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TrimTabs Plans 2 Free-Cash-Flow ETFs

TrimTabs ETF Trust has recently filed a post-effective amendment for two ETFs – one focusing on the domestic market and the other on international markets. The funds – TrimTabs International Free-Cash-Flow ETF and TrimTabs U.S. Free-Cash-Flow ETF – are expected to trade under the tickers FCFI and FCFD following their launch. Below, we have highlighted some of the details about the ETFs for investors seeking to know more about these in-registration funds: FCFI in Focus As per the SEC filing , the proposed passively managed ETF looks to provide exposure to international companies poised for rapid growth by tracking the performance of the TrimTabs International Free-Cash-Flow Index before fees and expenses. For this purpose, the index focuses on companies with high free cash flow yield, including REITs. Free cash flow here refers to the total cash generated by the company after spending the money required to maintain or expand its operations, while free cash flow yield is the ratio of a company’s free cash flow to its market capitalization. The index follows an equal weighted strategy which ensures a well-diversified portfolio. Moreover, the index seeks to provide exposure to 10 countries, including Australia, Canada, China, France, Germany, Japan, Korea, the Netherlands, Switzerland and the U.K. The fund will charge 69 basis points as fees. FCFD in Focus The proposed fund looks to track the performance of the TrimTabs U.S. Free-Cash-Flow Index, before fees and expenses. The passively managed fund focuses solely on U.S. companies, including REITs, having a high free cash flow yield. FCFD in short follows the same strategy as FCFI and also charges the same fees, but with a domestic focus. How Might it Fit in a Portfolio? Free cash flow is one of the important tools to measure the performance of a company. Usually most investors focus on fundamental indicators such as the price-to-earnings ratio (P/E), book value, price-to-book (P/B) and the PEG ratio to select companies with strong fundamentals. They often ignore free cash flow measures. However, the free cash flow yield offers a better representation of the company’s performance and in most cases give a fairer picture of the company than other fundamental measures. FCFI and FCFD, which focus on companies with high cash flow yield, are expected to hold some of the best performing international and domestic companies, respectively. ETF Competition Presently, there aren’t many funds focusing on this space. However, we have two funds from Cambria – one focused on the domestic space and the other on the international front – providing exposure to companies that generate high free cash flow and in turn look to return these to shareholders in the form of cash dividends, share repurchases, or by reducing their leverage. Cambria Shareholder Yield ETF (NYSEARCA: SYLD ) with an asset base of $218 million is based on the research that free cash flow is a key predictor of a company’s strength. This product invests in companies that show strong characteristics in returning free cash flow to their shareholders by way of cash dividends, share repurchases, or by reducing their leverage. The actively managed fund has a diversified portfolio of 104 stocks and charges 59 basis points as fees. Cambria Foreign Shareholder Yield ETF (NYSEARCA: FYLD ) on the other hand also works on the same proposition as SYLD, but focuses on stocks from foreign developed countries. The fund manages an asset base of $62.4 million and includes companies with the best combination of dividend payments and net stock buybacks. The fund charges the same fee as SYLD. Thus, FCFI and FCFD, if launched, have a fair chance of building assets for themselves, given the lack of competition in the space.

3 Worst Global ETF Investments Of 2014

2014 was a relatively sluggish year for international markets. While the U.S. indices were setting new all-time highs seemingly year round, most international economies were reeling under global pressures. Per MSCI, the World ex-USA index is down 5.9% so far this year, while countries within the European Monetary Union ( EMU ) have turned out to be one of the most beaten down markets, having shed about 8.7% in the time frame. Emerging nations were also no better having retreated about 4.4% YTD. These were in stark contrast to the 11.9% gain seen in North America. Deflationary worries in Europe, apparent failure of Abenomics in Japan, prolonged slowdown in the world’s second largest economy China, massive crash in crude and the ensuing currency woes (as well as the broader commodity market rout) rattled investors’ faith over international investing in 2014. As the year is drawing to a close, we handpick 3 global ETFs which have severely underperformed in 2014. These ETFs should be closely watched if the macroeconomic backdrop takes longer to turn around in the New Year. AdvisorShares Accuvest Global Opportunities ETF (NYSEARCA: ACCU ) The ETF is a good choice for long-term investors seeking a broad global exposure. The fund doesn’t track any particular index and instead looks to identify countries that may outperform other equity markets on the world stage based a top-down method that considers 40 different factors. The product is structured as a fund-of-funds and holds other ETFs in its basket in order to give investors global exposure. This AdvisorShares fund is unpopular and illiquid with just $4.2 million of assets and about 20,000 shares of average daily trading volume. While low trading volume can result in higher trading costs, the use of the fund-of-funds technique and the active management strategy render the fund quite expensive with an expense ratio of 1.25%. Presently, the iShares MSCI China ETF (NYSEARCA: MCHI ) (19.69%), the iShares MSCI Sweden ETF (NYSEARCA: EWD ) (17.90%) and the iShares MSCI Thailand Capped ETF (NYSEARCA: THD ) (14.78%) occupy the top three spots. The fund is heavy on emerging Asia (33%), Developed Europe (28%) and North America (25%). Sector-wise, financials takes the top spot with a 33.8% allocation, followed by 15.7% exposure to information technology and a 10.1% allocation to industrials. The fund lost the most in the global equities space in 2014, slumping about 15.3%. AdvisorShares Athena International Bear ETF (NYSEARCA: HDGI ) This one too is an active ETF from the same issuer, AdvisorShares. The ETF seeks to generate capital appreciation through short sales of international equities. Stocks are selected using the portfolio manager’s patented behavioral research, which measures manager behavior, strategy consistency and conviction. The research also evaluates stocks to be placed in top and bottom relative weight positions within the equity universe. Additionally, the portfolio manager also utilizes equity manager and investor behavior factors to determine the most attractive markets and capitalization ranges for their short choices. Once this is done, the stocks that rank the lowest from the conviction holdings list receive allocations in the fund, based on market cap. This intensive investigation results in a higher annual fee of 1.50%. The product is fairly overlooked by investors as depicted by its AUM of only $1 million and average daily volume of about 5,000 shares. The ETF was down 15% in the 2014 time frame. WisdomTree Commodity Country Equity ETF (NYSEARCA: CCXE ) Commodities had a rough stretch this year due to a stronger dollar, favorable weather and soft demand owing to a patchy global recovery. The product is a high-yield option looking to track the stock market performances of dividend-paying companies hailing from commodity-rich nations. The product tracks the WisdomTree Commodity Country Equity Index and results in a portfolio of 161 securities with an expense ratio of 58 basis points a year. This ETF assigns 26.3% of its asset base to financial stocks followed by 20.3% in energy, 15.9% in telecom and 11.9% in material. As the name suggests, the fund looks to invest in resource-dominant nations, including New Zealand, Canada, Norway, Australia, Chile, Brazil and Russia. Regional weights vary in the range of 10.95-14.76%. The fund appears to be spread out among companies, as no firm accounts for more than 4.97% in the fund. StatoilHydro ASA (NYSE: STO ), Telecom Corp of New Zealand Ltd, and Ambev S.A. (NYSE: ABEV ) take the top three positions in the fund with asset investment of 4.97%, 3.68% and 2.73%, respectively. The fund was down 11.2% on the year.

The Best And Worst Performing Assets Of 2014

By Matt Rego With 2015 officially rung in and the first trading day of the New Year in progress, 2014 is fading off into the distance. But, before it goes, let’s take a look at some of the best and worst performing assets of 2014, which can help formulate an investment plan for the current year. Reviewing prior year is a good habit to get used to, as it can show what assets could outperform this year or which could underperform this year. Ultimately, it is good to close out a year with a review and a takeaway that will allow us to improve our analysis scope and where some investments made during the year went wrong or right. Best And Worst Performing Assets: Stocks US equities continued to march higher in 2014, as the bull market continued to show strength during the year. Dow Jones Industrial Average rose 8.4% in 2014, S&P 500 rose 12.39%, and the Nasdaq led the group of US indices with 14.31% gain for the year. Turning to European equities, the FTSE 100 (INDEXFTSE:UKX) lost -2.26% for the year, the CAC 40 rose 1.08%, and Euro Stoxx 50 saw a rise of 2.48% in 2014. The Shanghai Composite, Chinese equities, rose 53.94% in 2014 and Japan’s Nikkei 225 (INDEXNIKKEI:NI225) saw 2014 outcome of -1.93% ( Google Finance data) Best And Worst Performing Assets: Commodities Commodities had a good start in 2014, but as the US dollar continued to build strength in the latter half of the year, commodities began to suffer. The biggest and most memorable story of 2014 for commodities will be the collapse in oil prices, which fell -44.5% during the year. Natural gas lost -29% and heating oil was the second worst performing commodity at -39.6%. Gold ended the year down, but relatively flat overall with -2.9% 2014 performance. Silver fared much worse, which fell -20.7%. On the bright side, coffee was the overwhelming best performing commodity, which shot up 44.8%. Cattle prices had a huge run up in 2014, led by feeder cattle’s gains of 33.7%. Live cattle saw gains of 22.1% and lean hogs was worst performer of the livestock sector, down -6.6% for the year. The US dollar rose 12.9% during the year. Best And Worst Performing Assets: Bond Yields Bond yields across the board saw declines in 2014. Yields and bond prices work inversely, meaning bond prices rallied in 2014 as yields sank. The US 10 Year saw yields fall -0.857 basis points, Germany’s 10 year fell -1.387 bps, UK saw a drop of -1.266 bps, Japan’s 10 year saw the lowest fall in yield at -0.412 bps. Spain’s 10 year yields fell the most by -2.54 bps, followed by Italy’s 10 year yield declines of -2.235 bps. Overall, 2014 was a good year for US equities, the US dollar, cattle, coffee, and bond prices. Looking forward to 2015, analysts and economists are forecasting continued strength in the US dollar, which will mean lagging commodity prices. US equities have the general consensus of starting the year off strong and getting weaker as the year rolls on. Bonds are predicted to have a very rough year with the US Federal Reserve expected to raise rates at some point. Ultimately, we will have to wait and see what the New Year brings. Disclosure: None