-neutral benchmark. The index identifies the lowest-beta stocks and goes long on them, while at the same time going short on the highest-beta stocks. Like MOM, this fund also invests in equal dollar amounts for both the long and short positions, and looks to profit from the spread return between low- and high-beta stocks. This is thin on AUM having amassed just $8.5 million in assets. The fund charges 99 basis points as expenses and gained 4% in the last five trading sessions (as of January 7, 2016). WisdomTree Dynamic Bearish U.S. Equity Fund (NYSEMKT: DYB ) The fund looks to track long equity positions or long U.S. Treasury positions and short equity positions. The long equity positions take care of about 100 U.S. large- and mid-cap stocks that satisfy eligibility criteria and have the best combined score based on fundamental growth and value signals. The stocks are weighted as per their volatility features. The short equity positions comprise the largest 500 U.S. companies designed to act as a market risk hedge. This $1.3-million fund charges 48 bps in fees and added 2.3% in the last five trading sessions (as of January 7, 2016). QuantShares U.S. Market Neutral Momentum ETF (NYSEARCA: MOM ) The fund looks to track the performance of the Dow Jones U.S. Thematic Market Neutral Momentum Index. The target index is equal-weighted, dollar-neutral and sector-neutral. The index takes the highest-momentum stocks into account as long positions and the lowest-momentum stocks as short positions, in almost equal measure within each sector. Thanks to its focus on momentum stocks, this low-volatility ETF offers a nice return even in a bull market. The basket of about 200 stocks that the fund is long on seeks to outperform the portfolio of about 200 stocks with short positions. Despite its solid strategy, the product has so far been overlooked by investors with AUM of $8.4 million. It charges a fee of 1.49% per year from investors and gained about 0.4% in the last one week. Original Post