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5 ETFs Losing Half Or More Of Its Value In 2015

Overall, 2015 has not been good for the U.S. equity market, caught up as it was in a vicious circle of never-ending woes. It all started with Fed uncertainty, a strong dollar and slumping commodities, and then extended to geopolitical tensions and global growth concerns, especially in China. Additionally, the U.S. economy, which was growing at a faster rate in over a decade in 2014, has cooled off substantially this year. While healing labor market, a gradual recovery in the housing market, robust auto industry, and cheap fuel are driving growth, persistent weakness in manufacturing activity, plunging oil prices, and shaky consumer confidence are posing threats to economic expansion (read: 5 ETFs for Loads of Holiday Shopping Delight ). As a result, the major indices – the S&P 500 and Dow Jones – are in the red territory from a year-to-date look, losing 0.3% and 1.4%, respectively. In fact, a number of products have been crushed, piling up huge losses for many ETFs. Below, we have highlighted five ETFs that have been hit badly so far in 2015 and might continue their rough trading in the months ahead if the trends persist unabated. First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) – Down 56.5% Natural gas producers have been the biggest laggard this year on falling natural gas price. This trend is likely to continue in the months ahead given declining demand, increasing production, and growing global glut. Additionally, the expectation of a milder weather for late December – the key period that drives heating demand – will push the natural gas price lower. The Energy Information Administration (NYSEMKT: EIA ) expects heating bill to decline 13% this winter (read: No Winter Cheer for Natural Gas ETFs? ). Consequently, FCG, which offers exposure to U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas, is down 56.5% in the year-to-date time frame. It follows the ISE-REVERE Natural Gas Index and holds 30 stocks in its basket, which are well spread out across components with none holding more than a 7.1% share. The fund has amassed $172 million in its asset base while charging 60 bps in annual fees. Volume is good with more than 1.7 million shares exchanged per day on average. The ETF has a Zacks ETF Rank of 5 or ‘Strong Sell’ rating with a High risk outlook. First Trust ISE Global Platinum Index ETF (NASDAQ: PLTM ) – Down 54.3% The precious metal space has been hit by the double whammy of the broad market commodity rout and rate hike concerns. Robust supply and dwindling demand are weighing on the price of platinum since the start of the year. Additionally, the prospect of a rate hike backed by solid job numbers and moderate inflation has dampened the appeal for platinum. As such, PPLT has fallen 54.3% so far this year. The fund provides exposure to the companies that are active in platinum group metals mining by tracking the ISE Global Platinum. In total, it holds 18 securities in its basket with double-digit concentration in the top three firms. Other firms do not hold more than an 8.07% share. South African firms take the largest share in the basket at 27.6% followed by double-digit exposure each in Australia, United Kingdom, United States, Russia and Canada. Market Vectors Coal ETF (NYSEARCA: KOL ) – Down 54.0% Coal has fallen completely out of favor over the past few years due to the thriving alternative energy space and weak global industry fundamentals. The depletion of fossil fuel reserves, global warming and high fuel emission issues, new and advanced technologies as well as more efficient applications are making clean power more feasible, reducing the demand for the black diamond. These are making it difficult for the coal miners to sustain their profitability and margins. As a result, the ETF targeting the global coal industry has seen a wild ride and was off nearly 54% so far this year. KOL tracks the Market Vectors Global Coal Index. Holding 27 securities in the basket, the fund is concentrated in the top 10 holdings at 64.6% of total assets. It has a Chinese focus accounting for 28.4% of the portfolio while U.S., Australia and Canada round off the next three. The fund has amassed $42.5 million in its asset base and trades in average daily volume of 71,000 shares. Expense ratio came in at 0.59%. KOL has a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook. Yorkville High Income MLP ETF (NYSEARCA: YMLP ) – Down 52.7% MLP was the worst hit corner from the oil price carnage with YMLP shedding the most – 52.7% in the year-to-date time frame. Being an interest rate sensitive sector, these securities will be further impacted by rising rates. This bearish trend is likely to continue as the Fed is on track to increase rates as early as next week. The fund follows the Solactive High Income MLP Index, charging investors 82 bps in annual fees. Holding 26 stocks in its basket, it is highly concentrated in the top 10 holdings at 58.3%, suggesting higher concentration risk. Oil & gas pipeline products take the top spot from a sector look at 40%, followed by oil refining & marketing (12%), and oil & gas drilling (10%). The product has managed $101.3 million in AUM and trades in moderate volume of 137,000 shares. SPDR S&P Metals & Mining ETF (NYSEARCA: XME ) – Down 50.0% Thanks to plunging metal prices and weak global trends, this broad metal & mining ETF has also lost half of its value. Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge losses than their bullion cousins in the slumping metal market. In particular, a strong U.S. currency is making dollar-denominated assets more expensive for foreign investors, thereby dulling the appeal for these commodities. 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 30 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 49.3%, while diversified metals and mining, and gold round out the next two spots with double-digit allocation each. The product has $242.4 million in AUM and trades in solid trading volumes of more than 2.6 million shares per day on average. It charges 35 bps in fees and expenses. Link to the original post on Zacks.com

Are You Ready To Invest Like Rothschild?

For many getting started, understanding how to invest can be a challenge. Knowing what to invest and where can seem daunting. For the very wealthy it is business as usual, and they have devised strategies and tactics to make sure their wealth can really work for them, but it is harder for smaller or new investors. According to Richard Dyson (2012), reporting for This Is Money , the very wealthy have focused on creating portfolios and organisations where generally they own a large share. However, in most cases, small investors were not aware that they could invest in these. However, in recent years, changes to regulations have been made such that these sorts of investments are more suitable for smaller investors as well. According to Dyson, one such company to invest in is RIT Capital Partners (“RIT”) ( OTCPK:RITPF ), in which the Rothschilds, an extremely rich family, has a large share. As explained: “Lord Rothschild and his family own 18% of what began in the early 1960s under the name of Rothschild Investment Trust.” It is cited that growth has been achieved to the position where RIT is now worth £1.8 billion, and the Rothschilds own £324 million of that. This has been extremely attractive as a proposition for investment to other private investors, especially as the investment has a superb record over a long history. The assets included are property and hedge funds, among others. History of Wealth The Rothschilds have been growing their wealth for a time span of more than 200 years, and they are considered one of the richest families of all time. Investor Network explains that the family originally made money from the Napoleonic Wars by supporting the side of the English in battling Napoleon. Rothschild was aware that the battle was lost for Napoleon, and he knew this ahead of other investors. This enabled him to purchase much of the stock market at a very favourable price, and when the news came out about Napoleon’s defeat, the market grew tremendously. In addition, the money lent was repaid, and overall, the family did really well out of the war. They continued to do well, and by 1825 they were in such a strong position that they were able to prop up the Bank of England when there was a financial crisis faced. Following this, the family invested in stocks and made shrewd investments and financial decisions that have led to the wealth accrued today. RIT Capital Partners is a good opportunity because small investors have gained significantly over the time it has been up and running. It is reported that the trust has delivered returns, on average, of 12.4 per cent per year. The approach taken is to make sure that investors’ capital is safeguarded as far as possible in the event of stock market crashes. This is beneficial in terms of risk, as there is lower exposure, but it is detrimental when the stock markets rise rapidly, and the investment will be likely to not perform as well as other opportunities in the markets at those times. Investing in RIT will help you invest like the Rothschilds. The cost of the fund is 1.25% per year. Experts say that it is a particularly good investment for pensions. Alternatively, you can learn from the way they operate. The family uses a multi-asset approach, which spreads the wealth across a range of different investments. This includes anything from gold, to shares in a range of high performing companies like eBay (NASDAQ: EBAY ), Walt Disney (NYSE: DIS ) and Samsung ( OTC:SSNLF ). It has also invested in gold, and it has funds that are focused on commodities, including BlackRock Gold and General and Baker Steel Precious Metals. In taking the approach that it does, it holds onto liquidity appropriately, and focuses on long-term benefits rather than short-term gains. Golden Rules of Contrarian Investing The approach taken by the Rothschilds is known as contrarian investing. Basically, those who follow this approach buy when there is bad news and sell when there is good news. It is thought that this is wise, because when there is good news on the stock market, investors are likely to pay a high price for it. On the other hand, when there is bad news, investors are more likely to get a good deal, as others are in fear of buying at those times. There are 5 golden rules of contrarian investing : When you read about it in the newspapers or see it on the news, it is already all over. Buy when everyone wants to sell, and sell when everyone wants to buy. No one sees a bubble when their income depends on it. Don’t take tips or advice, and don’t believe research notes. What is obvious to you is not obvious to others. Rationality and Risk Although it seems like extremely risky investment strategy, it is based on the principle of “rationality” . It might seem a bit contradictory, but it has a sense, as rationality is based on healthy evaluation of any financial decisions apart from current trends or experts’ advice. The latter, in turn, might be over-reliable, or under/overpriced. Not Contrarian Investment Strategy Contrarian Investment Strategy While efficient market hypotheses are based on stock prices reflecting the financial situation of industry, company or economy in question, the contrarians believe that the market can be beaten by keeping a rational investing viewpoint. They do it by being independent thinkers and controlling their optimistic and pessimistic feelings. To become a contrarian investor, you’ll need to go against the market trends, against the crowd and against social pressures. You’ll need to go for an optimism visible to yourself only. Uncertainty is a right time for investment for a contrarian investor, who will need to have a lot of patience as well as time for such a risky long-term strategy. 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.

5 Sector ETFs For December

So far, the month December has been downbeat for the U.S. market with the S&P 500 and Nasdaq Composite Index losing about 2.6% each (as of December 9, 2015) and the Dow Jones Industrial Average shedding about 2.2%. The commodity market rout instigated by fresh oil lows, the possibility of a Fed lift-off in a few days, the persistent slump in Chinese economic indicators, milder-than-expected generosity from ECB regarding the stimuli in the Euro zone, a strong greenback and depreciating emerging markets have set the backdrop for this investing lull. People are speculating hard about what the potential bet could be at this point of time, given the above-mentioned deterrents. Since equities are in the negative territory, hearsay is rife that there may not at all be any sector winner this month. For them, below are five sector ETFs which could be in watch for the rest of this month. The sectors have been chosen as per the Zacks Market Strategy. Semiconductor – Market Vectors Semiconductor ETF (NYSEARCA: SMH ) Since the second half of 2015 marked the rebound of tech stocks, semiconductors can’t be far behind. The semiconductor market will be propelled by smartphones and automotive in the coming days. As car sales are soaring and consumers are binging on tech gadgets this holiday season, demand for semiconductors should surge. Moreover, some analysts believe that the PC market is set for a rebound, helping companies like Intel (NASDAQ: INTC ). Meanwhile, the semiconductor titan Intel hiked its dividend and provided a bullish outlook for 2016. Impressive Q3 earnings are also driving this sector. In the last one month (as of December 9, 2015), the fund gained over 2.5%. Medical Devices – iShares U.S. Medical Devices ETF (NYSEARCA: IHI ) Though the healthcare sector has confronted a number of issues regarding steep pricing on drugs, overvaluations of biotech stocks and the future of ObamaCare, the sector sailed through pretty smoothly. The medical sector has seen earnings rising 15.2% on 9.7% higher revenues in Q3, with 80.8% of the companies beating EPS estimates and 59.6% surpassing on revenues. In the sector, medical products seem the most stable if we consider both earnings and revenue growth of 13.4% and 12.2%, and beat ratio of 71.4% and 61.9%, respectively. As much as 86% of the fund is invested in healthcare equipment followed by life sciences tools & services (12.84%). The fund has a Zacks ETF Rank #1 (Strong Buy) and was down 1.4% in the last one month (as of December 9, 2015). US Global JETS ETF (NYSEARCA: JETS ) Development in the airline industry is rampant these days. Busy traffic on improving travel and business demand, restructuring indicatives, stepped-up ancillary revenues, limited capacity growth and most importantly rock-bottom oil prices have put the spotlight on this area. Fuel accounts for a large portion of airlines’ operating expenses and the possibility of soft oil prices for longer has helped the sector to battle headwinds like a stronger dollar and global growth worries. The sole airline ETF JETS might have lost 1.1% in the last one month (as of December 9, 2015) on the November Paris terror attacks which resulted in lower tourism; but is due for a reversal in the coming days. KBW Premium Yield Equity REIT Portfolio (NYSEARCA: KBWY ) The interest-rate sensitive REIT sector might underperform once the Fed enacts a lift-off, but the underlying fundamental for the area is quite strong. As demand for housing picks up in the U.S., and the economy rebounds, the requirement of establishment rises and so does rent. So, income for REITs should go up. Notably, when rates rise on the back of a pickup in the economy, REITs outperform. As per reit.com , “in the 16 periods since 1995 when interest rates rose significantly, Equity REITs generated positive returns in 12.” Finally, REITs are strong dividend vehicle. The fund KBWY yielded 5.59% as of December 9, 2015 which is way above the current benchmark U.S. treasury yield of 2.22%. The fund has a Zacks ETF Rank #3 (Hold) and was flat in the last one month. SPDR S&P Retail ETF (NYSEARCA: XRT ) Traditionally, December is the month for retail and discretionary purchases. Though shopping euphoria has subdued a little among cautious consumers in recent times, spending on apparel, accessories, footwear and tech gadgets is still high thanks to the holiday season. As a result the Zacks Rank #1 XRT should be closely watched. The fund has 22.3% exposure in apparel followed by 16.4% in specialty stores and 15.4% in automotive retail. However, XRT was down 3.6% in the last one month. Original Post