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Oracle Q3 Earnings Beat Put Tech ETFs In Focus

Tech bellwether Oracle (NYSE: ORCL ) reported third-quarter fiscal 2015 results (ending in February) after the closing bell on Tuesday. The company beat our earnings estimates for the first time in the past four quarters, while revenues lagged due to negative currency translations. Earnings per share came in at 65 cents, topping the Zacks Consensus Estimate by a penny. Revenues were flat year-over-year at $9.3 billion and below our $9.45 billion estimate. While the company’s shift to the Web-based cloud computing business is paying off, a strong dollar restricted the top line during the reported quarter. Excluding the impact of unfavorable currency rates, revenues would have risen 6%. Cloud software platform sales climbed 29% from the year-ago quarter, and accounted for 4% of total revenue. Oracle will continue to benefit from the new generation of cloud computing and Big Data, and will steal market share from Salesforce.com Inc. (NYSE: CRM ), the only major software company competing in the cloud segment. Notably, the company is on track to sell more than $1 billion of new cloud subscriptions in the full fiscal 2015 (read: 3 ETFs Leading the Technology Sector Surge ). For the fiscal fourth quarter, the world’s largest database software maker expects revenues to grow in the range of 1-6% in constant currency terms and earnings per share to range between 90 to 96 cents. The midpoint is well above the Zacks Consensus Estimate of 90 cents. Oracle also pointed out in its conference call that high volatility in foreign exchange rates could hurt revenues in the future quarters. The company also raised its quarterly dividend by 25% to 15 cents per share. Based on dividend hike and cloud optimism, Oracle shares rose almost 4% in after-hours trading. The stock currently has a Zacks Rank #3 (Hold), and has a poor Zacks Industry Rank in the bottom 43% at the time of writing, suggesting mixed trading in the coming days. ETFs in Focus Given this, ETFs with the highest allocation to this software giant will be in focus in the days ahead. Investors should closely monitor the movement in these funds and avoid these if the stock drags them down (see: all the Technology ETFs here ): iShares North American Technology-Software ETF (NYSEARCA: IGV ) This ETF provides exposure to the software segment of the broader U.S. technology space by tracking the S&P North American Technology-Software Index. The fund holds a basket of 57 securities, with Oracle taking the third spot at 8.44% of total assets. It is quite popular, with AUM of over $1.2 billion, while the volume is moderate, as it exchanges nearly 92,000 shares a day. The product charges 47 bps in fees and expenses, and has gained about 4% so far this year. IGV has a Zacks ETF Rank of 3, or a “Hold” rating with a High risk outlook. First Trust NASDAQ Technology Dividend Index ETF (NASDAQ: TDIV ) This fund provides exposure to the dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $766 million in its asset base, and trades in volume of around 233,000 shares per day. The ETF charges 50 bps in annual fees (read: 5 Dividend ETFs to Buy for Income in 2015 ). In total, the fund holds about 95 securities in its basket. Of these firms, ORCL takes the sixth position, making up roughly 4.24% of the assets. In terms of industrial exposure, the ETF allocates one-fifth portion in semiconductors and semiconductor equipment, followed by technology hardware, storage & peripherals (16.9%) and software (15.2%). It has lost 1.8% so far this year. iShares U.S. Technology ETF (NYSEARCA: IYW ) This ETF tracks the Dow Jones US Technology Index, giving investors exposure to the broad technology space. The fund holds 140 stocks in its basket, with AUM of $3 billion, while charging 45 bps in fees and expenses. Volume is moderate, as it exchanges nearly 686,000 shares in hand a day (read: Bet on These Top Ranked Tech ETFs for Outperformance ). Oracle takes the ninth spot in the basket, with 3.94% of assets. The product is heavily skewed toward the software and services segments, as these make up just less than half of the portfolio. Tech hardware and equipment, as well as semiconductors and semiconductor equipment take the remaining portion in the basket. The fund has added nearly 1.7% in the year-to-date time frame, and has a Zacks ETF Rank of 1, or a “Strong Buy” rating with a Medium risk outlook.

3 Bond ETFs To Generate Income For Your Portfolio

Though investors have been continuously shifting their exposure to the equity world in the second half of the year thanks to a steadily improving U.S. economy, the fixed income world is also in great shape as a result of global market turmoil. The Eurozone is at a risk of facing deflationary woes after escaping recession almost a year ago. The economies of China and Japan have also dealt a blow to the global investing market and kept the risk quotient on even after the U.S. economy’s tantalizing Q2 growth of 4.6% and Q3 growth of 3.9%. All these issues have kept interest rates low this year despite the QE wrap-up in October. The yields on 10-Year U.S. Treasury note have fallen 25 bps to 2.24% (as of November 26, 2014) since the start of the year. Though short-term interest rates are likely to rise next year, long-term yields are subdued at the current level and are expected to remain so. An increased economic stimulus in Japan, the surprising rate cut in China and the potential announcement of the QE measure in the Eurozone with interest rates at rock-bottom levels will inject cheap money in the global economy and suppress long-to-medium-term interest rates. On the other hand, volatility levels might pick up in the days ahead as the S&P appears overvalued, having hit all-time highs more than 45 times this year and global growth remaining weak. Commodity markets continued their sluggish trend causing some to shift to low risk securities like bonds. This is especially true with the latest U.S. spending data coming in a little soft. The business spending plans indicator declined for two months in a row in October. Consumer spending nudged up just 0.2% in October despite multi-year low gasoline prices. Poor wages seemed to be the victim of such subdued numbers, per Reuters . With falling Treasury bond yields, relatively high-yield products look more attractive in the near term, at least to investors who are hungry for income. And should this broad market trend continue, moderately higher yield bonds and the related ETFs could put up a strong show and help investors to protect their portfolio as well as earn higher levels of income. Below we have analyzed three ETFs that investors could consider in this mixed kind of an environment where equities are witnessing a bull run. However, there is an associated risk of an imminent correction, or at least high levels of volatility. This urges investors to save a portion of their portfolios for fixed income. After all, even if markets end up in the red to close the year, a solid yield of about 4% should definitely help to withstand volatility. First Trust Tactical High Yield ETF (NASDAQ: HYLS ) The fund seeks to provide current income by investing primarily in a diversified portfolio of below investment-grade or unrated high-yield debt securities . Though capital appreciation is its secondary motive, it has added a bit this year, gaining 3.7% YTD.. The product thrives on long-short strategies. Net weighted average effective duration (considering the short positions) is 2.96 years indicating low interest rate risks. The fund is meant for an intermediate term as evident from 6.42 years of weighted average maturity. The product is expensive with an expense ratio of 1.28% per annum. Volume is light, trading in less than 35,000 shares per day that ensures extra cost for the product in the form of a wide bid/ask spread. The fund yields 4.93%. SPDR Barclays Long Term Corporate Bond ETF (NYSEARCA: LWC ) With an asset base of over $305 million and an average trading volume of roughly 100,000 shares, LWC is among one of the less popular funds in the corporate bond space. The fund tracks the Barclays Long U.S. Corporate Index to provide exposure to long-term corporate bonds. As such, the fund has a weighted average maturity of 23.89 years and an average duration of 13.85 years. The fund currently holds a well-diversified basket of 1,180 investment grade securities. Sector-wise, Industrials dominate the fund with a little over three-fourths of fund assets, followed by Finance and Utility with 19.6% and 13.04% allocations, respectively. The fund is a low-cost choice with 15 basis points as fees and has a 30-Day SEC yield of 4.26%. LWC is up 15% this year. PowerShares Fundamental Emerging Markets Local Debt Portfolio ETF (NYSEARCA: PFEM ) This emerging market fund seeks to provide exposure to high-yield bonds of various investment grades. Per the S&P, A and BBB-rated bonds take 30% of the portfolio each followed by AA rated bonds (21%) and BB rated bonds (13%). The fund presently holds 40 securities, targeting the intermediate part of the yield curve. The ETF has an average maturity of 7.18 years and an effective duration of 5.11 years. Country-wise, Brazil, Indonesia, Russia, Mexico and South Korea each occupy assets in the range of 7.5% to 9.7%. The fund charges 50 basis points as fees and has a 30-Day SEC Yield of 5.20%. The yield to worst came in at 5.74%. The fund manages a small asset base of $4.1 million and is relatively illiquid with average trading volume of roughly 1,000 shares a day.