Tag Archives: consumer

The iShares MSCI Austria Capped ETF: Does Vienna Wait For You?

Although an wealthy EU member with low unemployment it does not have a top line economy. The domestic financial sector lacks dividend distributions. The Materials sector is the funds best performing sector, even though it’s third in weighting. Mention “The Blue Danube Waltz”, and the Waltz King, Johann Strauss, immediately comes to mind. The waltz is a clever composition of a flowing waltz melody with instrumental interpretations of sounds one might have heard along the banks of the river Danube in 19th century Austria. However, this peaceful gentle flowing melody of the river waltz belies a turbulent history. Austria was almost continually at war in Europe, dating back to Napoleonic era and before. It was at the very center of the spark which ignited powder-keg Europe leading to the Great War, and sided with the axis powers of the Second World War, sharing the fate of the of the defeated. It was perhaps only through luck and a continent totally exhausted by war that Austria remained undivided between the Soviets and Western Europe. Located literally on the border of Cold War era Europe it became a center of intrigue and haunted by its past, until relatively recently. Austria embarked on a new epoch in its long history when it officially became a European Union member nation, January 1, 1995, adopting the Euro four years later. However, what of this new Austrian economy in this new economically united, post-cold war era Europe? In particular, is its economy growing sufficiently to serve as a focused investment for individual investors? For those who wish to consider it, there’s only one fund to choose from: the iShares MSCI Austria Capped ETF (NYSEARCA: EWO ). According Europa.eu , Austria’s per capita GDP, at approximately $46, 400 is well above the EU-28 average and pretty much in line with Denmark, Germany, Ireland, Netherlands, and Sweden. However, its current annualized growth rate is anemic at 0.4%, a full 100 basis points below the EU average. Its debt to GDP ratio is slightly below the EU average at 84.5% of GDP and runs a surprisingly high annualized inflation rate of 1.5%, well above the EU’s 0.6% annualized rate. Its unemployment rate, at 5.6% is well below its fellow EU member nations at over 10%. According to the CIA’s World Factbook , household spending is the largest contributor to GDP at 55%, followed by fixed capital investment at 21.1%, and government spending at 19.5%. Austria is a net exporter of goods and services, generating a trade surplus of 4.3% of GDP. As far as its domestic manufacturing economy, Austria’s Purchasing Manager’s Index indicates expansion, albeit slow, at 52.5 and capacity utilization is at 84%. This compares with the larger Eurozone PMI of 52 and capacity utilization of 81.1. It indicates a good domestic economy but not nearly as strong as, for instance, the U.K. or Germany. The fund tracks the MSCI Austria Investible Market Index 25/50 in U.S. Dollars. The ‘cap’ puts the fund in compliance with internal revenue code, in that: … at the end of each quarter of its tax year no more than 25% of the value of the RIC’s assets may be invested in a single issuer and the sum of the weights of all issuers representing more than 5% of the fund should not exceed 50% of the fund’s total assets… The iShares Austrian fund is nearly identically to the MSCI index, with the exception of a larger than usual cash allocation. It’s rare to see a cash allocation in excess of the fund’s sector allocations. In this case the 2.07% cash or derivative holdings are in excess of both the Utilities allocation, 1.46% and the Consumer Discretionary allocation at 1.72%. Specifically, the fund carries 2.0316% U.S. Dollar cash holding as well as 0.0382 Euro cash holding, totaling 2.0698%. There is also a small, 0.0019%, BlackRock (NYSE: BLK ) short term treasury holding and the fund is currently short, -0.0006% of USD/EUR forward contracts. (click to enlarge) Outside of the cash or derivative, the fund lists 27 holdings of Austrian based companies. Of the 27 holdings, 8 are Financials, 9 are Industrials, 4 Materials, 2 IT, 2 Energy and one each of Consumer Discretionary and Utility. One would expect that the heaviest weight sector to be the best in dividend distributions. This is not the case here. Of the eight holdings, only four have regular dividends and the entire sector allocation yield average is 1.85125%. Five of the eight holding’s major business is in Real Estate, only two in Banking and one Insurance company. Further, three of the holdings did not have appreciable earnings, nor were the Returns on Investment and Equity; three of the holdings recording negative ROI/ROE. Generally, although a large segment of the fund, Austria does not have a strong financial services sector. Financial Holdings OTC Symbol (if listed) Fund Weighting Market Cap (billions) Dividend Yield Payout Ratio Price/Earnings ROI/ROE Beta Sub Sector Erste Group Bank AG OTCPK:EBKDY 18.5952% $12.475 0.00% 0.00 N/A NA/-0.24 1.72 Banking Raiffeisen Bank OTCPK:RAIFY 4.4942% $4.594 0.00% 0.00 N/A NA/-6.12 1.62 Banking IMMOFINANZ AG OTC:IMMZF 4.4717% $2.778 0.00% 0.00 N/A -3.03/-5.42 1.29 Real Estate CA Immobilien Anlagen CAIV.VI* 3.8768% $1.836 2.71% 37.81% 17.59 2.87/4.87 0.72 Real Estate Buwog AG BWOA.VI* 3.2732% $2.075 3.71% 52.85% 14.28 3.47/8.22 N/A Real Estate UNIQA Insurance Group UNIQ.VI* 3.1128% $2.750 5.29% N/A 7.57 10.86 0.63 Insurance Conwert Immobilien Invest CONW.VI* 2.7511 $3,399 0.00% 0.00% 29.57 1.54/3.39 0.73 Real Estate S Immo Ag SIAG.VI* 1.5964 $0.653 3.10% 39.50% 14.34 2.39/6.63 0.55 Real Estate (Data From iShares and Reuters; *VI: Vienna Exchange) For example, Erste Group serves the domestic retail and small to midsized business banking segment. The company has a negative return on equity, does not offer a dividend, and has a very high P/E of over 100. Immofinanz invests in private and commercial properties. It is international serving Germany, Czech Republic, Hungary, Romania, Poland and Russia. However, has a negative ROI and ROE, negative EPS at -0.21 and no dividend growth. As a last example, UNIQA is an insurance group serving Central and Eastern Europe with a diversity of insurance products. However, it should be noted that its largest shareholder is Raiffeisen Bank, the second most weighted fund’s financial holding. Again, the financial sector may be adequate for the domestic economy, it isn’t as strong as other EU financial sectors in the same class. The second heaviest weighted allocation is Industrials. Andritz ( OTCPK:ADRZY ) designs and produces specialized electromechanical, pulp and paper, metals, biofuels and separation systems for those respective industries. Wienerberger ( OTCPK:WBRBY ) manufactures piping, clay blocks/bricks/pavers, ceramic and plastic pipes and water management products. The company is international with operations in Europe and North America. Zumtobel Group ( OTC:ZMTBY ) specializes in lighting solutions and control equipment. It’s small but profitable company manufacturing equipment under different brand names. Although there are a few interesting manufacturers, they are generally domestic and the metrics are relatively weak. Those in the fund seem typical of the Austrian industrial sector. Hence, over 65% of the fund is weak on several scores, particular on dividends, earnings and return on investment or equity. Industrial OTC Ticker (if listed) Fund Weighting Market Cap (billions) Dividend Yield Payout Ratio Price/Earnings ROI/ROE Beta Sub Sector Andritz ADRZY 7.6699% $4.9336 2.36% 24.76% 17.05 12.27/26.30 0.53 Diversified Wienerberger WBRBY 4.5323% $2.250 0.90% 28.82% N/A -4.64/-8.33 1.29 Construction Hardware Oesterrichische Post OTC:OERCF 3.3356% $2.43 6.07% 87.74% 14.40 14.29/23.40 0.33 Parcel/mail Delivery Zumtobel Group ZMTBY 1.9077% $0.980 1.09% 21.08% 55.67 2.18/4.87 1.36 Lighting solutions Flughafen Wien OTCPK:VIAAY 1.6418% N/A N/A N/A N/A N/A N/A Vienna Airport solutions Palfinger OTCPK:PLFRY 1.5042% $1.071 1.34% 13.48% 19.51 6.66/10.34 1.19 Hydraulic Lift Equipment Semperit Holding OTC:SEIGF 1.1757% $0.665 3.81% 265.14% 12.53 7.57/12.11 0.63 Rubber/Plastic Products Porr AG ABGV.VI* 0.9568% $0.778 3.14% 15.11% 12.97 5.64/12.53 -0.27 Construction equipment FACC FACC.VI* 0.9407 $0.364. N/A N/A N/A -0.63/-1.21 N/A Aerospace Defense (Data From iShares and Reuters; *VI: Vienna Exchange) The third largest sector is Materials, comprised of four holdings and seems to be the best sector of the three. Its average dividend yield is over 2.68%, P/E average 27.73 and fairly good return on investment and equity. Voestalpine ( OTCPK:VLPNY ) is a holding company manufacturing extruded, pressed and forged steel products for the automotive and construction industry. Its metric are good with a P/E of 8.43, a 3% dividend, selling at 4.36 times cash flow and an approximate payout ratio of about 40% of cash flow. Mayr Melnhof Karton ( OTC:MNHFF ) as the name suggests, produces packaging in the form of folding carton and carton board, mostly for the food and household product industry. It operates through subsidiaries, 40 locations distributed among 18 countries. Again the metric are surprisingly good: a 2.54% dividend yield, a P/E of 15, a payout ratio of about 38 and sell at about 9 times cash flow. Materials OTC Ticker (if listed) Fund Weighting Market Cap (billions) Dividend Yield Payout Ratio Price/Earnings ROI/ROE Beta Sub Sector Voestalpine VLPNY 8.9081% $6.492 3.02% 40.30% 8.40 7.61/12.76 1.22 Steel products Mayr-Melnhof Karton MNHFF 3.1386% $2.397 2.43% 38.00 15.63 10.30/12.59 0.45 Packaging Lenzing OTC:LNZNF 1.8928% $1.923 1.55% 110.52 71.79 1.22/2.26 0.80 Chemicals RHI OTC:RXHKY 1.809% $0.896 3.73% 56.42 15.09 4.34/10.50 0.91 Ceramics, metals, glass (Data From iShares and Reuters; *VI: Vienna Exchange) Summing up, sometimes individual nation funds, particularly those in the EU can be exceptional performers. This is not one of those funds. In all fairness, the fund is merely tracking the MSCI index, which it does rather well. As an individual EU member state economy Austria does well domestically: employment, social services, income and wealth distribution. Also, as a contributing EU and Eurozone member state, it does play a positive, albeit small part. Unfortunately, though, as a single country focused investment it does not have the strength, at least not yet, to generate significant dividend growth or capital appreciation, mainly because of its weak financial sector, which is focused on Real Estate. As such, an investor might certainly want to keep the fund in mind, but also be aware that it might not provide a positive risk/reward contribution to a long term portfolio. (click to enlarge) As for the fund itself the returns have been acceptable since inception in 1996, at 3.80%, but have generated negative returns over a 10 year period. As the chart indicates the fund had a spectacular run from the low of about $7.00 a share to just over $40.00 before giving up those gains during the global economic crises. The fund has managed consistent dividend returns, however, its 12 month trailing yield is 1.69% and its current annualized yield is 2.30%. 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.

Time Your Buys Like A Pro

By Jonathan Rodriguez For traditional buy-and-hold investors, market timing probably doesn’t mean much. But here’s the thing: It should. Believe it or not, many smart people are investing the wrong way every single day. These investors see a stock on the rise and chase shares when everyone else is buying – and that means they’re often buying too high. And then, when the market sells off, they dump shares along with everyone else – often at too low a price. Professional traders know this and mint fortunes off the herd. But by using one simple indicator, you can time your entries alongside the elite traders. Once you’ve identified a quality stock, the first step is to buy shares at the lowest price you can. You see, stocks never go up or down in a straight line. When a stock trends upward, it ascends the chart in waves. Shares rally under momentum and fall on profit taking. In order to buy the dips and sell the rallies, I use one of my favorite technical indicators: Bollinger Bands. Developed by John Bollinger in the 1980s, Bollinger Bands are volatility bands placed above and below a stock’s moving average. The bands’ values are based on standard deviations from the moving average. You can select any moving average and deviation, but traders typically use the 20-day moving average (DMA) and set the Bollinger Bands at two standard deviations above and below the DMA. I love Bollinger Bands because they combine several technical tools into an easy-to-use trend indicator. And because the bands utilize standard deviations, they adjust automatically for rapid changes in volatility. Once the bands are set, price action bounces between the upper and lower band as momentum swings. The idea is to buy shares as they “tag” the lower band and sell as they tag the upper band. Let’s look at an applied example. Here’s a one-year chart of Under Armour Inc. (NYSE: UA ), one of 2015’s hottest stocks. Over the last year, shares have outperformed the S&P 500 by more than 60%. As you can see, price action is contained between the Bollinger Bands. And by timing your entry on a dip to the lower band, you can increase your profits by several percentage points. On the chart, you’ll notice three distinct buy signals: December 2014-January 2015, May-June 2015, and August 2015. After executing a buy, you can sell on the upper band tag or hold until you’ve hit your profit target. Now, on a pricier large-cap stock, a few percentage points in profit might not mean much. But if you’re an options trader or short-term trader, those points can be the difference between small gains and big money. And the bands become even more valuable when trading volatile small-cap and mid-cap stocks. Bottom line: Don’t chase red-hot stocks at recent highs. Use Bollinger Bands to time the dips and get more bang for your buck. Original Post

Time For Dow ETFs?

Dow Jones Industrial Average has been the worst performing index among the popular trio – S&P 500, Dow and Nasdaq – thanks mainly to a freefall in oil prices and rising rate worries in the U.S. Added to this, fears of a hard landing in China and its ripples throughout the world sent this key index into the correction territory in August. So far this year (as of October 9, 2015), SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) is down about 4%. However, things seemed to have been set right for the Dow Jones lately on the oil price jump and the diminishing prospect of a rate hike this year. Oil prices regained some of the lost ground as the U.S. count of oil and gas drilling rigs slipped to a five-year low. Also, the Energy Information Administration (EIA) expects a remarkable drop in U.S. crude production through the middle of next year before a turnaround in late 2016. Oil output is estimated to fall from 9.2 million barrels per day (bpd) in 2015 to 8.9 million bpd in 2016. Needless to say, the rise in oil prices supported energy stocks greatly in recent sessions. On the other hand, a weak September job data pushed the speculative timeline of the Fed rate lift-off to early next year. After all, the year-to-date monthly pace of job gains now averages 198K and the pace for the last three months is much lower at 167K. This compares with the monthly average of 260K for 2014, hinting at the lost momentum in U.S. economic growth. And the stocks surged in hopes of incessant cheap money flows. Moreover, a soft job report curbed the dollar strength which in turn provided a long-awaited boost to the commodities and material stocks. Though all the major benchmarks are correlated and got the boost they needed in October from the Fed and energy-centric optimism, Dow remained relatively more beaten-down and thus is more prone to a sturdy reversal. If this was not enough, a dovish Fed pushed the interest rates down to a lower territory. This in turn brightened the appeal for more yielding securities. Notably, among the top ETFs, Jones Industrial Average-based DIA yields 2.33% annually (as of October 9, 2015) against the S&P 500-based SPY ‘s 2.02% and Nasdaq-100 based QQQ ‘s 1.08%. Below, we highlight a few Dow Jones-based ETF options which could be intriguing options to play: DIA seeks to match the performance of the Dow Jones Industrial Average Index. The index is price weighted and measures the performance of 30 large cap stocks traded in the U.S. markets. Industrials, Financials, IT, Consumer Discretionary and Health Care all hold double-digit exposure in the fund. However, it is subject to company-specific concentration risks as it invests more than half of its portfolio in the top 10 holdings. This $11.6 billion-fund trades in large volumes of over 5 million shares daily and charges 17 bps in fees. It advanced 4.8% in the last 10 trading sessions (as of October 9, 2015). The fund has a Zacks ETF Rank #3 with a Medium risk outlook. iShares Dow Jones U.S. ETF (NYSEARCA: IYY ) This $941.1 million ETF also tracks the Dow Jones U.S. total market index. This fund has a proportionate exposure in almost all sectors with maximum emphasis on IT (19.77%), Financials (17.47%), Health Care (13.91%), Consumer Discretionary (13.55%), and Industrials (10.66%). Unlike DIA, this 1,280-stock fund invests less than 15% share in the top 10 holdings. IYY charges 20 basis points as fees and added 4.2% in the last 10 trading sessions. ALPS Sector Dividend Dogs ETF (NYSEARCA: SDOG ) This fund applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis using the S&P 500. This could be easily done by selecting the five highest yielding securities in each of the 10 GICS sectors and equally weighing them. These higher yielding stocks will appreciate in order to bring their yields in line with the market, leading to outsized gains. This approach results in a portfolio of 51 stocks with each security accounting for less than 2.33% of total assets. The fund focuses on yield in the large cap market while giving investors roughly equal exposure to all sectors. SDOG has accumulated $1.1 billion in AUM and trades in good volume of more than 180,000 shares. It charges 40 bps in annual fees and has an annual dividend yield of 3.63%. The ETF was up over 5.9% in the last 10 days. Original Post