Tag Archives: zacks funds

Can Copper ETFs Rebound After Chinese Production Cut?

Thanks to a surging dollar, global growth worries and supply glut, industrial metals have been hammered badly this year. In particular, copper was the hardest hit by worries about slowing growth in China. This is especially true as China is the biggest consumer of the metal and accounts for about 45% of copper demand. Additionally, the red metal is used in global construction and manufacturing activities, which are experiencing a slowdown. Notably, copper plunged to a six-year low, losing nearly 30% so far this year. Even the announcement of production cuts in the weekend by Chinese producers did not yet help the price to stabilize. Production Cuts In order to counter slumping prices, 10 leading Chinese copper producers plan to cut their output by 350,000 metric tons in 2016, or about 5% of China’s annual production. The move could ease fears of a protracted supply glut and give some support to copper prices. However, many traders believe that the supply cuts are too small and insufficient to rebalance the metal market amid disappointing macro fundamentals. Outlook Still Bleak Weak economic activities in China have been weighing on copper demand and are expected to do so in the coming months as well. This is because manufacturing activity in China shrunk for the fourth straight month in November to the 3-year low, underscoring persistent weakness in the world’s second-largest economy. Most of the other developed and developing economics are also experiencing sluggish growth which is weighing on the global demand for copper. Adding to the woes is the prospect of a rates hike in the U.S. later this month that has dampened the appeal for metals as a store of value owing to a strengthening dollar. Given the bleak fundamentals, it seems that Chinese production cuts are not enough to reduce the global supply glut and drive copper prices upward. So, investors should currently avoid trading in copper ETFs. In addition, these funds have an unfavorable Zacks ETF Rank of 4 or ‘Sell’ rating, suggesting that these will continue to underperform in the months ahead. iPath Bloomberg Copper Subindex Total Return ETN (NYSEARCA: JJC ) The ETN tracks the Bloomberg Copper Subindex Total Return Index, which seeks to deliver returns through an unleveraged investment in the futures contracts on copper. The index currently consists of one futures contract on the commodity of copper (currently the Copper High Grade futures contract traded on the COMEX). The product charges investors 75 bps a year in fees, and has a lower level of AUM of $34.2 million. It trades in paltry volume of about 20,000 shares a day on average. The ETN shed nearly 30% so far this year. United States Copper Index Fund (NYSEARCA: CPER ) The fund seeks to track the performance of the SummerHaven Copper Index Total Return, plus interest income from CPER’s holdings. The index provides investors with exposure to front-month copper futures contract traded on the on the NYSE Arca. The product has amassed $2 million in its asset base while sees paltry volume of about 1,000 shares a day. Expense ratio came in at 0.65%. The ETF has lost 27.5% in the year-to-date time frame. iPath Pure Beta Copper ETN (NYSEARCA: CUPM ) This note seeks to match the performance of the Barclays Copper Pure Beta Total Return Index. Unlike many commodity indexes, this can roll into one of a number of futures contracts with varying expiration dates, as selected, using the Barclays Pure Beta Series 2 Methodology. This approach results in less contango, which is an important factor, as shifting from month to month in contracts can eat away returns in an unfavorable market situation. The note has amassed $1.6 million in its asset base and trades in a meager volume of about 200 shares a day. Expense ratio came in at 0.75%. CUPM is down 27% so far this year. Original Post

Top-Ranked ETFs To Tap India’s Growth Story

Finally, a slew of economic reforms including four rate cuts this year have started to pay off and stimulate growth in Asia’s third-largest economy. This is especially true as India picked up momentum with 7.4% growth in the second quarter (ending September). While this is far below the year-ago growth of 8.9%, it is up from 7% recorded in the first quarter and the market expectation of 7.3%, as per Reuters. Bright Spots A major boost to the economy came from solid progress in the manufacturing, mining and service sectors. Agriculture, industrial, automobiles and consumer durables are witnessing strong growth while investments are also showing signs of recovery. Additionally, current account deficit has narrowed and the currency has moved up significantly. Further, lower oil prices and rising consumer spending have added to economic strength. In particular, the current account deficit has narrowed sharply to around 1.3% of GDP in fiscal 2014-2015, below 1.7% in fiscal 2013-2014. Trade deficit in the first seven months of the current fiscal (April-October) contracted to $77.76 billion from $86.26 billion. Though inflation rose to 5% in October from 4.41% in September, it is expected to decline once the festival season ends. The central bank expects inflation to reach 6% by January 2016 and then moderate to 5% by March 2017. Given the positive developments, India has now become the world’s fastest-growing economy, outpacing China, and remains a bright spot given that most emerging economies are struggling to revamp growth. The Reserve Bank of India expects the country’s economy to grow 7.4% annually for fiscal 2015-2016 and the World Bank projects economic growth of 7.5% for the current fiscal year, followed by further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18. The Organization for Economic Co-operation and Development (OECD) also sees robust growth prospects in India compared to the other emerging markets. It expects GDP growth to remain above 7% in the coming years fueled by more structural reforms. India ETFs to Buy Based on a speedy recovery and bright outlook, we recommend investors to buy India ETFs at least for the short term. For interested investors, we have found a number of top-ranked ETFs in the broad emerging Asia-Pacific space targeting India that have a Zacks ETF Rank of 2 or ‘Buy’ rating and are thus expected to outperform in the upcoming months. Among these, the following five funds could be good choices to play in the coming months and have potentially superior weighting methodologies which could allow them to continue leading the emerging Asia-Pacific space in the months ahead. iShares MSCI India ETF (BATS: INDA ) This ETF follows the MSCI India Total Return Index and charges 68 bps in fees per year from investors. Holding 72 stocks in its basket, the fund is highly concentrated on the top two firms – Infosys (NYSE: INFY ) and Housing Development Finance Corp. ( OTC:HSDGY ) – that together make up for 20.2% of total assets. Other firms hold no more than 6.63% share. Further, the product is slightly tilted toward the information technology sector at 21.7% while financials, consumer staples, health care, and consumer discretionary round off the top five. INDA is the largest and popular ETF in this space with AUM of over $3.5 billion and average trading volume of more than 2 million shares a day. The fund is down 7.9% in the year-to-date time frame. WisdomTree India Earnings Fund (NYSEARCA: EPI ) This product tracks the WisdomTree India Earnings Index, holding 238 profitable companies using an earnings-weighted methodology. Reliance Industries and Infosys occupy the top two positions with a combined 17.9% of assets while other firms hold less than 5.8% share. The fund is heavy on financials with one-fourth share, while energy and information technology also get double-digit allocation in the basket. The fund has amassed nearly $1.7 billion and trades in volume of more than 4.8 million shares a day. Expense ratio came in at 0.83%. The fund has lost about 9% over the trailing one year. iShares India 50 ETF (NASDAQ: INDY ) This ETF provides exposure to the largest 53 Indian stocks by tracking the CNX Nifty Index. It is pretty well spread out across components with none of the securities holding more than 7.73% of assets. With respect to sector holdings, financials takes the top spot at 26%, closely followed by information technology (16%), consumer discretionary (11%) and energy (10%). The product has managed assets worth $814.9 million and trades in good volume of nearly 320,000 million shares a day. It is the high cost choice in the space, charging 93 bps. The product shed 8.4% in the trailing one-year period. PowerShares India Portfolio (NYSEARCA: PIN ) This fund offers exposure to the basket of 50 stocks selected from the universe of the largest companies listed on two major Indian exchanges by tracking Indus India. The top two firms – Infosys and Reliance Industries – take double-digit exposure each while the other firms hold no more than 5.6% share. From a sector look, the fund is tilted toward energy and information technology, each accounting for over 20% share, followed by financials (12.1%) and health care (10.8%). The fund has amassed $431.7 million in its asset base and trades in solid volume of around 1.3 million shares a day on average. It charges a higher expense ratio of 85 bps and has lost 7.7% in the year-to-date timeframe. Market Vectors India Small-Cap Fund (NYSEARCA: SCIF ) This fund targets the small cap segment and tracks the Market Vectors India Small-Cap Index. In total, it holds 135 securities in its basket with none making up for more than 3.21% of assets. Here again, financials occupies the top position from a sector look at 28.3% while industrials, consumer discretionary, and information technology round off the next three spots. The fund has so far amassed $203.5 million in its asset base while charging 89 bps in annual fees. Volume is good, exchanging around 105,000 shares in hand a day. Bottom Line Given the current trends and favorable dynamics, India will likely get a solid boost. So a solid play on the country might be a good idea. This is especially true if investors take a closer look at the top-ranked ETFs in the space for excellent exposure and some outperformance in the coming months. Original Post

5 Zacks Rank Number 1 California Muni Bond Funds For Stable Return

California municipal bond funds invest in municipal debt obligations of issuers from the state. It provides the state’s investors stable income that is exempted from Federal and California income tax. Meanwhile, municipal bonds, informally called “munis” are debt securities issued by state and local governments to borrow money. These are preferred by investors seeking a steady stream of tax free income in a choppy market. Munis come with lower yields compared to taxable bonds. However, they fetch better returns for investors in high tax brackets if we consider after-tax returns. Below we share with you 5 top-rated California muni bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect it to outperform its peers in the future. Dreyfus California AMT-Free Municipal Bond Z (MUTF: DRCAX ) invests a major portion of its assets in municipal debt securities that are expected to pay interest free from federal and California state income taxes. DRCAX mainly focuses on acquiring investment-grade securities that are rated not below Baa/BBB. The Dreyfus California AMT-Free Municipal Bond Z fund is non-diversified and has returned 3.6% in the past one year. DRCAX has an expense ratio of 0.71% compared to the category average of 0.86%. Franklin California Tax-Free Income A (MUTF: FKTFX ) seeks high tax exempted income. FKTFX invests the lion’s share of its assets in municipal securities that are rated investment-grade and income from which is exempted from federal alternative minimum tax, and from California personal income taxes. FKTFX may invest not more than 20% of its assets that are subject to the federal alternative minimum tax. A maximum of 35% of FKTFX’s assets may be invested in securities of the U.S. territories. The Franklin CA Tax-Free Income A fund has returned 3.6% in the past one year. John S. Wiley is one of the fund managers of FKTFX since 1991. Invesco California Tax-Free Income A (MUTF: CLFAX ) invests heavily in investment grade California municipal securities that provide income free from federal and California state income taxes. CLFAX may also invest a maximum of 20% of its assets in securities that are rated below investment grade or “junk” bonds. The Invesco CA Tax-Free Income A fund has returned 3.9% in the past one year. As of September 2015, CLFAX held 226 issues, with 1.84% of its assets invested in Long Beach Calif Fing Auth 6%. American Century California Long-Term Tax-Free A (MUTF: ALTAX ) seeks high tax free current income with safety of principal. ALTAX invests a large chunk of its assets in bonds issued by different entities including municipalities in California and U.S. territories. ALTAX mainly invests in securities that are expected to provide return exempted from federal and California income taxes. ALTAX is expected to invest in securities with maturity durations of more than seven years and maintains a weighted average maturity of more than 10 years for the portfolio. The American Century CA Long-Term Tax-Free A fund has returned 3% in the past one year. ALTAX has an expense ratio of 0.72% compared to the category average of 0.86%. Franklin California Insured Tax-Free Income Advisor (MUTF: FZCAX ) invests the majority of its assets in securities that pay interest free from the federal alternative minimum tax and California personal income taxes. FZCAX invests a minimum of 65% of its assets in securities issued by municipalities in California. FZCAX may invest not more that 35% of its assets in municipal securities of the U.S. territories. The Franklin CA Insured Tax-Free Income Advisor fund has returned 4.6% in the past one year. As of September 2015, FZCAX held 255 issues, with 4.1% of its assets invested in Alameda Corridor Transn Auth 5.25%. Link to the original post on Zacks.com