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Buy-Ranked Gaming ETF In Focus

The once-thriving global gaming industry was badly hit by the slowdown in the Chinese economy that led to sluggish casino business in Macau – the world’s largest casino gaming destination. This is because the nationwide crackdown on corruption in China last year compelled Macau officials to impose restrictions on illegal money transfers in VIP gambling from mainland China to Macau. This has taken a toll on overall gambling revenues hurting the casino stocks at large. Additionally, smoking ban in casinos, tighter restrictions on visas and lower spending by high-stake gamblers added to the woes (read: 4 China A-Shares ETFs Pick Up After Gloom ). This 16-month bear trend now seems to be reversing with many casino stocks bouncing up from their lower levels. In particular, the U.S. casino giants like Las Vegas Sands (NYSE: LVS ), Wynn Resorts (NASDAQ: WYNN ), Melco Crown Entertainment Limited (NASDAQ: MPEL ) and MGM Resorts International (NYSE: MGM ) are up 4.5%, 2.6%, 5.5% and 1.5%, respectively, since the start of the second quarter. Hong Kong listed Galaxy Entertainment Group ( OTCPK:GXYEY ) added 5.6% while Sands China ( OTCPK:SCHYY ) moved higher by 15.1% so far this month. The impressive gains were brought in by the easing of tourist restrictions in Macau, and the possibility that bans on gaming-floor smoking rooms will be eased once operators maintain decorum and protect these rooms from harmful tobacco smoke. Effective July 1, mainland China passport holders transiting through Macau can stay there for two days longer and could gain entry into the city within 30 days instead of 60 days previously. This move will benefit casino operators in the months ahead. Further, the Chinese economy is stabilizing and casino operators in Macau are making efforts to diversify their businesses beyond gaming for additional revenue streams (read: ETFs to Play 3 Undervalued Sectors ). Apart from these, casino stocks seem extremely cheap at the current levels as the average valuation on Macau’s five biggest casino operators by market value has dropped to 18 times estimated earnings , about half of the peak reached in December 2013. This suggests an attractive point to enter the gaming market. Given this, investors could play this space with lower risk in a basket form rather than tilting toward individual companies. The Market Vectors Gaming ETF (NYSEARCA: BJK ) is the lone ETF providing investors global exposure to the casino gaming market. The fund has a Zacks ETF Rank of 2 or “Buy” rating with a High risk outlook (see: all the Top Ranked ETFs ). BJK in Focus This product follows the Market Vectors Global Gaming Index, holding 47 securities in its basket. It is concentrated on the top 10 holdings with the largest allocation going to Las Vegas, Galaxy Entertainment and Wynn Resorts that have combined to make up for 22.6% share. In terms of country exposure, U.S. takes the top spot at 36.8%, followed by China and Australia with 13% share each. The fund focuses on large caps at 56.2% while mid caps account for the remainder. From a style look, it has a nice mix of blend, value and growth securities, reflecting superior weightings. However, investors often overlook the fund as it has accumulated only $29.6 million in its asset base and trades in small volume of roughly 12,000 shares per day. This ensures additional cost in the form of wide bid/ask spread beyond the expense ratio of 0.65%, which is already at the higher end of the expense ratios prevailing in consumer discretionary ETF space. In terms of performance, BJK has been lagging the broad market and lost 24.2% in the trailing one-year period and 5.1% so far this year. But it recently broken its near-term range as depicted by the chart below, indicating some smooth trading in the weeks ahead. The fund’s short-term moving average (9-Day SMA) has managed to move ahead of the mid-term moving average (50-Day SMA) and is now treading toward the long-term (200-Day SMA) average, signaling upside for the fund. Further, the bullish trend is confirmed by the parabolic SAR, which is currently trading below the current price of the fund. Bottom Line Given the bullish technical indicators and improving fundamentals in Macau, investors could garner huge profits in the gaming industry with this top ranked ETF. Original post

Does Your Portfolio Have A Margin Of Safety?

By Ronald Delegge Building an architecturally sound investment portfolio doesn’t happen by chance. A structurally strong and healthy portfolio is organized into three basic parts: 1) the portfolio’s core, 2) the portfolio’s non-core, and 3) the portfolio’s “margin of safety.” All portfolio parts complement each other by deliberating holding non-overlapping assets. Let’s talk about the part of the portfolio that represents the “margin of safety.” The concept “margin of safety” was originally developed in the 1930s by Benjamin Graham and David Dodd, the founders of value investing. Their idea was applied to selecting individual stocks at undervalued prices to help people become better investors. In the context of the individual investor, the “margin of safety” represents the capital or money that a person absolutely cannot afford to risk to potential market losses. Like an insurance premium, this money gets set aside from a person’s core and non-core portfolio to be invested in fixed accounts with principal protection and liquidity. (click to enlarge) Some people have deceived themselves into believing their investments require no margin of safety. This group generally believes they are too wealthy, too experienced, and too smart to have a margin of safety inside their portfolio. Ironically, this same group of people that invest without a margin of safety (or insurance), have insurance (or margin of safety) on their automobile, home, health, and life. Why is there an illogical disconnect between the need to protect physical assets, while simultaneously ignoring the financial ones? “I’m a long-term investor” or “the stock market always bounces back” are common excuses for investing without a margin of safety. Unfortunately, both of these techniques are not a credible form of portfolio risk management. Diligent and proper risk control is always proactive versus being passive or reactive. Others may claim that investing in bonds or physical assets like gold is their portfolio’s margin of safety. This too is erroneous. Why? Because bonds and precious metals are subject to daily fluctuations just like stocks and can lose market value. Gold’s almost 40% loss in value since mid-2011 is a tough lesson on why you shouldn’t use assets that are prone to market losses as a form of portfolio insurance. Similarly, those who have invested in long-term treasuries as a form of portfolio insurance have suffered losses near 8% over the past three-months alone! When is the best time to implement your portfolio’s margin of safety? Like insurance coverage, the prudent investor acquires a margin of safety within their investment portfolio before they need it. Put another way, the timing of when you implement your portfolio’s margin of safety is mission critical. Think about it this way: Would it be logical to attempt to buy insurance coverage after you’ve already had an automobile accident or after your home has been destroyed? Of course not! Similarly, would it be logical to implement a margin of safety after your portfolio has suffered catastrophic losses? Of course not! To be fully protected, you must prepare ahead. In summary, implementing your portfolio’s margin of safety should happen when market conditions are favorable, not when it’s raining cannonballs. And if you’re caught in the unfortunate situation where you failed to implement a margin of safety during good times and market conditions have deteriorated, the next most logical moment to implement your margin of safety is immediately. Disclosure: No positions Link to the original article on ETFguide.com

Meritage Partners With Behringer For Distribution Of The Insignia Macro Fund

By DailyAlts Staff The strategic agreement between Behringer Securities and Meritage Capital is starting to bear fruit. Back in May, the two firms announced an agreement to develop, manage, and distribute specialized, multi-strategy investment funds intended to address the challenges presented by market volatility. On July 20, Behringer formally announced that it will be distributing the Insignia Macro Fund (MUTF: IGMFX ), an open-end mutual fund managed by Meritage. The Insignia Macro Fund initially debuted on December 31, 2013. It employs global-macro investment strategies in pursuit of attractive long-term risk-adjusted returns. The multi-manager fund is unique among global macro mutual-fund offerings in that it allocates to “discretionary focused managers.” Per the fund’s most recent fact sheet date 4/30/15, the $64 million fund employed seven underlying managers in the following weights: 16.53% – H2O Asset Management Discretionary Macro | Fundamental 15.85% – Willowbridge Associates Discretionary Macro | Fundamental 14.91% – The Cambridge Strategy Quantitative | Fundamental & Technical Models 14.80% – QMS Capital Management Quantitative | Fundamental & Technical Models 14.77% – Tlaloc Capital Discretionary Macro | Fundamental 13.92% – Crabel Capital Management Quantitative | Short Term 9.22% – Blackwater Capital Management Trend Follower | Pattern Recognition “Historically, global macro strategies have shown higher long-term returns with lower volatility than developed equity markets – and little correlation to stocks, bonds or other investments,” said Meritage CEO Alex Smith, in a recent statement. “We are pleased that the Fund will be distributed on Behringer Securities’ platform, and we look forward to our continued partnership.” In the same statement, Behringer CEO Frank Muller said the addition of the Insignia Macro Fund to Behringer’s platform indicates Behringer’s commitment to providing financial advisors with access to “nimble, entrepreneurial managers, strategies and structures to build better portfolios.” He also said the fund helps investors “identify portfolio diversifiers” and preserve their wealth. The past year has been both hot and cold for global macro funds, and the Insignia Macro Fund is no exception. Its A-class shares returned 9.31% for the year ending June 30, ranking in the top 42% of the funds in its Morningstar category (Managed Futures). But for the final six months of that period, the fund returned just 0.66% – and yet, this was enough for it to rank in the top 24% of the category. The Insignia Macro Fund is also available in institutional-class shares (MUTF: IGMLX ). Class A shares have a net-expense ratio of 2.00%, while the institutional shares carry fees of 1.75%. The minimum initial investment for the A shares is $2,500; while the minimum for institutional shares is 100 times higher, at $250,000. For more information, visit insigniafunds.com .