Tag Archives: zacks funds

Q3 ETF Asset Flow Roundup

The third-quarter of 2015 was teeming with economic shockers that bulldozed risky investments worldwide but showered gains on some safe bids. While a hard landing fear in China was the actual culprit, a long-standing guesswork on the Fed’s liftoff timeline was a partner in crime. Yet, we admit that nothing could stand against the China issues that include sudden currency devaluation, multi-year low manufacturing data and a massive crash in the Chinese market. The resultant shockwaves, swooning commodities and the return of deflationary fears in the Euro zone also set the dark stage for the third quarter’s investing activity. The combined impact of these events led the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) , to lose about 7.7%, the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) to shed 5.7% and the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) to retreat about 8.4% in Q3. The iShares MSCI ACWI (All Country World Index) Index ETF (NASDAQ: ACWI ) was off about 9.8% in the quarter. Overall, the global market was quite disastrous for investors as most key indices endured the worst quarter in four years. In such a scenario, investors might thus want to check out the top and worst grossing ETFs of Q3 to see which products cashed in on the market crash and which lost out. Winners of Q3 The SPDR S&P 500 Trust ETF Though volatility rocked the show in the third quarter as China-led global growth fears and its ripples in the other emerging and developed economies muddled the market momentum, steady U.S. growth impressed investors. Also, the Fed’s reiteration of near zero interest rates at the end of the quarter resulted in strong inflows into the U.S. equity funds. The ultra-popular SPY led the way last month, gathering over $8.4 billion in capital. Not only SPY, another popular S&P 500 ETFs namely Vanguard S&P 500 ETF (NYSEARCA: VOO ) accumulated $4.45 billion in assets. U.S. Treasury Bonds – iShares 1-3 Year Treasury Bond ETF (NYSEARCA: SHY ) With the Fed still hesitating to hike the benchmark interest rates even almost after a decade, bond investing prevailed in Q3. Though September was a chancy month for the lift-off, a global market rout in August, a choppy global market and a still-low inflation level in the U.S. held the Fed back from catapulting a lift-off. This gave a big-time boost to the short-term U.S. Treasury bond ETFs. As a result, SHY garnered about $4.05 billion in assets in Q3. The SPDR Barclays 1-3 Month T-Bill ETF (NYSEARCA: BIL ) also piled up $1.66 billion in assets and made it to the top-10 asset scorers’ list (read: Guide to Interest Rate Hikes and ETFs: 4 Ways to Play ). Since the global macroeconomic environment was tumultuous in Q3, investors sought refuse in safe haven bids like intermediate-to-long term treasury ETFs. These offer investors safety along with a decent level of current income. Thanks to this sentiment, the iShares 7-10 Year Treasury Bond ETF (NYSEARCA: IEF ) and the iShares 20+ Year Treasury Bond ETF (NYSEARCA: TLT ) attracted about $2.40 billion and $1.65 billion of AUM during the quarter (read: ETF Winners & Losers Post Dovish Fed Meet ). Hedged Global – Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEARCA: DBEF ) The global economy may be lagging, but investors’ penchant for currency-hedged global equity ETF investing is not. The policy divergence stemmed from the looming Fed tightening and the easy money policies in most developed economies made hedged international investments a compelling opportunity for U.S. investors and led them to pour about $2.38 billion in assets in DBEF. Several other Europe-based ETFs including the iShares MSCI EMU ETF (NYSEARCA: EZU ) and the Vanguard FTSE Europe ETF (NYSEARCA: VGK ) hauled in respectively $1.7 billion and $1.6 billion assets in Q3. Top Losers Emerging Market – Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) Emerging markets were hard hit in Q3 thanks to the double whammy of China-induced worries and the Fed rate hike tensions. This clearly explains why two top-notch emerging market ETFs namely VWO and the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) saw assets bleeding in the quarter. The funds, VWO and EEM saw outflows of about $3.44 billion and $2.79 billion respectively in the quarter. Un-hedged Global – iShares MSCI EAFE ETF (NYSEARCA: EFA ) Since sooner or later the Fed is due for a policy tightening, investors started to dump non currency-hedged international ETFs like EFA. The fund shed about $1.13 billion in assets in the quarter. Gold – SPDR Gold Trust ETF (NYSEARCA: GLD ) Gold has slipped to multi-year lows on a stronger dollar, a still-muted inflationary backdrop worldwide and the slowdown in China, which is one of the largest consumers of gold. Though the recent global market rout offered gold the much-needed respite for a brief session on the metal’s safe haven appeal, the underlying fundamentals are weak. So, investors abandoned this product in Q3, resulting in about $922 million in net outflows. Link to the original post on Zacks.com

Top ETF Stories Of September

The third quarter of 2015 was utterly downbeat for the broader U.S. market as well as the global indices with the China-led rout surfacing in August and spilling over into September. Not only global growth worries but also high speculation of a Fed lift-off has made the month of September the most-watched one so far this year. In any case, according to the Stock Trader’s Almanac , September ended in red 55% of the times while S&P Dow Jones Indices indicated an average fall of 1.03% return over the last 87 years in September. As a result, after a worldwide investing massacre in August, the investing cohort must be keen to know the top financial stories of September and check their impact on the ETF world. Still a Dovish Fed Turning loads of hearsays off, the Fed remained supportive in its most talked-about September meeting. A dreaded uproar in the global investing backdrop in August led by the Chinese market crash, swooning commodities and their shockwaves on other emerging economies held the Fed back from switching on the lift-off button this September. Muted inflation and a still-strong greenback were also other forces to inhibit the Fed from policy tightening. As the Fed stayed put, some big moves in various markets and asset classes were prompted. Though the Fed has kept the option for a 2015 hike still alive, a small section of policymakers and traders have started to bet that the rates may not be hiked before 2016. Whatever the case, financial ETFs like SPDR S&P Regional Banking ETF (NYSEARCA: KRE ) and iShares Broker Dealer ETF (NYSEARCA: IAI ) and U.S. dollar ETF PowerShares DB US Dollar Bullish Fund (NYSEARCA: UUP ) were the foremost losers post Fed meeting. UUP shed 0.04%, KRE lost 1.1% and IAI was off 6.4% in the month. However, there were plenty of gainers too. Long-term Treasury bond ETFs like Vanguard Extended Duration Treasury ETF (NYSEARCA: EDV ), high-yield m-REIT ETFs like iShares FTSE NAREIT Mortgage Plus Capped Index Fund (NYSEARCA: REM ) and gold-related ETFs like SPDR Gold Shares (NYSEARCA: GLD ) and Market Vectors Gold Miners ETF (NYSEARCA: GDX ) added gains post meeting. Overall, EDV was up over 1.5% in the month but other products could not hold on to gains. REM was off 4.2% while GLD and GDX shed 0.45% and 5.6% in the month (as of September 28, 2015). Biotech Meltdown If China made August infamous, biotech did the same for September. Pricing issues in the biotech space has long been a concern but came into the limelight in September following a tweet by the Democratic presidential candidate Hillary Clinton. Her tweet raised concerns on over pricing on life-saving drugs at the end of the month. Questions over biotech pricing came on the heels of a 5,455% price hike (in about two months) of a drug called Daraprim, used to treat malaria and toxoplasmosis. This gigantic leap in pricing action was taken by a privately held biotech company Turing Pharmaceuticals. Not only Turing Pharmaceuticals, Valeant Pharmaceuticals International Inc. (NYSE: VRX ) is also likely to be summoned by Democrats on the House oversight committee for hiking 525% and 212% prices for two heart drugs. The talks pulled VRX shares down by 16.5% on September 28 and hit all biotech ETFs. In fact, growing pains for biotech investing led the biggest related ETF iShares Nasdaq Biotechnology (NASDAQ: IBB ) to incur the largest weekly loss in seven years. IBB was down over 15% in the last one month while ETFs like SPDR S&P Biotech ETF (NYSEARCA: XBI ), Medical Breakthroughs ETF (NYSEARCA: SBIO ) and BioShares Biotechnology Clinical Trials Fund (NASDAQ: BBC ) were off 15.4%, 16.5% and 15%, respectively. Volkswagen Scandal This dealt quite a blow to the entire auto industry. The iconic German carmaker Volkswagen AG ( OTCQX:VLKAY ) has been accused of tricking on the Environmental Protection Agency (EPA) test. Per EPA, Volkswagen had set up a software algorithm which allowed it to mislead U.S. emissions tests and the carmaker has admitted the charge. This immediately weighed on the key auto industry of Germany as other automakers have also been hit. Germany ETFs like iShares MSCI Germany ETF (NYSEARCA: EWG ), Recon Capital DAX Germany ETF (NASDAQ: DAX ), Germany AlphaDEX Fund (NASDAQ: FGM ) and db X-trackers MSCI Germany Hedged Equity Fund (NYSEARCA: DBGR ) were hit hard on this car scandal and registered a steep retreat in the month. The funds were off over 6.6%, 6.5%, 6.4% and 5.15 respectively in September. Original Post Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

2 Metal ETFs To Buy For Q4

Metal ETFs were clearly out of investors’ favor for much of 2014 and have been unloved so far this year. The combination of a stronger greenback, a slumping China, the oil price rout and the adverse demand-supply imbalance have put a hold over several industrial metals in recent times. Since the Chinese economy accounts for about half of the global consumption of the industrial commodities, a steep slowdown in the country’s economy and a protracted downturn in its manufacturing sector mean reduced demand for commodities. While the commodity market is yet to show any definite sign of recovery, a trend reversal seems to be playing on the horizon. A diminishing supply glut, multi-year low metal prices and production cuts in the face of loss-making might open up opportunities for some metal ETFs. Also, investors are increasingly wagering on hopes of a solid monetary stimulus in China which in turn will shore up the manufacturing sector and fuel metal prices and the related ETFs. Given this, investors may want to consider cycling into the industrial metal space in order to obtain a momentum play and profit out of a beaten-down space. How to Pick Right ETFs? First, fundamentals need to be favorable, then investors can look at our Zacks ETF Rank. This system looks to find the best ETFs in a given market segment based on a number fundamental and technical factors about the ETF and the Zacks forecast for the underlying industry or asset class. Following this technique we at Zacks revised our ETF ranks recently and found out that two metal ETFs have been upgraded from #3 (Hold) #2 (Buy). Below we highlight these two metal ETFs: Aluminum Aluminum consumption is likely to surge helped by the automotive and packaging industries. The boom in the airline industry is also another catalyst in driving the price higher. Also, policy easing in China should play a major role as the economy accounts for over 40% of global aluminum consumption. iPath Pure Beta Aluminum ETN (NYSEARCA: FOIL ) The product focuses on the Barclays Capital Aluminum Pure Beta TR Index. The index consists of a single futures contract but has a unique roll structure which selects contracts using the Pure Beta Series 2 Methodology. This strategy looks to limit the impact of contango while at the same time provides the collateralized return from U.S. T-Bills. The product has amassed about $1.6 million in assets and trades in paltry volumes of 500 shares a day. The product charges 75 bps in fees. FOIL was up over 4.5% in the last one month (as of September 25, 2015). Dow Jones-UBS Aluminum Total Return Sub-Index ETN (NYSEARCA: JJU ) This ETN delivers returns through an unleveraged investment in the futures contracts on aluminum and currently consists of one futures contract on the commodity. The product trades in a paltry volume of about 1,000 shares daily on average and has amassed $2.2 million in AUM. Expense ratio comes in at 0.75%. The product gained over 0.1% in the last one month. Nickel A fear of supply shortage could push up nickel price in Q4. Brazil’s giant producer expects the price to rebound in the last quarter brining about the ‘strongest performance’ since the start of 2015. GMK Norilsk Nickel PJSC, the world’s second-largest producer of nickel and Russia’s biggest mining company, ticked up its metal deficit forecast on a further cut in production. A significant reduction in LME inventory can be considered as a cue for a stable nickel market going forward. Plus, Indonesia’s decision to carry on the ban on exporting unprocessed ores would support the nickel price recovery. Notably, Indonesia is the world’s biggest producer and exporter of nickel, and accounts for 18-20% of global supply. iPath Pure Beta Nickel ETN (NYSEARCA: NINI ) This note seeks to match the performance of the Barclays Capital Nickel Pure Beta Total Return Index. Unlike many commodity indexes, this product can roll into one of a number of futures contracts with varying expiration dates, as selected, using the Barclays Pure Beta Series 2 Methodology. The ETN manages just $0.8 million in its asset base and sees light volume of about 1,500 shares a day, suggesting additional cost beyond the annual fee of 75 bps per year. The note was down 2.4% in the last one month (as of September 25, 2015). iPath Dow Jones-UBS Nickel Subindex Total Return (NYSEARCA: JJN ) This ETN tracks the Dow Jones-UBS Nickel Subindex Total Return. The index delivers returns through an unleveraged investment in the futures contracts on nickel and currently consists of one futures contract on the commodity. The product is a bit expensive as it charges 75 bps in fees per year. It trades in a paltry volume of nearly 5,000 shares daily on average that increases the trading cost in the form of a wide bid/ask spread. The fund is also unpopular and has attracted just $6.3 million in AUM. JJN lost 0.8% in the last one month. Original Post