Tag Archives: zacks funds

New Factor-Based Emerging Market ETF From IShares

With the Fed on the verge of raising rates after almost a decade, emerging markets (EM) are presently running high risks. Investors are hurriedly dumping emerging market products on apprehensions of the end of the cheap-money era in the U.S. Higher interest rates in the U.S. would fade the appeal for high-yield lure for the emerging market equities. Plus, emerging economies’ growth is slowing with the biggest market, China, suffering from a long-drawn-out slowdown. The economies are mostly commodity heavy and are thus extremely susceptible to the prolonged commodity market slump. All these make fund issuers very careful and selective when it comes to launching a new EM ETF. In that vein, iShares recently rolled out the iShares FactorSelect MSCI Emerging ETF (BATS: EMGF ) . Let’s elaborate the product. EMGF in Focus The fund seeks to offer exposure to the developing world via large and mid-cap companies. To screen stocks, the underlying index targets some key criteria including ‘inexpensive stocks, financially healthy firms, trending stocks and relatively low market cap companies’ per the issuer . Quality of the stock is measured by ‘higher return on equity, earnings consistency and lower debt to equity ratio’ and cheaper valuations are determined by lower P/E and P/B ratios, per iShares. This focus results in a portfolio holding a basket of 156 well-diversified companies. India ETF, the iShares MSCI India ETF (BATS: INDA ) (7.18%), KT&G Corp. ( OTC:KTCIF ) (2.46%) and CITIC Ltd. ( OTCPK:CTPCY ) (2.37%) are the top three holdings. However, as far as sector allocation is concerned, the fund has a tilt towards Financials, which occupies about 23.67% of weight followed by Information Technology (15.45%) and Consumer Discretionary (12.78%). Two other sectors, Consumer Staples and Industrials also have a double-digit weight. Considering country-wise allocation, China takes the top spot having 29.75% allocation while South Korea (15.54%), South Africa (12.06%) and Taiwan (10.07%) also have double-digit exposure. The fund charges 70 basis points in fees. How Does it Fit in a Portfolio? For investors still having faith in the emerging market growth story, this fund can be a good choice. As such, smart-beta investing seems necessary for emerging markets at this point of time when the U.S. economy is about to see the end of the easy-money policy. Emerging markets across the board had a great time in previous years on incessant inflows from cheap money and the stocks surged. But as soon as the policy tightening takes place in the U.S., only high quality picks will likely gain investor attention. Moreover, the fund is well diversified as far as individual stocks are concerned. However, investors should note that the product is a bit concentrated from both a sector and country perspective, though expenses are reasonable. ETF Competition The emerging market equities space is primarily dominated by two large players – the Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) and the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) – managing an asset base of $33.8 billion and $20.8 billion, respectively. However, both of them are market-cap oriented ETFs and thus do not pose a threat to the newbie. The emerging market funds that could act as competitors to the newly launched iShares’ ETF are the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (NYSEARCA: GEM ) , the PowerShares FTSE RAFI Emerging Markets Portfolio ETF (NYSEARCA: PXH ) , the FlexShares Morningstar Emerging Markets Factor Tilt Index ETF (NYSEARCA: TLTE ) , the PowerShares DWA Emerging Markets Momentum Portfolio ETF (NYSEARCA: PIE ) and the iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSEARCA: EEMV ) . All these are running on smart-beta indexing or some unique approach rather than just revolving around market capitalization. Original Post

3 Strong-Buy American Funds Mutual Funds

American Funds – a segment of Capital Group – currently has nearly $1 trillion assets under management invested in mutual funds across a wide range of categories including both equity and fixed-income funds. The company generally focuses on providing long-term returns to investors. American Funds claims to have managers with an average of 27 years of investment experience. Meanwhile, its parent company, Capital Group, which currently has around $1.4 trillion assets, is one of the biggest investment management organizations of the world. Founded in 1931, the company offers a wide range of financial services all over the world through its offices in different regions including North America and Europe, and 7,000 associates. Below we share with you 3 top-rated American Funds mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all American Funds mutual funds, investors can click here to see the complete list of American Funds mutual funds . American Funds New Perspective A (MUTF: ANWPX ) seeks long-term capital appreciation. ANWPX invests in companies throughout the globe in order to take advantage of changes in factors including international trade patterns and economic relationships. ANWPX primarily focuses on acquiring common stocks of companies that have impressive growth prospects. ANWPX may also invest in companies that are believed to pay dividend in the future to generate future income. The American Funds New Perspective A fund returned 5.1% in the past one-year period. ANWPX has an expense ratio of 0.75% compared to the category average of 1.28%. American High-Income Municipal Bond A (MUTF: AMHIX ) invests a major portion of its assets that provide a federal income tax free return or that have a return subject to minimum alternative federal tax. AMHIX invests a minimum of half of its assets in debt instruments that are BBB+ or Baa1 or below. The American High-Income Municipal Bond A fund has returned 4.1% in the past one-year period. As of September 2015, AMHIX held 1,272 issues, with 1.49% of its assets invested in Tobacco Settlement Fing Corp N Asset 5%. American Funds Intermediate Bond Fund of America A (MUTF: AIBAX ) seeks current income with capital preservation. AIBAX invests in bonds, other debt securities and money market derivatives with a dollar-weighted average effective maturity between three and five years. AIBAX invests in securities that are rated not below A- or A3. AIBAX focuses on acquiring securities that are denominated in the U.S. dollar. The American Funds Intermediate Bond Fund of America A fund has returned 0.7% in the past one-year timef rame. Mark A. Brett is the one of fund managers of AIBAX since 2009. Original Post

4 Country ETFs To Shun If Oil Hits $20

Now that OPEC has announced that it will continue to pump out more oil despite piling-up supplies and falling demand, traders have set a new bottom for the long-exhausted commodity oil of $20 which is way below the psychologically resistant level of $40. OPEC terminated the production limit after the December 4 meeting. Though the investing was expecting in the same line as the OPEC top brass Saudi Arabia and other Gulf countries are more concerned about market share, per CNBC , rather than falling oil prices. Goldman Sachs viewed the outcome of this meeting as a serious threat to future oil prices and commented that this ‘leaves risks to their forecast as skewed to the downside in coming months, with cash costs near $20/bbl ‘. However, all are not as bearish as Goldman since HSBC expect non-OPEC supply growth to decrease from 2.3 mbd in 2014 to 0.9 mbd in 2015, before turning negative in 2016. HSBC also projects Brent crude to average $60 per barrel in 2016, $70/bbl in 2017 and $80/bbl in 2018. While nobody knows where the bottom is, one thing for sure is that oil is due for a wilder or a rather sluggish run in the coming days. At the time of writing, oil prices are hovering around the $40 level and are giving no signs of a near-term recovery. While a WTI crude oil ETF like United States Oil Fund (NYSEARCA: USO ) lost over 9.8% in the last five trading sessions, there are other corners as well which are linked to the commodity oil and are equally at risk if black gold slips to $20 or remains stressed. Those corners are key oil producing and exporting countries which have been exhibiting a downtrend, as revenues earned from this commodity account for a major share of their GDP. We have seen this trend in a number of countries so far this year. Market Vectors Russia ETF (NYSEARCA: RSX ) The Russian economy contracted 4.1% year over year in Q3. The economy shrunk for the third successive quarter with stubbornly low oil prices being mainly responsible. Among the other reasons for the deterioration are the ban on Russia by the West on the Ukraine issue and sky-high inflation. Oil – seemingly the main commodity of the nation – posed huge risks to the nation. The plunge in oil prices forced investors to think twice before investing in Russia even at bargain prices. In fact subdued oil prices and a stronger U.S. dollar on the Fed lift-off bet put pressure on the Russian currency ruble which lost about 17.2% in the last one year against the greenback (as of December 4, 2015). RSX is the most popular and liquid option in the space with an asset base of $1.83 billion and average trading volume of more than 8 million shares a day. The energy sector accounts for about 43% of RSX, which charges 61 basis points as expenses. The Zacks ETF #4 (Sell) fund advanced 5.9% but lost 6.5% in the last five trading sessions (as of December 7, 2015). Global X FTSE Norway 30 ETF (NYSEARCA: NORW ) Norway is among the top 10 nations famous for oil exports and with its comparatively low population, oil forms the key part of the country’s GDP. As per U.S. Energy Information Administration (EIA), Norway is the biggest oil driller in Europe. The most popular way to play the country is with Global X ETF NORW. The product tracks the FTSE Norway 30 Index, a benchmark of 30 companies that focus on Norway, charging investors 50 basis points a year in fees. The ETF is heavily concentrated on energy stocks, as these make up for nearly 45% of the portfolio. In fact, Norwegian oil giant Statoil accounts for one-fifth of the portfolio alone, suggesting a heavy concentration. Thanks to a slump in oil prices, NORW has lost about 11.3% in the year-to-date frame and was down 2.9% in the last five trading sessions. iShares MSCI Canada ETF (NYSEARCA: EWC ) Canada is also among the world’s top 10 oil producers. The oil, gas and mining sector make up about over a quarter of the Canada’s economy. Its currency plummeted to an 11-year low level after the disappointing outcome of the OPEC meeting. Canadian currency lost about 15% year over year while jobless data spiked last month. The best way to invest in Canada is the iShares MSCI Canada ETF, a product that has nearly $1.89 billion in assets. The fund tracks the MSCI Canada Index, which holds just under 100 stocks in its basket. Energy makes up a huge chunk of assets accounting for one-fifth of the total. The fund was off about 19% in the last one year. The fund has lost 22.7% this year and has a Zacks ETF Rank #4. The fund lost over 4.4% in the last five trading sessions. Global X Nigeria Index ETF (NYSEARCA: NGE ) Nigeria – an OPEC member – is one of the biggest net crude exporters in the world. An option to invest in Nigeria is a Global X ETF, NGE. This new product follows the Solactive Nigeria Index, giving exposure to about 25 companies and charging investors 68 basis points a year in fees. Though financials actually take the top spot in the ETF, making up about 45% of the holdings, energy has about 10% exposure. That is why, it is important to see how the fund fared during the recent oil price downturn. NGE shed about 31.1% during the last one year and is down 30.8% so far this year. NGE retreated 1.4% in the last five trading sessions. The fund has a Zacks ETF Rank #4. Original Post