Tag Archives: chinese

4 Outperforming Sector ETFs Over The Past One Month

After a tumultuous ride in January and mid-February, the U.S. stocks witnessed the fourth consecutive week of gains on continued signs of improvement in the domestic and international markets. As a result, all the three major indices erased most of the losses made this year, climbing more than 6% over the past one month. With this, the S&P 500 and Dow Jones are down just over 1% each from a year-to-date look while the NASDAQ Composite Index has shed 5.2%. Behind the Surge A spate of stronger U.S. economic data infused enough confidence in the economy, erasing fears of a recession any time soon. In particular, factory activity contracted less than expected in February, suggesting that the beleaguered industry is stabilizing. About half of the industries have shown strength for the first time since August. Oil price has stabilized as the global oil glut has eased and the demand-supply trend is improving, thereby giving boost to the battered energy stocks. Notably, U.S. crude has risen 47% from a 13-year low of $26.21 a month ago. The rise in oil price has also calmed fears over the health of banks, especially those that are highly exposed to the energy sector. On the international front, the European Central Bank (ECB) turned more dovish in its meeting last week. The bank cut its deposit rate further by 10% to negative 0.4%, and lowered its refinancing rate and marginal lending rate by 0.5% each to zero percent and 0.25%, respectively. Further, it has expanded its monthly bond buying program from €60 billion to €80 billion. Additionally, the People’s Bank of China (PBOC) also stepped up its efforts to reinvigorate growth in the economy by fixing the yuan higher against the dollar at 6.4905, the strongest level seen this year. Investors should note that the Chinese turmoil and oil price slide were the main culprits of a steep downfall early in the year. The receding fears increased the appeal for riskier assets leading to a bullish trend in stocks, though bouts of volatility are still showing up. Given this, we have highlighted four sector ETFs that easily crushed the broad market funds by wide margins and were the star performers over the past one-month period. PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) – Up 34.1% This fund provides exposure to the energy sector of the U.S. small-cap segment by tracking the S&P Small Cap 600 Capped Energy Index. It is less popular and less liquid with an AUM of $28.1 million and average daily volume of about 22,000 shares. Expense ratio comes in at 0.29%. Holding 33 securities in its basket, it is concentrated on the top firm with 16% share while other firms hold less than 10% of total assets. About 56.6% of the portfolio is tilted toward energy equipment and services while oil, gas and consumable fuels take the rest. PSCE currently has a Zacks ETF Rank of 5 or “Strong Sell” rating with a High risk outlook. SPDR S&P Metals and Mining ETF (NYSEARCA: XME ) – Up 28.0% The ETF offers a broad exposure to the U.S. metal and mining industry by tracking the S&P Metals & Mining Select Industry Index. Holding 26 stocks in its basket, it uses an equal-weight methodology and does not put more than 6.8% of assets in a single security. In terms of industrial exposure, steel makes up a large chunk at 52.6% while precious metals and gold mining round out the next two spots with a double-digit allocation each. The product has $314.6 million in AUM and trades in solid trading volumes of around 3.2 million shares per day on average. It charges 35 bps in fees and expenses. ETRACS ISE Exclusively Homebuilders ETN (NYSEARCA: HOMX ) – Up 24.0% This is an ETN option offering exposure to the companies that engage in the development and construction of homes and communities by tracking the ISE Exclusively Homebuilders Total Return Index. Notably, the index has 20 stocks in its basket with the largest allocation going to the top four firms with a combined share of 36.2%. The ETN has accumulated nearly $22 million in its asset base since its inception a year ago and trades in a light volume of about 32,000 shares. It charges 40 bps in annual fees and has a Zacks ETF Rank of 4 or “Sell” rating. PowerShares WilderHill Progressive Energy Portfolio ETF (NYSEARCA: PUW ) – Up 21.1% This fund provides exposure to 41 companies that focused on alternative energy, better efficiency, emission reduction, new energy activity, greener utilities, innovative materials and energy storage. This is easily done by tracking the WilderHill Progressive Energy Index. The ETF is pretty well spread out across various securities as each makes up for less than 3.7% of total assets. Oil, gas and consumables takes the top spot at 21.2% while electrical equipment and machinery make up for the next two spots with a double-digit exposure each. The fund has amassed $20.4 million in its asset base and sees paltry volume of nearly 5,000 shares a day. Expense ratio came in at 0.70%. PBW has a Zacks ETF Rank of 4. Original post

Coal ETF On The Mend: Will The Momentum Last?

The dark days of coal suddenly lit up with coal ETF, the Market Vectors Coal ETF (NYSEARCA: KOL ), adding about 25% so far this year. In just the last one month, the fund advanced 27.5%, while it scooped up about 17% returns in the last five trading sessions (as of March 7, 2016). Investors should note that coal has long been a beaten-down commodity due to the growing popularity of the alternative energy space and soft global industry fundamentals. Global warming and high fuel emission issues as well as new and advanced technologies are making clean power more usable, curbing the demand for black diamond and hurting the profitability of coal producers. Notably, coal producer Peabody Energy Corporation (NYSE: BTU ) incurred losses in the last five quarters. Another coal miner, Arch Coal (NYSE: ACI ) filed for bankruptcy and was delisted from the stock market. What’s Behind the Shifting Wind? However, shares of coal-producing companies have lately been turning around. The renewed optimism in the oil patch may have acted as a jump pad for the entire energy sector. Plus, China’s intention to lay off about 20% workers in the coal industry to shift to a cleaner energy base led to a likely deceleration in supplies. Peabody too is aggressively implementing cost-saving initiatives, and has cut back on production and restructured its organization via lay-offs. The job cut will result in considerable cost savings every year. Peabody shares were up 82.3% in the last five trading sessions (as of March 7, 2016) Coming to CONSOL Energy Inc. (NYSE: CNX ), the rise in shares looks more sensible, as the company has been shifting its focus to natural gas from the more struggling coal space. This diversified energy producer is well placed to cash in on any pickup in commodity prices that we are witnessing at the current level. CNX was up 35.4% in the last five trading sessions (see all Energy ETFs here ). Having said all, the coal ETF is an amazing value play. Even after the recent spurt, KOL trades at a P/E (TTM) of 14 times, versus the Energy Select Sector SPDR ETF ‘s (NYSEARCA: XLE ) P/E (TTM) of 24 times. Quite understandably, investors do not want to lose out on any moment to make some quick gains out of this undervalued coal ETF. Can the Momentum be Sustained? The road ahead for these companies is anything but smooth, as the Clean Power Plan is sure to pose challenges. Not only in the U.S., the drive to lower carbon emissions and moderate the planet’s warming is rising globally. These have been thwarting the demand for coal in the U.S. The picture is almost the same in China. So forget being solid, the medium-term outlook for coal can easily be called soft. KOL in Focus Even then, the ETF targeting the global coal industry is making the most of the opportunity in its hand. KOL tracks the Market Vectors Global Coal Index. Holding 26 securities in its basket, the fund is concentrated on the top 10 holdings at about 60% of total assets. It has a Chinese focus accounting for 27% of the portfolio, while the U.S., Australia and Canada round off the next three spots with double-digit weights each. The fund has amassed $47.1 million in its asset base and trades in average daily volume of 71,000 shares. Its expense ratio comes in at 0.59%. KOL has a Zacks ETF Rank of 5 or “Strong Sell” rating with a High risk outlook. Original Post

4 Energy ETFs Outperforming On Oil Rebound

Energy investors have long been waiting for oil prices to soar and energy stocks and ETFs to join the party. Though the start of 2016 was not at all joyous for oil, the commodity finally bucked the trend as evident by the 17% one-month gain and an 11.3% five-day uptick in the WTI crude ETF, the United States Oil ETF (NYSEARCA: USO ) . The picture is equally rosy for Brent crude with the United States Brent Oil (NYSEARCA: BNO ) rising 11.1% in the last five days and adding 21.1% in the last one month. Brent crude is hovering around $40 while WTI crude is around $37 at the time of writing. Though the commodity was stressed lately by soft Chinese data , the underlying momentum remained strong. Several investors turned bullish on the product. Also, the number of rigs fell to the lowest level since December 2009 (as per Baker Hughes (NYSE: BHI )) pointing to a likely fall in U.S. output. The U.S. rig count slipped to below 500 for the week ending March 4. Of these, there were 392 active oil rigs and the rest were drilling natural gas. If this was not enough, the biggest oil producing countries – Saudi Arabia and Russia – along with Qatar and Venezuela had agreed to freeze oil output at the January level. Needless to say, the move brought a fresh lease of life in the energy sector. In short, efforts from both U.S. and OPEC to shore up the oil market signal that producers are now really serious about reining in the oil rout. As far as demand is concerned, China’s crude imports surged 19.1% between January and February despite a soft economy, per Reuters. Speculation is rife that oil can reach the $50 level by the end of this year. While buoyancy was noticed in the entire energy sector, below, we highlight four energy ETFs that cashed in the most on the recent rally. First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) This product offers exposure to the U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. It follows ISE-REVERE Natural Gas Index and holds 30 stocks in its basket that are well spread out across components. The product has amassed $186.9 million in its asset base while it sees solid volume of nearly 896,000 shares per day. It charges 60 bps in annual fees from investors. The fund added 27.8% in the last one month (as of March 7, 2016). It has a Zacks ETF Rank of 3 or ‘Hold’ with ‘High’ risk outlook. PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) This fund provides exposure to 33 firms by tracking the S&P SmallCap 600 Capped Energy Index. The fund has garnered about $30.9 million in its asset base while it sees a moderate volume of around 21,000 shares a day. The product is largely concentrated on the top 10 firms that collectively make up for about 60% share of the basket. About 58% of its assets is allocated to energy, equipment and services while oil, gas and consumable fuels account for the remainder. The ETF charges a fee of 29 bps annually and added 25.3% in the last one month (as of March 7, 2016). The fund has a Zacks ETF Rank #5 (Strong Sell) with a ‘High’ risk outlook. SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA: XES ) This fund provides equal weight exposure across 42 securities by tracking the S&P Oil & Gas Equipment & Services Select Industry Index. None of the firms account for more than 3.95% of total assets. The fund has amassed $189.1 million in its asset base. The ETF has an expense ratio of 0.35% and gained 26.9% in the last one month. XES has a Zacks ETF Rank #5 with a ‘High’ risk outlook. SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) This fund follows the S&P Oil & Gas Exploration & Production Select Industry Index, holding 63 stocks in its portfolio. It is well diversified across its holdings with none of the companies accounting for more than 2.96% of total assets. The ETF has been able to manage $2.01 billion in its asset base. It charges 35 bps in annual fees and expenses. The product gained 17.5% in the last one month and has a Zacks ETF Rank #4 (Sell) with a ‘High’ risk outlook. Original Post