Tag Archives: zacks funds

5 Strong Buy Municipal Bond Mutual Funds

Debt securities will always be the natural choice of the risk-averse investor, because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned from these securities are exempt from Federal taxes, and in many cases, from state taxes as well. Below, we will share with you 5 top-rated municipal bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) , as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds. Dreyfus High Yield Municipal Bond Z Fund (MUTF: DHMBX ) seeks a tax-exempted high level of current income. It invests a lion’s share of its assets in municipal securities that are expected to provide returns that are free from Federal income tax. DHMBX is generally expected to maintain dollar-weighted average maturity of more than 10 years. The Dreyfus High Yield Municipal Bond Z Fund is non-diversified and has returned 5.4% over the past one year. As of June 2015, DHMBX held 87 issues, with 3.55% of its assets invested in Tobacco Settlement Financing Corp N Asset 5%. MFS Municipal High-Income Fund A (MUTF: MMHYX ) invests a large chunk of its assets in securities that are expected to pay interest exempted from Federal taxes. It may invest in securities that provide income which are not exempted from Federal alternative minimum tax. The MFS Municipal High-Income Fund A has returned 5.7% over the past one year. MMHYX has an expense ratio of 0.67%, as compared to a category average of 0.95%. Federated Municipal High Yield Advantage F Fund (MUTF: FHTFX ) seeks high current income. The fund invests in securities that are believed to provide Federal tax-free interest income. FHTFX normally invests in long-term securities. It may also invest in securities of medium quality and that are rated below investment grade. The Federated Municipal High Yield Advantage F fund is non-diversified and has returned 5.5% over the past one year. Lee R. Cunningham II is one of the fund managers, and has managed FHTFX since 2009. Delaware National High-Yield Municipal Bond Fund A (MUTF: CXHYX ) invests a major portion of its assets in municipal bonds, interest from which is exempted from Federal income tax. CXHYX focuses on acquiring securities rated below high or medium quality, which are expected to have impressive income prospects with high risk. The Delaware National High-Yield Municipal Bond Fund A has returned 5.7% over the past one year. As of June 2015, CXHYX held 393 issues, with 2.37% of its assets invested in Buckeye Ohio Tob Settlement Fi To 5.875%. American Century High-Yield Municipal Fund Investor (MUTF: ABHYX ) seeks a high level of tax-free current income. The fund invests a majority of its assets in municipal debt securities expected to pay interest income exempted from Federal tax. It emphasizes in investing in securities that are believed to provide high return. ABHYX may invest in securities with interest that is not free from Federal alternative minimum tax. The American Century High-Yield Municipal Fund Investor is non-diversified and has returned 5% over the past one year. ABHYX has an expense ratio of 0.60%, as compared to a category average of 0.95%. Original Post

3 Country ETFs Impacted By China’s Currency Devaluation

Wise were those analysts who had foreseen the start of a currency war post China’s yuan devaluation story. China shook the global markets on August 11 when its policymakers devalued the country’s currency by 2% against the greenback to boost its sagging exports. This resulted in the largest single-day decline since the historical devaluation in 1994 . Though the Chinese central bank defended its currency intervention ‘as a free-market reform’, global experts’ apprehensions of a currency war in the near future, especially among its Asian neighbors, are turning into a reality. Most export-centric economies will likely be forced to depreciate their currencies to stave off competition and rev up their exports. And analysts were not wrong at all, as this currency war is already underway. Let’s take a look at the country ETFs which were hit hard by the yuan devaluation. Vietnam To fight against the dark impact on its exports, Vietnam weakened its currency, dong, on August 19. This was the third time that the country devalued its currency this year and the second time in a week. The trading band has now has been widened to 3% from 2%, per Reuters. Like China, Vietnam also acts as a low-cost producer and earned some edge over China in recent times, as Chinese wages are on the rise. With a stronger currency, Vietnam would lose this competitive advantage. Not only exports, Vietnam is unable to sell products to domestic consumers due to the surge in cheaper Chinese imports, resulting in a widening trade deficit. In the first seven months of 2015, deficit in trade with China was $19.33 billion, worse than $14.88 billion of deficit in the year-ago period, according to Reuters . Following the latest depreciation in currency, dong fell 4.5% in interbank on August 18. In the last one month, the greenback gained 2.3% against dong. The Market Vectors Vietnam ETF (NYSEARCA: VNM ) – the pure play on Vietnam – lost about 5% in the last five trading sessions. Malaysia The Malaysian equity market has been an impacted area post the yuan devaluation. Also, a falling oil price marred the stocks of oil-rich Malaysia, which happens to be one of the largest Asian crude exporters. Political crisis is another cause of concern for Malaysia. On the other hand, China’s currency devaluation hurt its competiveness as an exporter. This, coupled with a strong U.S. dollar amid the looming Fed rate hike, recently sent Malaysia’s currency, ringgit, to a 17-year low. This resulted in the depletion of Malaysia’s foreign exchange reserves, and in turn soured investors’ mood toward Malaysian investing. Ringgit fell over 7% in the last one month against the U.S. dollar. Pure play-Malaysia ETF, the iShares MSCI Malaysia ETF (NYSEARCA: EWM ), was off 17.9% in the last one month (as of August 20, 2015). Indonesia Following the yuan move on August 11, Indonesia’s currency, rupiah, tumbled the most in 2015. This currency also touched a 17-year low after the yuan episode. Rupiah was the second worst-performing Asian currency this year. The country was already grappling with weak exports and a five-year low GDP growth. Indonesia ETF, the iShares MSCI Indonesia ETF (NYSEARCA: EIDO ), was down over 14% in the last one month. Original Post

6 Reasons Why JETS ETF Could Fly Higher

Gone are the days when aviation companies were ill-famed for their bankruptcy protection status. During 2005 and 2008 , over half of the U.S. carriers functioned under Chapter 11 of bankruptcy protection. But things have changed in the last seven years. Since last year, the U.S. aviation industry has been soaring with oil price going into a tailspin. Moreover, a pickup in the domestic economy, rising cargo demand and a boost to tourism bode well for the sector and the pure play airline ETF U.S. Global Jets ETF (NYSEARCA: JETS ) . The fund was up 6.5% in the last one month though it lost slightly in the first quarter, resulting in a muted year-to-date return of 2.3% (as of August 19, 2015). Since the fund is new in the industry and debuted on April 30, 2015, let’s take a look at the drivers that can take the fund higher in the coming days. To analyze this, we have considered the details provided by U.S. Global Investors in its JETS presentation. Higher Margin & Lower Debt: The U.S. airline industry saw the 10-year best margin performance in 2014. Not only this, U.S. airlines are projected to see huge free cash flows (in the range of $15,000 to $20,000 million) in the coming three years including 2015. These figures represent a remarkable jump from less than $5,000 million of FCF earned in 2014. The debt-ridden airlines are also paying down borrowings over the years. Total debt in proportion of operating revenues came down to 41.4% at the end of 2014 from around 65% at the end of 2010. Surge in Ancillary Revenues: Apart from the key business, supplementary revenues including hotel accommodation, car rentals, onboard food, and travel insurance are all performing well. Restructuring: Modifications in operations and carrier structure are on in full swing. While slimmer seats and the addition of more rows resulted in about a 16 percentage point increase in passenger load factor in 10 years (till Q2 of 2014), fuel-efficient aircraft contributed to energy savings. Limited Capacity Growth: Most airlines recently acknowledged plans of adding lesser fleet in the coming days. While several factors are responsible for this decision, a shortage of pilots is the primary reason. As per U.S. Global Investors’ report, as much as 34% of present pilots will retire by 2021. Solid Earnings: The positive factors led to an immense improvement in the companies’ earnings. The airline stocks gained altitude post Q2. In any case, cheap fuel has been a windfall and will likely remain so in the quarters to come. The mounting middle-income population in emerging markets is benefitting worldwide customer growth. Strong Zacks Metrics: At the time of writing, the sector resides in the top 16% of the Zacks Industry Rank. Most of the industry players have a top Zacks Style Score of ‘A’ for their Growth and Value metrics, suggesting a bullish outlook for the space. By now, one must have realized that the underlying trend is solid in the airlines industry. So, investors might play it via the basket approach to tap the entire potential of the space. And to do so, what could be the best option other than the JETS ETF? The fund holds 33 stocks in its portfolio and is concentrated on a few individual securities, as it allocates about 70% to the top 10 holdings. Southwest (NYSE: LUV ) (12.75%), Delta Air Lines (NYSE: DAL ) (12.49%), United Continental (NYSE: UAL ) (11.9%) and American Airlines (NASDAQ: AAL ) (11.34%) are the top four elements in the basket, with a combined share of about 45%. Other firms mentioned above also get places in the top 10 chart, each with over 4% weight. The product charges 60 bps in fees. Original Post