Tag Archives: consumer

Emerging Markets Back On Track: 5 Outperforming ETFs

Emerging markets, which were the worst hit by slowing economic growth, China turmoil and the prospect of higher interest rates in the U.S., seem to have been rebounding in recent weeks. This is especially true as the two most popular ETFs – the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) and the Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) – climbed over 5% in the past five days against gains of 3.4% for the iShares MSCI ACWI ETF (NASDAQ: ACWI ) and 3% for the SPDR S&P 500 ETF (NYSEARCA: SPY ) , suggesting that the worst might be over. Impressive gains came on the back of stabilization in commodity prices, hopes of additional stimulus from central banks from Asia to Europe, and China’s latest step to arrest the slowdown that led to some gains in emerging market currencies. Additionally, investors’ lack of hope for a rate hike anytime soon fueled the rally in the stocks. Further, data from the Institute of International Finance, which showed that capital flows into emerging markets turned flat in February after seven straight months of outflows, injected fresh optimism into the emerging markets. Notably, net emerging market outflows decreased to $200 million last month, with Latin America pulling in the maximum capital of $2.7 billion, followed by inflows of $1.7 billion in Africa and the Middle East, $1.5 billion in Europe and $300 million in Asia. Apart from positive developments, low valuations made these stocks tempting. As a result, several emerging market ETFs performed remarkably well over the past five days. Of those, we have highlighted the ones that emerged as the true winners of this short-covering rally. PowerShares FTSE RAFI Emerging Markets Portfolio ETF (NYSEARCA: PXH ) – Up 6.4% This ETF follows the FTSE RAFI Emerging Markets Index and offers exposure to the largest emerging market stocks based on four fundamental measures – book value, cash flow, sales and dividends. Holding 336 securities in its basket, the fund allocates no more than 3.4% in a single security. Financials (31%) and energy (22.6%) take the top two spots. In terms of country holdings, about one-fourth of the portfolio goes to Chinese firms while Taiwan, Brazil, and Russia round off the next three spots with a double-digit exposure each. The fund has amassed $282.1 million in its asset base, and trades in a good volume of around 265,000 shares a day. It charges 49 bps in annual fees from investors and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. iShares MSCI BRIC ETF (NYSEARCA: BKF ) – Up 5.7% This fund targets the four BRIC countries with highest exposure of 57.1% in China, 19.6% in India, 13.7% in Brazil and the rest in Russia. It tracks the MSCI BRIC Index and holds 308 stocks in its portfolio. However, it is skewed towards the top firm – Tencent Holdings ( OTCPK:TCEHY ) – at 6.82%. Other firms hold no more than 4.84% of assets. In terms of sector exposure, financials dominates the fund return with 30% of the portfolio, followed by information technology (18.4%) and energy (12.4%). The fund has accumulated $154.9 million in AUM and trades at a lower volume of 21,000 shares per day on average. It charges 72 bps in expense ratio and has a Zacks ETF Rank of 4 or ‘Sell’ rating with a Medium risk outlook. EGShares Emerging Market Consumer ETF (NYSEARCA: ECON ) – Up 5.5% This ETF targets the consumer sector of the emerging markets by tracking the Dow Jones Emerging Markets Consumer Titans 30 Index. It holds 30 stocks in its basket with heavy concentration on the top firm – Naspers ( OTCPK:NPSNY ) – at 10.3%. The other firms hold less than 5.7% share. From a country look, South Africa occupies the top position with one-fourth of the portfolio while China and Mexico round off the top three with over 16% share. The fund has amassed $549.6 million in its asset base and sees solid average trading volume of more than 352,000 shares. The expense ratio comes in at 0.83%. Schwab Emerging Markets ETF (NYSEARCA: SCHE ) – Up 5.5% This fund tracks the FTSE Emerging Index, holding 776 stocks in its basket. None of the securities accounts for more than 4% of total assets. The product is slightly tilted towards financials at 25%, closely followed by technology (14%) and energy (8%). Here again, China takes the top spot at 26.5% while Taiwan and India receive a double-digit allocation each. SCHE is one of the popular and liquid options in the emerging market space with AUM of $1.5 billion and average daily volume of 848,000 shares. It charges 14 bps in fees per year from investors and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. First Trust Emerging Markets Small Cap AlphaDEX ETF (NYSEARCA: FEMS ) – Up 5.5% This fund follows the NASDAQ AlphaDEX Emerging Markets Small Cap Index and targets the small cap segment of the emerging market space. Holding 206 securities, the fund is well spread out across each component as each security holds less than 1.5% share. Taiwanese firms take the top spot at nearly 24.2%, closely followed by China (18.2%) and Brazil (12.4%). From a sector look, about one-fifth of the portfolio is allocated to information technology while financials, industrials, and consumer discretionary round off the next three spots with a double-digit allocation each. The product is often overlooked by investors, as depicted by AUM of $36.3 million and average daily volume of roughly 22,000 shares. The expense ratio comes in higher at 0.80%. Original Post

New High Dividend ETF With Free Cash Flow Focus By Pacer

With the global market being edgy since the start of this year, demand for value-oriented and high-yielding products is high now. Agreed, every storm ends sometime and risk-on sentiments will return to the market. But this year seems to be a little different with growth worries expected to remain in the marketplace for a longer time (read: Enjoy High Yield with These Low Beta EM Local Currency Bond ETFs ). This operating backdrop makes the launch of Pacer Global High Dividend ETF (BATS: PGHD ) – launched by Pacer Funds Trust – extremely well timed. Let’s see how the fund is designed and what its prospects are. PGHD in Focus It is a strategy-driven, exchange-traded fund that looks to provide a steady stream of income and capital appreciation by picking companies with a high free cash flow (FCF) yield and an impressive dividend yield. The fund accomplishes its objective by tracking the Pacer Global Cash Cows Dividends 100 Index. The index first tracks 1000 companies in the FTSE all-world developed large-cap index. From the initial universe, 300 companies with the highest trailing 12-month free cash flow yield are chosen. From this set, 100 companies having the highest trailing 12-month dividend yield are picked to form the underlying benchmark. The fund currently holds 100 stocks. Currently, the U.S. is the top nation in the fund with over 35% weight followed by Switzerland (8.45%), the U.K. (7.14%) and Australia (6.77%). Sector-wise, Industrials (16.93%) and Consumer Staples (16.6%) dominate the fund with over 32% allocation, while Energy (5.8%) and Financials (0.82%) occupy the bottom two spots. The fund is equal-weighted in nature, with no stock accounting for more than 2.27% of the basket. Wal-Mart Stores, Altria Group and AT&T are the top three holdings of the fund. The fund charges 60 basis points in fees. As the name suggests, the fund is rich in yields with the Pacer Global Cash Cows Dividends 100 Index offering 5.06% annual yield (as of January 29, 2016). How Could it Fit in a Portfolio? The fund could be a good choice for value investors with a global market focus. Against the present low-yield backdrop worldwide, the hunt for higher yield is common among investors. This, accompanied by the higher free-cash flow yield criteria, provides the portfolio a value quotient as these companies traditionally suffered less during the economic upheaval, per the factsheet (read: 3 Dividend ETF Winners Year to Date ). Also, the issuer went on explain that higher free cash flow generating companies are also great tools to tap growth opportunities as these in turn result in capital gains. Moreover, the fund’s exposure to numerous economies is expected to provide huge diversification benefits to investors. However, investors should note that the ETF will be subject to severe currency risk. As such, the product is most suitable for long-term investors, willing to bear any currency volatility in the short run. ETF Competition The high dividend yield space is chockablock with products. From that angle it wouldn’t be easy for the fund gain enough market share. So, the fund will have to sell the highest free-cash flow yield feature to hog investors’ attention. This space is yet to be exploited. TrimTabs International Free-Cash-Flow ETF (NYSEARCA: FCFI ) normally grabs the attention of investors interested in the free-cash flow related funds. FCFI looks to track the international companies with the highest free cash flow yields. But since FCFI yields only 1.21% annually (as of February 24, 2016) and charges 69 bps in fees, the newly launched PGHD has chances to score more, with increased yield and a lower expense ratio. Link to the original post on Zacks.com

ETF & Stocks In Focus On Sizzling February Auto Sales

After a lackluster start to the year, the auto sector rebounded in February on regained vigor in the economy and fresh signs of increasing consumer confidence. This is especially true as sales climbed 6.9% year over year to an annualized 17.51 million units in February, as per Autodata Corp. This represents the best month for American auto sales since February 2000. Five of the six major American and Japanese automakers reported solid sales growth last month. Ford Motor (NYSE: F ) led the way with 20.2% growth, followed by sales increases of 12.8% for Honda (NYSE: HMC ), 11.8% for Fiat Chrysler (NYSE: FCAU ), 10.5% for Nissan ( OTCPK:NSANY ), and 4.1% for Toyota (NYSE: TM ). On the other hand, General Motors (NYSE: GM ) sales fell 1.5% year over year last month. Robust growth was driven by deeper Presidents’ Day discounts, cheap fuel, easy availability of credit at lower interest rates, and rising income. In addition, higher demand for sports utility vehicles, a plethora of new models, fuel-efficient and technologically packed vehicles, and the need to replace aging vehicles added to the strength. This trend is likely to continue in the coming months. With this, 2016 could be another record year for vehicle sales (read: Mixed Auto Earnings Put This Car ETF in Focus ). The solid data propelled the auto stocks higher and spread bullishness into the entire industry across the globe. Given the solid jump in auto sales, investors may want to take a closer look at the ETFs and stocks from this corner that they could ride on. ETFs in Focus First Trust NASDAQ Global Auto ETF (NASDAQ: CARZ ) This fund offers a pure play global exposure to 37 auto stocks by tracking the NASDAQ OMX Global Auto Index. It is a large-cap centric fund and is highly concentrated on the top four prime automakers – Ford, Toyota, General Motors and Honda – that combined to make up for 32.2% share. In terms of country exposure, Japan takes the top spot at 35.8% while the U.S. and Germany round off the next two spots with 23.8% and 18% share, respectively. CARZ has a lower level of $39.6 million in AUM and trades in a small average daily trading volume of around 11,000 shares. The product charges 70 bps in fees per year and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook. Stocks in Focus While all the auto stocks are in focus for the coming days, we have highlighted stocks that have the potential to move higher than its peers amid recovering sentiments. To accomplish this, we have used Zacks stock screener to spot two stocks that have a Zacks Style Score of ‘A’ for Growth, Value and Momentum each. These when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential with strong momentum, cheap price and robust growth (read: 3 Momentum Stocks & ETFs to Play ). Cooper Tire & Rubber Co. (NYSE: CTB ) Based in Findlay, Ohio, Cooper Tire is engaged in the manufacture and marketing of replacement tires worldwide. It is the fourth largest tire manufacturer in North America and the eleventh largest in the world. The company saw solid earnings estimate revision of 37 cents for the current year over the past 30 days and is expected to grow at an annual rate of 4%. Further, the company delivered positive earnings surprises in the three of the past four quarters, with an average beat of 26.23%. The stock currently has a Zacks Rank #1. Lear Corp. (NYSE: LEA ) Based in Southfield, Michigan, Lear Corporation is a global leader in designing, developing, engineering, manufacturing, assembling, and supplying automotive seating, electrical distribution systems, and related components primarily to automotive original equipment manufacturers worldwide (see: all the Consumer Discretionary ETFs here ). The stock saw positive earnings estimate revisions from $11.89 to $12.18 per share for 2016 over the past 30 days, representing a year-over-year increase of 12.21%. It delivered an average positive earnings surprise of 9.05% in the last four quarters. The stock has a Zacks Rank #2. Bottom Line A slowly recovering economy and reviving consumer spending will continue to drive auto sales higher, making the above-mentioned ETF and stocks compelling choices for investors to play in the months ahead. Original Post