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Why The S&P 500 Is Likely To Revisit The Correction Lows Near 1870

In spite of the Fed’s decision to refrain from a borrowing cost hike, SPY’s price movement strongly suggests the ultra-accommodating policy of zero percent interest rates may be inadequate. We’re likely heading back to the recent low point for the current year. The reality is that our recovery is stalling and has been since the end of the Fed’s quantitative easing stimulus. In Selling The Drama Or Buying The Rally (8/27), I delineated the way in which 10%-plus price corrections had unfolded under similar circumstances in history (e.g., 1998, 2010, 2011, etc.). Specifically, when the prospects for the global economy are deteriorating, U.S. stock benchmarks typically reclaim about one-half of their losses on “hope rallies.” Afterwards, they retest their lows. The most recent example of the price movement phenomenon is the eurozone crisis. In late July/early August of 2011, the S&P 500 SPDR Trust ETF (NYSEARCA: SPY ) plunged 16% due to fears surrounding economic malaise and financial credit concerns in Portugal, Italy, Greece and Spain. The popular ETF then recovered one-half (nearly 8%) of its price decline in late August/September before revisiting new lows in early October. At that point, the European Central Bank (ECB) and the Federal Reserve dropped market-moving hints about extraordinary stimulus measures, effectively ending the panicky price depreciation. In the same vein, the present corrective phase for SPY stopped short at roughly 12%. The popular ETF then retraced about one-half of the price erosion (6%) on two recent occasions. And now, in spite of the Federal Reserve’s decision to refrain from a borrowing cost hike (probably for 2015 in its entirety), SPY’s price movement strongly suggests that the ultra-accommodating policy of zero percent interest rates may be inadequate; that is, we’re likely heading back to the recent low point of the current year. Shouldn’t the Fed’s September decision to hold off any increases in borrowing costs have catapulted the U.S. stock market higher? Shouldn’t we have seen speculative buying demand for riskier assets like high yield bonds and growth stocks? Not when the U.S. has been contending with a sharp slowdown in exports, manufacturing activity as well as consumer sentiment. Not when the Atlanta Fed forecasts anemic GDP of 1.5% for the third quarter. And not when chairwoman Janet Yellen acknowledges the absence of wage inflation as well as the the presence of labor troubles via the labor participation rate. Prior to the rapid-fire declines for the Dow, S&P 500 and Nasdaq in mid-August, I detailed these economic concerns in extraordinary detail. I highlighted the dreadful manufacturing data in the Philly Fed Survey as well the Empire State Manufacturing Survey in 15 Warning Signs Of A Market Top . On, July 30th, I pointed to economic weakness in both the U.S. and across every region of the globe as being one of 5 reasons to lower one’s allocation to riskier assets . Going into yesterday’s (9/17) monumental Fed decision, traders had been positioning themselves for further delay on an increase in borrowing costs. They got it. And yet, they got more than they had bargained for. Not only did the Fed highlight weakness in the global economy as a potential threat to the domestic economy, but they shot down the notion of so many economists and analysts that the U.S. economy is standing on “terra firma.” For amusement, revisit what the overwhelming majority of journalists and media personalities had been saying about the strength of the U.S. economy. After, glance at the analysis and commentary a day later. The chief economist at Natixis Asset Management explained that the Fed’s decision not to act demonstrates that committee members of the central bank clearly think that the U.S. economy is “very weak.” Oh really? Now the economy is very weak? Or how about Dan Veru, chief investment officer at Palisade Capital Management, explaining that the Fed doesn’t want to be responsible for possibly unraveling a “fragile recovery.” Fragile recovery? After six-and-and-a-half years? Wasn’t this the great U.S. expansion that was perfectly capable of a modest move away from the emergency level zero bound? Sometimes, the truth hurts. The reality is that our recovery is stalling and has been since the end of the Fed’s quantitative easing stimulus. This truth is painful for everyday Americans. The fact that corporate sales and earnings growth are both on the decline also stings because, absent a more definitive Fed commitment to zero rate policy or more stimulus or a sloth-like token hike, riskier assets are likely to struggle. In essence, at certain correction levels, the Federal Reserve tends to take certain actions and/or make certain statements to boost market confidence. That level for the S&P 500 is near 1870. Obviously, I cannot know that the S&P 500 will revisit 1870, but I believe it is far more probable than not. Let me repeat. I anticipate the broader S&P 500 retesting the lows of the current correction, though it is impossible for any person to predict the direction of stock assets. For those moderate growth/income investors that have been emulating the tactical asset allocation that I do for actively managed clients, we are maintaining the lower risk profile of 50% equity (mostly large-cap domestic), 25% bond (mostly investment grade) and 25% cash/cash equivalents. This has been the case since we began reducing risk exposure in June-July. The typical target allocation for moderate growth/income of 65%-70% stock (e.g., large, small, foreign, domestic) and 30% income (e.g., investment grade, high yield, short, long, etc.) will not be reestablished until market internals and fundamentals show signs of improvement. Popular holdings for the 50% equity component? We have ETFs like iShares S&P 500 (NYSEARCA: IVV ), iShares USA Minimum Volatility (NYSEARCA: USMV ), SPDR Select Health Care (NYSEARCA: XLV ) and Vanguard Mid Cap Value (NYSEARCA: VOE ). Funds like USMV and VOE have weathered the storm better than many of the leading market-cap-weighted benchmarks. Disclosure : Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.

Mutual Funds To Buy Amid Global Jitters

Global growth fears have been prominent in recent times. Dismal economic data out of China had sparked jitters in the global markets. Also, disappointing factory data in the Eurozone recently, dampened investor sentiment. The record exports data from Germany was a bright spot, but that is not enough to dispel the global growth fears. In fact China, the second largest economy, poses a big threat as acknowledged by the IMF. They believe China’s slowdown may have graver repercussions on other countries than what was forecasted. The U.S. markets were not immune to the global market rout, but economic data looks convincing enough to suggest that the U.S. is relatively better positioned. Latest data showed that the U.S. economy has recovered significantly from the sluggish growth conditions in the first quarter. In this situation, mutual funds that mostly hold companies with a domestic focus are likely to gain from improving fundamentals. China, Europe Jitters China The China Federation of Logistics and Purchasing reported that the official manufacturing PMI index declined to a three-year low in August to 49.7 from July’s reading of 50. Meanwhile, the final Caixin Manufacturing Purchasing Managers’ index fell from 47.8 in July to 47.3 in August, reaching its lowest level in the last 77 months. The reading below 50 signaled that manufacturing activity contracted in August. Moreover, a plunge of 8.3% in exports and a decline of 8.1% in imports in July indicated the world’s second biggest economy is suffering from both weak global and domestic demand. It was also reported that producer prices declined to the lowest level in six years in July. Yesterday, data from China proved to be dismal once more. Fears of China-led global slowdown intensified after the National Bureau of Statistics in China showed China’s fixed-asset investment growth slowed to 10.9% in the first eight months of 2015. This is the weakest in about 15 years. Alongside, factory output increased 6.1% in August from prior year period. This missed the market expectations of a 6.4% gain. China stocks dropped the most it had in three weeks and also dampened sentiment in the U.S. markets. These disappointing data raised concerns that China may fail to achieve the target of 7% GDP growth rate this year Europe Investors are also worried about the economic condition of Europe. The final reading of Markit’s manufacturing PMI came in at 52.3 in August, below July’s reading of 52.4. Though the reading of the index reached a 16-month high in Germany, the reading out of France and Italy declined to the lowest level in the last four months. Meanwhile, the Markit/Cips U.K. manufacturing PMI declined from 51.9 in July to 51.5 in August, indicating a slowdown in manufacturing activity in the U.K. Meanwhile, it was also reported that the Euro zone’s inflation rate was at only 0.2% in August, significantly below the targeted rate of 2%. Last month, Eurosat reported that the common currency bloc expanded at a rate of only 0.3% in the second quarter, down from the first quarter’s growth rate of 0.4%. Last week, the Bank of England (BOE) decided to keep the key interest rate unchanged. The committee members voted 8-1 in favor of keeping the interest rate flat at 0.5%. It acknowledged that the China developments has increased downside risk to the global economy, but didn’t see any effect on the U.K. economy yet. The U.K. Office for National Statistics recently reported that manufacturing production declined at an adjusted rate of 0.8% in July, compared to a rise of 0.2% in the previous month. Most of the manufacturing sub-sectors witnessed a decline in production during July. The bright spot from Europe has been the Germany exports data. According to Germany’s Federal Statistics Office, exports gained a seasonally adjusted 2.4% from the prior month to 103.4 billion euros ($115.35 billion) in July. Imports were up 2.2% to 80.6 billion euros. These are the highest values since records started in 1991. Both exports and imports comprehensively beat expectations of gains of 0.7% and 0.5% respectively. On a seasonally adjusted basis, foreign trade balance showed a surplus of 22.8 billion euros. U.S. Shows Strength Amid the global concerns, the U.S. has done relatively well. Right now, uncertainty prevails over the rate hike decision. It is not clear if the FED will raise rates during the two-day policy meeting that begins tomorrow. However, the economic indicators are fairly encouraging. Despite global growth coming to a grinding halt, the “second estimate” released by the U.S. Department of Commerce last month showed that the GDP in the second quarter advanced at a pace of 3.7%, significantly higher than the first quarter’s rise of only 0.6%. The report also showed that gross domestic purchases surged at a rate of 3.4% during the quarter compared to a gain of 2.5% in the first indicating an increase in domestic demand. Also, the personal consumption expenditure (PCE) price index gained 1.5% during the quarter, a turnaround from the first quarter’s 1.9% decline. Though August jobs data came lower than expected, June and July’s job additions were revised higher. Analysts note that August’s job numbers have been revised higher later due to seasonal factors. Separately, the unemployment rate fell to 5.1% in August, its lowest level since Apr 2008. The unemployment rate was also lower than the consensus estimate of 5.2%. The unemployment rate was within the Fed’s goal of full employment. 3 Domestic Funds to Buy Funds that have limited international exposure should be more shielded from global growth concerns. Meanwhile, these domestically focused funds are poised to benefit from the favorable economic environment in the U.S. Thus, we present 3 funds that hardly have foreign stock holdings. The following funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy). We expect the funds to outperform its peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund. The funds have encouraging year-to-date, 1-year and 3 and 5-year annualized returns. The minimum initial investment is within $5000. The Oppenheimer Discovery Fund A (MUTF: OPOCX ) primarily focuses on acquiring common stocks of domestic companies having impressive growth potential. OPOCX invests in securities of small cap companies having market capitalizations below $3 billion. As of the last filing, OPOCX, a Small Growth fund, allocates their fund in two major groups; Small Growth and Large Growth. OPOCX currently carries a Zacks Mutual Fund Rank #1. The fund has gained 6.7% and 9.6% in the year-to-date and 1-year periods. The 3 and 5 year annualized returns are 14% and 17.7%. Expense ratio of 1.12% is lower than the category average of 1.33%. The Neuberger Berman Mid Cap Growth Fund A (MUTF: NMGAX ) invests a large chunk of its assets in companies having market cap size identical to those included in the Russell Midcap Index. NMGAX maintains a diversified portfolio by investing in common stocks of companies across a wide range of sectors and industries. NMGAX may focus on specific sectors that are expected to gain from market or economic trends. NMGAX, as of the last filing, allocates their fund in three major groups; Small Growth, Large Growth and Large Value. NMGAX currently carries a Zacks Mutual Fund Rank #1. The fund has gained 7.1% and 11.1% in the year-to-date and 1-year periods. The 3 and 5 year annualized returns are 14.8% and 15.5%. Expense ratio of 1.11% is lower than the category average of 1.29%. The Diamond Hill Select Fund A (MUTF: DHTAX ) seeks to provide capital growth over the long term. DHTAX invests in 30-40 U.S. equities which the Adviser believes are undervalued. These equity securities may be of any size. The adviser estimates a company’s value devoid of its market price and also takes into effect the industry competition, regulatory factors and various industry factors among others. As of the last filing, DHTAX, a Large Value fund, allocates their fund in three major groups; Large Value, Large Growth and High Yield Bond. DHTAX currently carries a Zacks Mutual Fund Rank #1. The fund has gained 2.9% and 7.5% in the year-to-date and 1-year periods. The 3 and 5 year annualized returns are 18.8% and 15.2%. Expense ratio of 1.20% is however higher than the category average of 1.11%. Link to the original post on Zacks.com

ETF Stats For August 2015 – Assets Fall As Trading Jumps

ETF industry assets dropped 5.4% in August as trading surged 33.5%. Product count increased by only four because the 24 launches were nearly overshadowed by the 20 ETF deaths. The month closed with 1,768 active listings, consisting of 1,574 ETFs and 194 ETNs. The actively managed fund count held steady at 133, although their assets moved 2.0% higher. Assets shrunk by $115 billion for the month as negative market action swamped the less-than $3 billion of cash inflows. The setback puts overall assets at just a little over the $2 trillion mark and the year-to-date asset gains at just 1.0%. Actively managed funds fared better than passive funds in August as assets increased to $21.2 billion, which represents a 2.0% gain for the month and a healthy 23.1% year-to-date jump. The quantity of ETFs with more than $10 billion in assets slipped from 54 to 52, and these 2.9% of the listings control 56% of the assets. Funds with more than $1 billion in assets declined by 4 to 259 and they hold an 84.7% market share. The average ETF has $1.18 billion in assets, but average does not imply typical. Only 228 products are above average when it comes to assets, while the other 1,540 (87%) are below average. The median asset size across all products is about $75 million. August is often a sleepy month for trading activity as summer vacations tend to put a damper on market volume. This August was far from typical, as ETF trading activity surged to its second-highest monthly level in more than four years. The total dollar volume of ETFs and ETNs was $2.12 trillion for the month. This was a 33.5% jump from July and a whopping 178% surge from August 2014. As usual, the vast majority of the trading was concentrated in relatively few ETFs. 14 products averaged more than $1 billion per day in trading activity, and this elite group captured a 61.1% market share. At the other extreme, there were 1,419 products that failed to muster $10 million in average daily trading. Even though they represent 80% of the products on the market, they accounted for only 2% of the trading action. Realizing how tough it is to succeed in the ETF space, industry leader BlackRock (NYSE: BLK ) closed and liquidated 18 iShares ETFs. 2 of the closing funds had more than $30 million in assets, which is above the $25 million limit for ETF Deathwatch inclusion. So far this year, 11 products with more than $25 million in assets have closed. It may be time to raise the threshold. Currency hedging remains the dominant theme for new launches. 12 of the 24 new ETFs released in August boast a currency-hedged strategy. Deutsche Bank (NYSE: DB ) had some early success with this approach, and it now appears to be the firm’s primary thrust for its X-trackers product line. 10 new Deutsche X-trackers ETFs employing currency hedging arrived in August. Additionally, Deutsche closed 9 of its unhedged funds this year. Of the 32 X-trackers listed for trading in the US, 24 use currency hedging, 3 use interest rate hedging, and only 5 are unhedged. August 2015 Month End ETFs ETNs Total Currently Listed U.S. 1,574 194 1,768 Listed as of 12/31/2014 1,451 211 1,662 New Introductions for Month 24 0 24 Delistings/Closures for Month 20 0 20 Net Change for Month +4 0 +4 New Introductions 6 Months 145 4 149 New Introductions YTD 179 5 184 Delistings/Closures YTD 56 22 78 Net Change YTD +123 -17 +106 Assets Under Mgmt ($ billion) $1,993 $25.3 $2,019 % Change in Assets for Month -5.5% +1.5% -5.4% % Change in Assets YTD +1.1% -6.0% +1.0% Qty AUM > $10 Billion 52 0 52 Qty AUM > $1 Billion 252 7 259 Qty AUM > $100 Million 765 35 800 % with AUM > $100 Million 48.6% 18.0% 45.3% Monthly $ Volume ($ billion) $2,040 $80.8 $2,120 % Change in Monthly $ Volume +33.7% +31.0% +33.5% Avg Daily $ Volume > $1 Billion 12 2 14 Avg Daily $ Volume > $100 Million 102 7 109 Avg Daily $ Volume > $10 Million 337 12 349 Actively Managed ETF Count (w/ change) 133 +0 mth +8 ytd Actively Managed AUM ($ billion) $21.2 +2.0% mth +23.1% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in August (sorted by launch date): Virtus Newfleet Multi-Sector Unconstrained Bond ETF (NFLT), launched 8/11/2015, is an actively managed ETF with a main objective of providing a high level of current income and a secondary objective of capital appreciation. The ETF will rotate among various global bond market sectors at times the managers believe they will outperform. Yield information is not currently provided. The expense ratio will be capped at 0.80% until 8/10/16 ( NFLT overview ). Deutsche X-trackers MSCI All World ex US High Dividend Yield Hedged Equity ETF (HDAW), launched 8/12/2015, is designed to invest in non-US companies with higher-than-average dividend yields while mitigating exposure to fluctuations between the value of the component currencies and the US dollar. Equities can be selected from both developed and emerging markets, with the largest geographic exposure currently being the UK at about 33%. Current yield is 4.4%. HDAW has an expense ratio of 0.45% ( HDAW overview ). Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (HDEF), launched 8/12/2015, invests in non-US companies with higher-than-average dividend yields while offsetting value changes between the component currencies and the US dollar using forward currency contracts. Equities are selected from among the MSCI EAFE universe, with the largest geographic exposure currently being the UK at about 40%. Current yield is 4.4%. The ETF sports an expense ratio of 0.45% ( HDEF overview ). Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE), launched 8/12/2015, is designed to invest in emerging market companies with higher-than-average dividend yields while mitigating exposure to fluctuations between the value of the component currencies and the US dollar. China leads the way with about a 31% country allocation, and the current yield is 4.1%. The ETF’s expense ratio is 0.65% ( HDEE overview ). Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (HDEZ), launched 8/12/2015, invests in European companies with higher-than-average dividend yields while offsetting value changes between the euro and the US dollar using forward currency contracts. The largest geographic exposure is Germany at about 24%, with France coming in next at about 19%. Current yield is 4.2%. Investors will pay 0.45% annually to own this ETF ( HDEZ overview ). Guggenheim S&P 500 Equal Weight Real Estate ETF (NYSEARCA: EWRE ), launched 8/13/2015, is designed to provide an investment option composed of the companies in the S&P 500 that are included in the real estate sector, excluding mortgage real estate investment trusts (REITs). The holdings are equally weighted and will be rebalanced quarterly. EWRE has an expense ratio of 0.40% ( EWRE overview ). Deutsche X-trackers Japan JPX-Nikkei 400 Hedged Equity ETF (NYSEARCA: JPNH ), launched 8/19/2015, will hold 400 Japanese securities that are selected based on qualitative and quantitative measures such as return on equity (ROE), cumulative operating profit, and market capitalization. The ETF then hedges its currency risk between the US dollar and Japanese yen with forward contracts. The expense ratio is capped at 0.45% until 10/1/16 ( JPNH overview ). Deutsche X-trackers MSCI Australia Hedged Equity ETF (DBAU), launched 8/19/2015, invests in large- and mid-capitalization Australian stocks while utilizing currency forwards to minimize fluctuations between the Australian and US dollars. The ETF currently holds 70 securities, with over 50% representing the Financials sector. The ETF sports an expense ratio of 0.45% ( DBAU overview ). Deutsche X-trackers MSCI EAFE Small Cap Hedged Equity ETF (DBES), launched 8/19/2015, is designed to give investors access to small-cap, developed market equities outside of the US while mitigating exposure to currency fluctuations. There are over 2,000 holdings representing 21 countries. The ETF’s expense ratio is 0.45% ( DBES overview ). Deutsche X-trackers MSCI Italy Hedged Equity ETF (DBIT), launched 8/19/2015, is currently invested in 26 large- and mid-capitalization Italian equities. DBIT uses forward contracts to minimizing the value fluctuations between the US dollar and the euro. Holdings of Intesa Sanpaolo and Eni combine to be about 25% of the fund. Investors will pay 0.45% annually to own this ETF ( DBIT overview ). Deutsche X-trackers MSCI Southern Europe Hedged Equity ETF (DBSE), launched 8/19/2015, selects large- and mid-capitalization equities in Spain, Italy, and Portugal while minimizing the value fluctuations between the US dollar and the euro. The underlying MSCI Index excludes Greece, which lies further south than the three constituent countries. Sector allocation is heavy in Financials at nearly 42%, while 56% of the 55 holdings are in Spain. DBSE has an expense ratio of 0.45% ( DBSE overview ). Deutsche X-trackers MSCI Spain Hedged Equity ETF (DBSP), launched 8/19/2015, is currently invested in 25 large- and mid-capitalization Spanish equities. DBSP utilizes forward contracts to minimize the fluctuations between the value of the US dollar and euro. Financials leads the sector allocation at nearly 42%, with Banco Santander the top holding at 17.2%. The ETF sports an expense ratio of 0.45% ( DBSP overview ). Direxion Daily Homebuilders & Supplies Bear 3x Shares (CLAW), launched 8/19/2015, is designed to return a leveraged daily return of -300% (inverse) of the Dow Jones US Select Home Construction Index. The Index includes a variety of companies that provide home building services and products, such as builders, home improvement retailers, and suppliers of building materials and fixtures. The expense ratio will be capped at 0.95% until 9/1/17 ( CLAW overview ). Direxion Daily Homebuilders & Supplies Bull 3x Shares (NAIL), launched 8/19/2015, has a goal of providing a leveraged daily return of 300% of the Dow Jones US Select Home Construction. The Index includes a variety of companies that provide home building services and products, such as suppliers of building materials and furnishings, builders, and home improvement retailers. The expense ratio will be capped at 0.95% until 9/1/17 ( NAIL overview ). Direxion Daily Regional Banks Bear 3x Shares (WDRW), launched 8/19/2015, seeks to provide a daily return of -300% (inverse) of an index reflecting the 50 largest regional banks in the US. The banks are selected based on their free-float market capitalization and then equally weighted. The expense ratio will be capped at 0.95% until 9/1/17 ( WDRW overview ). Direxion Daily Regional Banks Bull 3x Shares (DPST), launched 8/19/2015, attempts to provide a 300% daily return of the Solactive US Regional Banks Total Return Index. The Index selects the 50 largest regional banks in the US based on free-float market capitalization and then equally weights the holdings. The expense ratio will be capped at 0.95% until 9/1/17 ( DPST overview ). Market Vectors Oil Refiners ETF (Pending: CRAK ), launched 8/19/2015, invests in the largest and most liquid companies in the global oil refining segment. It currently holds 25 companies that produce gasoline, jet fuel, fuel oil, naphtha, and other petrochemicals. The US accounts for about half of the geographic allocation, with the next largest being Japan at about 10.9%. The manager will cap expenses at 0.59% until 5/1/17 ( CRAK overview ). O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI), launched 8/19/2015, invests in large- and mid-capitalization companies in Asia Pacific that pay dividends. Holdings are selected based on several factors such as liquidity, high quality, low volatility, and dividend yield. The largest country represented is Japan at 43.9%, and the sector allocation is relatively even with six over 10%. OASI has a 0.58% expense ratio ( OASI overview ). O’Shares FTSE Europe Quality Dividend ETF (OEUR), launched 8/19/2015, invests in large- and mid-capitalization, dividend-paying European equities. Holdings are selected based on several factors such as liquidity, high quality, low volatility, and dividend yield. The UK has the largest country allocation at 43.1%. Health Care and Consumer Goods lead the sectors at about 19% each. Investors will pay 0.58% annually to own this ETF ( OEUR overview ). Compass EMP International 500 Volatility Weighted Index ETF (NASDAQ: CIL ), launched 8/20/2015, invests in up to 500 large-cap equities in developed stock markets, excluding the US. The ETF’s selection process starts with screening for companies with net positive earnings for four consecutive quarters. It then selects the largest 500 and weights them based on their daily standard deviation (volatility). Countries with more than a 10% allocation include Japan at 20.5% and the UK at 12.7%. The expense ratio is capped at 0.45% until 6/30/17 ( CIL overview ). Compass EMP International High Dividend 100 Volatility Weighted Index ETF (NASDAQ: CID ), launched 8/20/2015, selects the 100 highest dividend-paying equities from the CEMP International 500 Volatility Weighted Index and weights them based on their daily standard deviation (volatility). The UK tops the country allocation with 19.5%. Australia is close behind at 17.5%. The expense ratio is capped at 0.45% until 6/30/17 ( CID overview ). O’Shares FTSE Asia Pacific Quality Dividend Hedged ETF (OAPH), launched 8/25/2015, is a fund-of-funds seeking to invest in Asia Pacific large- and mid-capitalization equities that exhibit relatively low volatility and high dividend yields while reducing the impact of changes between the value of the underlying currencies and the US dollar. The ETF holds O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI) and then hedges against the currency risk. The ETF’s expense ratio is 0.68% ( OAPH overview ). O’Shares FTSE Europe Quality Dividend Hedged ETF (OEUH), launched 8/25/2015, is a fund-of-funds investing in large- and mid-capitalization equities across the European region that exhibit relatively low volatility and high dividend yields while minimizing the impact value fluctuations between the underlying currencies and US dollar. The ETF holds O’Shares FTSE Europe Quality Dividend ETF (OEUR) and then hedges against the currency risk. It sports a 0.68% expense ratio ( OEUH overview ). Vanguard Tax-Exempt Bond ETF (NYSEARCA: VTEB ), launched 8/25/2015, offers diversified exposure to the investment-grade US municipal bond market. Its objective is to provide moderate current income in a long-duration portfolio with high credit quality. Yield information is not yet provided. VTEB has an expense ratio of 0.12% ( VTEB overview ). Product closures/delistings in August: AdvisorShares Accuvest Global Long Short (NYSEARCA: AGLS ) ETFS Physical Asian Gold Shares (NYSEARCA: AGOL ) iShares FTSE China (NASDAQ: FCHI ) iShares MSCI All Country Asia Info Technology (NASDAQ: AAIT ) iShares MSCI All Country Asia ex-Japan Small-Cap (NASDAQ: AXJS ) iShares MSCI Australia Small-Cap (BATS: EWAS ) iShares MSCI Canada Small-Cap (BATS: EWCS ) iShares MSCI Emerging Markets Growth (NASDAQ: EGRW ) iShares MSCI Emerging Markets Value (NASDAQ: EVAL ) iShares MSCI Emerging Markets Eastern Europe (NYSEARCA: ESR ) iShares MSCI Emerging Markets EMEA (NASDAQ: EEME ) iShares MSCI Emerging Markets Cons Discretionary (NASDAQ: EMDI ) iShares MSCI Emerging Markets Energy Sector (NASDAQ: EMEY ) iShares MSCI Hong Kong Small-Cap (NYSEARCA: EWHS ) iShares MSCI Singapore Small-Cap (NYSEARCA: EWSS ) iShares Asia Developed Real Estate (NASDAQ: IFAS ) iShares North America Real Estate (NASDAQ: IFNA ) iShares Financials Bond (NYSEARCA: MONY ) iShares Industrials Bond (NYSEARCA: ENGN ) iShares Utilities Bond (NYSEARCA: AMPS ) Product changes in August: Goldman Sachs discontinued issuing shares of GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN (NYSEARCA: GSC ) on June 9. It is now a broken product without a functioning share creation and redemption process. Buyers, sellers, and holders beware. The Forensic Accounting ETF (NYSEARCA: FLAG ) became the WeatherStorm Forensic Accounting Long-Short ETF ( FLAG ) effective August 7 . The underlying index changed from the long-only Del Vecchio Earnings Quality Index to the WeatherStorm Forensic Accounting Long-Short Index. The new index is constructed with a 130% long and 30% short (130/30) equity exposure. Fidelity Investments made changes to its commission-free ETF lineup by adding iShares MSCI All Country World Minimum Volatility (NYSEARCA: ACWV ) and iShares Short Treasury Bond (NYSEARCA: SHV ) effective August 24. It also removed iShares MSCI Emerging Markets EMEA ETF ( EEME ) as of August 24 and will remove iShares U.S. Real Estate ETF (NYSEARCA: IYR ) effective October 31. WisdomTree renamed thirteen of its ETFs effective August 31. Changes included “Dividend Growth” to “”Quality Dividend Growth”, “DEFA” to “International”, and “Equity Income” to “High Dividend”. Announced Product Changes for Coming Months: The iShares iBonds Sep 2015 AMT-Free Muni Bond ETF (NYSEARCA: IBMD ) is scheduled to mature and will cease trading after the market closes on September 1. The iShares MSCI USA ETF (NYSEARCA: EUSA ), a capitalization-weighted fund, will undergo an extreme makeover on September 1, becoming the iShares MSCI USA Equal Weighted ETF ( EUSA ). The iShares Japan large-Cap ETF (NYSEARCA: ITF ), based on the S&P/TOPIX 150 Index, will undergo an extreme makeover on September 4, becoming the iShares JPX-Nikkei 400 ETF ( ITF ). Deutsche X-trackers Regulated Utilities (NYSEARCA: UTLT ) and Deutsche X-trackers Solactive Investment Grade Subordinated Debt (NYSEARCA: SUBD ) will close with September 9 being their last day of trading. State Street will forward split ten of its SPDR industry ETFs effective September 10. VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) will have a 1-for-10 reverse split and VelocityShares 3x Long Natural Gas ETN (NYSEARCA: UGAZ ) will have a 1-for-5 reverse split effective September 10 . ProShares UltraShort Telecommunications (NYSEARCA: TLL ) will close with September 14 being its last day of trading. Van Eck Global will close its four international quality ETFs with September 18 being the last day of trading for QEM, QDEM, QXUS, and QDXU. Shareholders that do not sell prior to the delisting will have to wait nearly six weeks (to October 28) to get their money . PIMCO will close three ETFs with September 23 being the last day of trading. Affected funds are PIMCO 3-7 Year U.S. Treasury Index ETF (NYSEARCA: FIVZ ), PIMCO 7-15 Year U.S. Treasury Index ETF (NYSEARCA: TENZ ), and the actively managed PIMCO Foreign Currency Strategy Active (NYSEARCA: FORX ). Direxion will perform reverse splits on six of its leveraged ETFs effective October 1 (originally scheduled for September 10). Van Eck Global plans to acquire Yorkville MLP ETFs ( press release ) and hopes to close the transaction in the fourth quarter. Previous monthly ETF statistics reports are available here . Disclosure covering writer: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.