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India ETFs To Soar On Rate Cut?

The Reserve Bank of India (RBI) lowered its key rate to an over five-year low on April 5, 2016. This was the first cut in 2016 followed by four rate cuts in 2015. On Tuesday, the central bank slashed its key interest rate by 25 basis points (bps) to 6.50%, in line with the market expectations, to bolster business in the economy. The Indian stock market took giant strides in 2014 on pro-growth political changes only to lose in 2015, probably due to political deadlock. So far this year (as of April 4, 2016), most of the India ETFs are in the red, but could turn around on monetary policy easing. Not only this, the Reserve Bank of India hinted at accommodative monetary policy going forward, giving market experts reasons to see another 25 bps cut later this year, per Reuters . The move was prompted by easing inflation. Raghuram Rajan, the RBI governor, sounded hopeful of hitting the 5% inflation target for March 2017. The next target is 4.2% by March 2018. Investors who put more emphasis on slowing GDP data for the U.S. economy for the October-December quarter (7.3% followed by 7.7% growth rate in the second quarter), will now find some reason to invest in Asia’s third-largest economy. This along with stubbornly low oil prices in the global market and a relatively stable currency in the wake of a subdued greenback should propel the Indian stock market in the days to come. After all, India is heavily reliant on imports to meet its energy requirements. So, a massive drop in oil prices last year came as a boon to the economy and saved India’s significant foreign exchanges. While all India ETFs should bounce following the rate cut, below we highlight three small-cap ETFs that might get an edge over their peers. This is because small-cap stocks rebound more than the larger ones when the domestic economy picks up. These pint-sized stocks are less affected by global market turmoil than their larger counterparts. iShares MSCI India Small Cap Index Fund (BATS: SMIN ) This product provides exposure to the small cap segment of the broad Indian stock market by tracking the MSCI India Small Cap Index. Holding 236 securities in its basket, it is widely spread out across number of securities with each holding less than 1.96% of assets. Consumer discretionary takes the top spot making up for one-fifth of the portfolio, closely followed by industrials (20.4%) and financials (17.8%). The fund is unpopular and illiquid with AUM of $63.1 million and average daily volume of 17,000 shares. It charges 74 bps in annual fees from investors. The fund is down 7.7% so far this year (as of April 4, 2016). India Small-Cap Index ETF (NYSEARCA: SCIF ) This fund also targets the small cap segment and tracks the Market Vectors India Small-Cap Index. Here again, financials occupies the top position from a sector look at 28.8% while industrials and consumer discretionary round off the next two spots. The fund has so far amassed $153.8 million in its asset base while charging 89 bps in annual fees. Volume is decent exchanging more than 84,000 shares in hand a day. The fund is up 10% so far this year (as of April 4, 2016). India Small Cap ETF (NYSEARCA: SCIN ) This $19.2 million fund invests about 23% in the financial sector followed by 22.85% in the industrial sector. Technology and utilities sectors also got double-digit exposure in the fund. In total, the fund gives exposure to 74 stocks. It charges 85 bps in fees and has lost about 13.1% so far this year (as of April 4, 2016). EGShares India Infrastructure ETF (NYSEARCA: INXX ) Apart from small-cap ETFs, infrastructure stocks and ETFs will also get a boost from this move. As this sector is debt-heavy in nature, a decline in interest rates will favor it. This ETF provides exposure to 30 Indian stocks. It is pretty well spread out across components with none of the securities holding more than 5.98% of assets. With respect to sector holdings, construction & materials takes the top spot at 17.3%, followed by electricity (16.5%), mobile telecommunications (15.1%) and industrial engineering (10.6%). The product has managed assets worth $40 million and trades in volume of nearly 22,000 million shares a day. It has an expense ratio of 0.85% and has lost 2.8% so far this year (as of April 4, 2016). Original Post

6 Nutritious ETFs To Consider On World Health Day

On World Health Day, we would like to draw investors’ attention to well-nourished ETFs that can immune a portfolio from market volatility that is so rampant now. Just like we need nutrients to lead a healthy life, given below are what an ETF portfolio needs to be in the pink. Quality Quality ETFs are generally rich on value characteristics as they focus on stocks with high quality scores based on three fundamentals – high return on equity, stable earnings growth, and low financial leverage. This approach seeks investments in safer stocks and reduces volatility when compared to plain vanilla funds. Academic research shows that high quality companies consistently deliver superior risk-adjusted returns than the broader market over the long term. More importantly, these stocks generally outperform in a crumbling market (read: How to Play the Choppy Market with Cheap Smart Beta ETFs ). While there are several quality ETFs available in the space, the iShares MSCI USA Quality Factor ETF (NYSEARCA: QUAL ) seems to be the most popular. This fund provides exposure to the stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth, and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index. In total, the fund holds 123 securities in its basket, which are pretty spread across a number of securities with none holding more than 5.03% of assets. From a sector look, information technology takes the top spot at 20.5%, followed by financials (16.0%), healthcare (14.5%) and consumer discretionary (14.2%). The product has amassed $2.3 billion in its asset base and charges just 15 bps in annual fees from investors. Average trading volume is good at around 317,000 shares per day. The fund has returned nearly 36.7% to date since its inception in July 2013. Low Volatility Low volatility products appear safe in a turbulent market, and reduce losses in declining markets. But these generate decent returns when markets rise. This is because these funds include more stable stocks that have experienced the least price movement in their portfolio. Further, these funds contain stocks of defensive sectors, which usually have a higher distribution yield than the broader markets (read: Low Volatility ETFs Still in Play ). In particular, the ultra-popular iShares MSCI USA Minimum Volatility ETF (NYSEARCA: USMV ) having AUM of $11.4 billion and average daily volume of about 3 million shares, tracks the MSCI USA Minimum Volatility (NYSEARCA: USD ) Index. It offers exposure to 168 U.S. stocks having lower volatility characteristics than the broader U.S. equity market. The fund is well spread across a number of components with each holding less than 1.71% share. From a sector look, financials, healthcare, information technology and consumer staples occupy the top positions with double-digit exposure each. Expense ratio comes in at 0.15%. The fund has delivered returns of 44.1% over the trailing five-year period. Low Beta Low beta ETFs exhibit greater levels of stability than their market-sensitive counterparts and will usually lose less when the market is crumbling. Though these have lesser risks and lower returns, the funds are considered safe and resilient amid uncertainty. However, when markets soar, these low beta funds experience lesser gains than the broader market counterparts but are still considered healthy. The PowerShares Russell 1000 Low Beta Equal Weight Portfolio ETF (NASDAQ: USLB ) could be a solid pick. This ETF has debuted in the space last November and has attracted $128 million in its asset base so far. It follows the Russell 1000 Low Beta Equal Weight Index, holding 306 well-diversified stocks in its basket with each holding less than 0.60% of assets. Volume is moderate exchanging 60,000 shares in hand on average. The product is skewed toward financials at 21.3%, followed by consumer discretionary (16.2%), industrials (13%), healthcare (10.8%) and consumer staples (10.5%). It charges investors 35 bps in annual fees and is up over 1% since inception. Dividend Dividend paying securities are the major sources of consistent income for investors when returns from the equity market are at risk. Dividend-focused products offer both safety in the form of payouts and stability in the form of mature companies that are less immune to the large swings in stock prices. While several choices are available in the dividend space, First Trust Morningstar Dividend Leaders Index ETF (NYSEARCA: FDL ) looks attractive. With AUM of $1.1 billion, the fund follows the Morningstar Dividend Leaders Index. In total, it holds 96 stocks that have shown the highest dividend consistency and dividend sustainability. The top two firms – Exxon Mobil (NYSE: XOM ) and AT&T (NYSE: T ) – dominate the returns of the fund holding over 9% share each. Other firms hold less than 7.4% of assets. Volume is solid as it exchanges more than 467,000 shares a day on average while expense ratio comes in at 0.45%. FDL surged 83.2% in the past five years. Blend Blend funds consist of a mix of both growth and value stocks and are considered most appropriate in any type of market. This is because these funds harness their momentum in earnings to create a positive bias in the market resulting in rocketing share prices. At the same time, these tap buying opportunities at depressed stock prices hoping for capital appreciation when the stock finally reflects its true market price. In particular, the iShares S&P 100 ETF (NYSEARCA: OEF ) could be an interesting choice as it offers exposure to 102 mega-cap U.S. stocks by tracking the S&P 100 index. It is slightly tilted toward the top firm – Apple (NASDAQ: AAPL ) – at 5.4% while other firms hold no more than 3.81% of assets. As such, the fund has a nice mix of growth, value and blend stocks. About one-fourth of the portfolio is dominated by information technology while health care and financials round off the next two spots, with less than 15% allocation for each. OEF is by far the most popular and liquid choice in the mega cap space with AUM of $4.5 billion and average daily volume of around 1.2 million shares per day. It charges 20 bps in fees and surged 72.5% in the last five years. Diversified A diversified portfolio in the equity world refers to investing in stocks of different companies, securities and industries in order to minimize overall risk and achieve optimal risk-adjusted returns. While there are several ETFs that offer diversification benefits, the Guggenheim S&P Equal Weight ETF (NYSEARCA: RSP ) could be an interesting choice, as it offers almost equal allocation in the stocks of the S&P 500 index and does not allocate a big chunk to any sector. The fund tracks the S&P Equal Weight Index, putting roughly 0.2% in each stock. Financials, consumer discretionary, information technology, industrials and healthcare are the top five sectors accounting for less than 18% share each. The fund has amassed nearly $9 billion in its asset base while sees volume of more than 1.2 million shares a day on average. It charges 40 bps in fees per year from investors and gained 66.5% over the past five years. Original Post

Victory Capital Rolls Out New Emerging Market ETF

After a string of issues including turmoil in China and global growth slowdown dragging the emerging markets down, a positive shift in sentiment can be seen lately. This trend is validated by the two most popular ETFs – the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) and the Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) – climbing over 11% in the past one month. In comparison, the iShares MSCI ACWI ETF (NASDAQ: ACWI ) gained 5.6% and the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) rose 4.7%, suggesting that the emerging segment is headed for a rebound (read: Can Emerging Market ETFs Sustain the Rally? ). This did not go unnoticed by Victory Capital, which has launched a smart beta fund with a focus on the emerging market space. The 11th fund by the company is a low-risk alternative for investors seeking to diversify their portfolios through exposure to the emerging market. Below, we have highlighted the newly launched fund – the Victory CEMP Emerging Market Volatility Weighted Index ETF (NASDAQ: CEZ ) – in greater detail. CEZ in Focus The fund launched late last week trades on Nasdaq. The product seeks to track the performance of CEMP Emerging Market 500 Volatility Weighted Index. The index comprises 500 stocks domiciled in the emerging market nations with a history of positive earnings. The weightage is based on their volatility measured by daily standard deviation over the last 180 trading days compared to the aggregate mean. The fund has an expense ratio of 0.50% and will be rebalanced on a semi-annual basis. The fund currently has 499 stocks in its basket with the top 10 stocks holding an aggregate weight of just over 5%, indicating low concentration risk. From a country perspective, Taiwan takes the top spot with about 11.9% of the basket followed by China (11.5%), Korea (9.7%), India (9.5%) and Malaysia (8.7%). Currently, the fund provides exposure to 22 countries in total. As per ETF.com , the fund has already amassed $2.5 million in its asset base (see all Broad Emerging Market ETFs here ). How does it fit in a portfolio? For investors looking to diversify their portfolio and having faith in the emerging market rebound, this fund can be a good choice to invest in. Thanks to its strategic beta approach that combines fundamental measures along with inverse volatility weighting of individual stocks, it can lead to a broader diversification than traditional market cap weighting. Thus, it also possesses the potential to outperform traditional indexing strategies. Moreover, the fund is well diversified as far as individual stocks and country weights are concerned, while expenses are reasonable. ETF Competition Though the emerging market space is crowded with products, the newly launched ETF should not face many obstacles in amassing assets thanks to its unique stock selection technique, which could set the new entrant apart from the entire lot. Having said this, products like the iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEARCA: EEMV ) , the PowerShares S&P Emerging Markets Low Volatility Portfolio ETF (NYSEARCA: EELV ) , the PowerShares FTSE RAFI Emerging Markets Portfolio ETF (NYSEARCA: PXH ) and the PowerShares DWA Emerging Markets Momentum Portfolio ETF (NYSEARCA: PIE ) might give the newcomer a run for its money. Like CEZ, these ETFs operate in the emerging market space with some tweaks. Apart from these, the emerging market equities space is primarily dominated by two large players – VWO and EEM – with funds under management an impressive $34.6 billion and $24.3 billion, respectively. While VWO’s expense ratio of 0.15% is far less than CEZ, EEM charges a higher fee of 72 basis points. Despite the competition, the newly launched fund has the potential to emerge as a winner if it manages to generate returns net of fees greater than other products in the emerging market ETF space. In any case, the smart-beta theme is trending and many are trying out this concept for their own portfolios. Link to the original post on Zacks.com