Tag Archives: japan

Winning ETF Strategies For Q2

After the upheaval in the first quarter, the broader market is still far from even close to a bear market. The S&P 500 may be just 0.9% up from the year-to-date look (as of April 12, 2016), but the decline in the key U.S. index is merely 4% from the previous high . This points to a far better situation than a 10% decline from the previous high which defines a correction or a 20% fall from the previous high that makes it a bear market. However, this does not ensure a smooth road ahead. With the broader market blowing hot and cold every now and then, downside risks prevail in the ongoing second quarter. Agreed, factors driving the market now – especially oil price stabilization and the drop in the dollar – are somewhat favorable, but the near-term outlook of the broader market may turn glum given the expected downbeat earnings for Q1. After all, there are always panicky investors in the market who may just start dumping stocks following the underperformance in Q1 earnings. And if it turns out to be a herd investing pattern, it could ruin market returns despite a healing earnings trend from the second quarter itself. So, what should we do? Since it is difficult to predict whether the market will move up or go down from this point in Q2, it is better to shield yourself from all volatility. Thus, for investors, we shall detail the possible asset class movements in Q2 and the likely ETF bets. Dividend Exposure As far as global market investing is concerned, it’s better to stay diversified. However, since negative rates are prevailing in many developed economies, the drive for dividend will be higher. So, investors can tap products like First Trust Dow Jones Global Select Dividend Index ETF (NYSEARCA: FGD ), which yields about 5.16% annually or the iShares Core MSCI Total International Stock ETF (NYSEARCA: IXUS ) that offers about 2.85% in annual dividend yield. The case is similar back home. Thanks to the delay in further Fed rate hike, long-term yields are hovering at lower levels, making dividend ETFs popular at present. The WisdomTree Equity Income ETF (NYSEARCA: DHS ) and the iShares Core High Dividend ETF (NYSEARCA: HDV ) could be best suited for this play. Focus on Quality or Value in the U.S. Cautious investors may also hunt for dividends in high-quality value stocks rather than running after high-yielding products. In this vein, investors can buy the Vanguard Dividend Appreciation ETF (NYSEARCA: VIG ), which considers those companies that have a record of increasing dividends over time, or the PowerShares S&P 500 High Quality Portfolio ETF (NYSEARCA: SPHQ ), which provides exposure to the constituents of the S&P 500 index with long-term growth and stability of a company’s earnings and dividends. Yet another choice for this category is the PowerShares Dynamic Large Cap Value Portfolio ETF (NYSEARCA: PWV ). Which Capitalization to Bet on in the U.S.? The U.S. economy is making strides, with improving trends seen in the manufacturing, housing and labor markets. But the dollar is sagging on a dovish Fed. This makes a winning combination for mid-cap ETFs, as this spectrum bears the traits of both large and small caps. It has moderate international exposure, which will remain unharmed in a weaker dollar environment. However, a value quotient is desirable even in this area. Thus, we pick two mid-cap value ETFs for investors, namely the Guggenheim S&P MidCap 400 Pure Value ETF (NYSEARCA: RFV ) and the PowerShares Fundamental Pure Mid Value Portfolio ETF (NYSEARCA: PXMV ). Both carry a Zacks Rank #1 (Strong Buy). Where Will the Bond Markets Go? Bond ETFs had a stupendous run in Q1 and are likely to be loved by investors this quarter too. However, investors can tap investment-grade corporate bond ETFs this time around, rather than sticking to the safe Treasury bond ETFs. The SPDR Barclays Capital Long Term Corporate Bond ETF (NYSEARCA: LWC ), yielding about 4.05% annually, can be considered for this purpose. Should You Toss Out Currency Hedging from International Investing? Since the Fed vowed to take it easy with the policy tightening stance and hinted at just two rate hikes this year, the U.S. dollar is likely to be muted in the rest of Q2. So, currency-hedged ETF investing may not be a very popular concept this quarter. If global turmoil persists, the safe-haven currency, the Japanese yen, is likely to be stronger, and thus, the currency-hedging technique will not be that fruitful. Investors can thus take a look at the Buy-rated iShares MSCI Japan Minimum Volatility ETF (NYSEARCA: JPMV ) and the SPDR MSCI Japan Quality Mix ETF (NYSEARCA: QJPN ). These funds will help you navigate market volatility. The IQ 50 Percent Hedged FTSE Japan ETF (NYSEARCA: HFXJ ), with a Zacks Rank #3 (Hold), is another option to deal with the currency translation risk. As far as the European market is concerned, investors can ride on massive policy easing by investing in the WisdomTree Europe SmallCap Dividend ETF (NYSEARCA: DFE ). Original Post

Top-Performing Energy Mutual Funds In Q1 2016

After bleeding heavily from the beginning of 2016 through early February, the energy sector made an impressive comeback to end the first quarter on a positive note, all thanks to a strong spike in oil prices. The sector’s rebound also helped energy mutual funds to end the quarter with moderate gains. According to Morningstar, the mutual fund category – Energy Equity – returned 2.2% during the first quarter, after losing nearly 10.5% in its first two months. Meanwhile, the WTI and Brent crude, which slumped 28.7% and 19.2%, respectively, since the start of 2016 to reach multi-year low levels on February 11, gained 4.3% and 6.4% during the first quarter. This was the best quarterly performance of crude since the second quarter of 2015 that came on the back of a strong rebound from February 11 through the end of the quarter, when WTI and Brent crude surged 46.3% and 31.7%, respectively. Against this backdrop, it will be worth watching the top performers from the energy equity mutual fund category in the first quarter. But before going into the discussion about the mutual funds, let’s find out the factors that impacted the movement of oil prices during the quarter. Behind the Early Slump Oil prices witnessed a massive slump since the start of 2016, following concerns including China-led global growth worries and the unwillingness of major oil producers to reduce production despite the persistent fall in oil prices. A flurry of disappointing economic data out of China – one of the major importers of oil – raised concerns that an already weak demand environment may deteriorate further following the weakness in the Chinese economy. Dismal economic data out of the major economic regions, such as the U.S., the eurozone and Japan, intensified worries regarding weak global demand. Meanwhile, the major oil producers continued to produce at high levels without considering weak global demand and an already oversupplied market. Continued increase in crude inventories also played a major role in the oil slump during the first half of the quarter. Separately, Iran, which witnessed a lift-off in sanctions on its oil export, continued to raise its production, adding to the supply glut. These were the reasons why crude prices touched 12-year low levels in early February, which in turn, dragged the major benchmarks to multi-year lows. A Remarkable Recovery Strong intentions of major oil producers to control the supply glut played a catalyst for the rebound. Ministers and officials of both OPEC and non-OPEC countries said that they will be meeting on April 17 to discuss an oil production freeze in order to boost prices. Continued decline in oil rig counts and a lower-than-expected rise in crude inventories also gave a boost to oil prices during the latter half of the first quarter. Meanwhile, improvements witnessed in the economic environment of the U.S. and China also eased concerns over weak global demand to some extent. Separately, a weaker U.S. dollar also played a significant role in increasing oil prices, as it made crude more attractive for investors trading in currencies other than the U.S. dollar. 3 Top Energy Mutual Funds In this section, we have highlighted three fundamentally strong energy mutual funds that gained the most during the first quarter, banking on a strong rebound in oil prices and the energy sector. These funds either have a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their 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 also on the likely future success of the fund. Besides having impressive first quarter return, these funds also have strong three-month returns. The minimum initial investment is within $5000. Also, these funds also have low expense ratios. Vanguard Energy Fund Inv (MUTF: VGENX ) seeks growth of capital over the long run. It invests the lion’s share of its assets in securities of companies engaged in operations related to the energy sector. The fund primarily invests in common stocks of companies. Currently, VGENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 7.8% and 20.3%, respectively. Its annual expense ratio of 0.37% is lower than the category average of 1.51%. BlackRock Natural Resources Trust Fund A (MUTF: MDGRX ) invests the majority of its assets in equity securities of companies having a significant portion of their assets in natural resources. It invests in securities of companies having operations related to sectors including energy, oil and gas. Currently, MDGRX carries a Zacks Mutual Fund Rank #2. The product has first-quarter and three-month returns of 3.9% and 17.7%, respectively. Its annual expense ratio of 1.10% is lower than the category average of 1.51%. Fidelity Select Energy Portfolio No Load (MUTF: FSENX ) seeks capital growth. It invests a large chunk of its assets in common stocks of companies involved in the energy sector, including oil, gas, electricity and solar power. The fund invests in securities of companies throughout the globe. Currently, FSENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 3.3% and 15.8%, respectively. Its annual expense ratio of 0.79% is lower than the category average of 1.51%. Original Post

U.S. Broker-Dealer And Japan: 2 ETFs To Watch On Outsized Volume

In the last trading session, U.S. stocks ended on a weaker note thanks to renewed global growth concerns. Among the top ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) go down 1.2%, the S PDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) lose 0.99% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) shed 1.44% on the day. Two more specialized ETFs are worth noting as both saw trading volume that was far outside of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This could make these ETFs the ones to watch out for in the days ahead to see if this trend of extra-interest continues: iShares U.S. Broker-Dealers ETF (NYSEARCA: IAI ) : Volume 3.73 times average This U.S. broker-dealer ETF was under the microscope yesterday as nearly 417,000 shares moved hands. This compares to an average trading day of 117,000 shares and came as IAI lost about 3.3% in the session. The movement was due to the dovish Fed minutes as lower rates hamper the income for broking companies. However, the fund has a Zacks ETF Rank #3 (Hold). IAI was down about 3.8% in the past one-month period. iShares MSCI Japan ETF (NYSEARCA: EWJ ) : Volume 2.36 times average This Japan ETF was in focus yesterday as roughly 117.6 million shares moved hands on that day compared to an average of roughly 50.9 million. We also saw some share price movement as shares of EWJ lost 0.5%. The movement can largely be blamed on the strengthening of the yen against the dollar. It could have a big impact on Japan stocks that we find in this ETF portfolio. For the past one month, EWJ was down 3.4%. The fund currently has a Zacks ETF Rank #3 with a Medium risk outlook. Link to the original post on Zacks.com