Tag Archives: alt-investing

2 Excellent Dividend Growth ETFs In Focus

After a widespread sell-off last week in the wake of events in Greece and China, stocks have rebounded nicely this week. While in the shorter term, market volatility is expected to remain high, investors should focus on the longer-term picture. Here in the US, recent economic data has been mixed, pointing to a gradually recovering economy. If the economy perks up in the coming months, the Fed may start raising interest rates, even though the pace of hikes will most likely be very gradual. In any case, investors should start positioning their portfolio for the rising rate environment. Dividend stocks and ETFs have been extremely popular with investors over the past few years due to rock-bottom interest rates. Investors should however remember that most high yielding dividend ETFs focus on defensive sectors like Utilities and Telecom. In view of the rising rates scenario, investors may like to avoid ETFs that have a lot of focus on these rate-sensitive (bond-like) sectors, as these sectors underperform when rates start rising. On the other hand, cyclical sectors are likely to do well in the rising rate scenario Companies that consistently grow their dividends are usually high-quality companies that deliver excellent risk-adjusted return in the longer term. Further, many US companies have a lot of cash on their balance sheets and are likely to continue increasing their dividend payouts. Dividend Growth ETFs are excellent options for investors looking to invest in such companies. To learn more, please watch the short video below: Original Post Share this article with a colleague

Wide Moat ETF Gets An International Counterpart

Summary Popular economic moat ETF strategy goes international. Highlight the new market Vectors Morningstar International Moat ETF. A closer look at the economic moat strategy. The popular Market Vectors Wide Moat ETF (NYSEARCA: MOAT ) got an international equivalent today with the debut of the Market Vectors Morningstar International Moat ETF (NYSEARCA: MOTI ). MOTI tracks the Global ex-US Moat Focus Index (MGEUMFUN), “a rules-based, equal-weighted index intended to offer exposure to 50 attractively priced companies outside the U.S. with sustainable competitive advantages according to Morningstar’s equity research team,” according to Market Vectors . Like its U.S.-focused counterpart, MOTI uses Morningstar’s proprietary methodology to identify companies with long-term advantages, which allows companies to earn sustainable excess economic profits , as measured by the return on invested capital relative to the company’s cost of capital. The new ETF features exposure to 16 countries, including four emerging markets. However, MOTI’s geographic lineup is heavily tilted toward developed markets. India, China, Mexico and Chile – MOTI’s four emerging markets exposure – combine for just over a quarter of the new ETF’s weight. Conversely, Australia alone is 21.1% of MOTI’s weight. Home to 51 stocks, MOTI’s lineup is roughly two and a half times the size of MOAT’s. However, MOTI applies the same equal-weight methodology. MOAT’s 21 holdings have weights ranging from 4.64% to 6%, whereas MOTI’s holdings range in size from 1.15% to 2.32%. Four of MOTI’s top 10 holdings are Indian stocks, making the country the most represented among MOTI’s top 10 lineup. ” MOAT resonated with investors and with much of the world’s investable opportunities outside the United States, we’re launching MOTI as a means to capture moat-based opportunities abroad,” said Brandon Rakszawski, product manager at Van Eck Global, in a statement. “Morningstar is a leader in equity research and we look forward to offering investors the ability to access its analysts’ best ideas through an investible ETF.” At the sector level, MOTI is heavily allocated to financial services names with that sector commanding nearly 49% of the ETF’s weight. Materials at almost 12% is the only other sector to garner a double-digit allocation. Consumer discretionary and staples names combine for just over 15% of MOTI’s weight, according to Market Vectors data. Familiar individual names in MOTI’s lineup include State Bank of India, Unilever (NYSE: UN ), America Movil (NYSE: AMX ), Westpac Banking (NYSE: WBK ), Nestle ( OTCPK:NSRGY ), Potash Corp. (NYSE: POT ), HSBC (NYSE: HSBC ) and all of Canada’s major banks. MOAT’s methodology has clearly been embraced by investors. The ETF has swelled to nearly $881 million in assets under management in just over three years of trading. MOTI’s annual expense ratio is 0.56%. MOTI Sector Weights Chart Courtesy: Market Vectors Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

New Alternative ETF Takes Income Generating Seriously

Income investors may look at alternative assets to garner attractive yields. ETF options that provide attractive dividends. Focus on the Global X suite of SuperDividend ETFs. By Todd Shriber & Tom Lydon Investors are still searching for ways to generate income. Home to asset classes including business development companies (BDCS), private equity, closed-end funds, covered call funds and others, the alternatives space is a credible source of high income and yields. Enter the Global X SuperDividend Alternatives ETF (NASDAQ: ALTY ) , which debuted today. ALTY is the latest member of Global X’s SuperDividend suite , becoming the sixth ETF in a group that includes well-known products such as the Global X SuperDividend ETF (NYSEARCA: SDIV ) and the Global X SuperDividend U.S. ETF (NYSEARCA: DIV ). ALTY tracks the Indxx SuperDividend Alternatives Index. The new ETF offers investors exposure to an array of income-generating asset classes including a 26.3% weight to real estate investment trusts (REITs), a 19.1% allocation to BDCs and private equity and an 8.5% weight to master limited partnerships (MLPs). The new ETF also features 11.6% weights to covered call strategies and mortgage- and asset-backed securities, according to Global X data . BDCs have increased in popularity among investors for one big reason: Tantalizing dividend yields. However, with Treasury yields on the rise, some high-yielding asset classes are proving vulnerable, meaning investors should take the time to assess positions in BDCs and the corresponding exchange traded funds. BDCs are closed-end investment companies created under the Investment Company Act of 1940 that invest in debt and equity of small public and privately-held companies. The companies essentially help fund small $5 million to $100 million businesses. Ever since the financial crisis, regulators have clamped down on traditional lenders and made it harder for businesses to access public capital, which has forced smaller business to take loans from BDCs. ALTY delivers on the income promise via of a fund-of-funds approach as top 10 holdings are other funds, including a 26.3% weight to the Global X SuperDividend REIT ETF (NASDAQ: SRET ) . SRET, by far ALTY’s largest holding, debuted in March. “As a result of their stable earnings, REITs have demonstrated less volatility than equity prices. Global REIT volatility from 2010 – 2014 was 15.3% as compared to 16% of S&P 500. This stability has contributed to higher risk-adjusted returns as observed by Sharpe Ratio. The Sharpe Ratio for global REITs in 2014 was 2.11 as compared to a Sharpe Ratio of 1.01 for S&P 500,” said Global X, citing Bloomberg data. Alternative assets have other advantages in addition to income-generating potential. “Alternatives are generally known for lower volatility compared to equities. ALTY’s index methodology seeks to further reduce volatility through its selection and weighting of components. Alternative income is often generated from sources with low correlation to equities and traditional fixed income, such as real assets, private equity, and derivative strategies,” according to Global X . However, those advantages come at a cost. As ALTY holds multiple asset classes across multiple funds, the new ETF’s expense ratio is 3.03%, which is high by the standards of most actively-managed mutual funds, let alone passively-managed ETFs. ALTY pays its dividend on a monthly basis. (click to enlarge) Charts Courtesy: Global X Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.