Tag Archives: lists

Best And Worst Q1’16: Large Cap Blend ETFs, Mutual Funds And Key Holdings

The Large Cap Blend style ranks first out of the twelve fund styles as detailed in our Q1’16 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Large Cap Blend style ranked second. It gets our Attractive rating, which is based on aggregation of ratings of 35 ETFs and 873 mutual funds in the Large Cap Blend style. See a recap of our Q4’15 Style Ratings here. Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. Not all Large Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 19 to 1507). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Large Cap Blend style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The SPDR MSCI USA Quality Mix ETF (NYSEARCA: QUS ), the FlexShares US Quality Large Cap Index ETF (NASDAQ: QLC ), and the SPDR MFS Systematic Core Equity ETF (NYSEARCA: SYE ) are excluded from Figure 1 because their total net assets are below $100 million and do not meet our liquidity minimums. Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) is the top-rated Large Cap Blend ETF and the Vulcan Value Partners Fund (MUTF: VVPLX ) is the top-rated Large Cap Blend mutual fund. Both earn a Very Attractive rating. The PowerShares Russell 1000 Equal Weight Portfolio ETF (NYSEARCA: EQAL ) is the worst-rated Large Cap Blend ETF and the Goldman Sachs Absolute Return Tracker Fund (MUTF: GARTX ) is the worst-rated Large Cap Blend mutual fund. EQAL earns a Neutral rating and GARTX earns a Very Dangerous rating. The Travelers Companies (NYSE: TRV ) is one of our favorite stocks held by DIA and earns a Very Attractive rating. Since 2004, Travelers has grown after-tax profit ( NOPAT ) by 14% compounded annually. Travelers has tripled its return on invested capital ( ROIC ) from 4% in 2004 to 12% on a trailing-twelve-months (TTM) basis and has generated positive free cash flow every year of the past decade. It should come as no surprise then that TRV is up 80% over the past five years. What may surprise some, though, is that TRV remains significantly undervalued. At its current price of $107/share, TRV has a price to economic book value ( PEBV ) ratio of 0.6. This ratio means that the market expects that Travelers’ NOPAT will permanently decline by 40%. If Travelers can grow NOPAT by just 2% compounded annually for the next decade , the stock is worth $182/share today – a 70% upside. Clean Harbors Inc. (NYSE: CLH ) is one of our least favorite stocks held by GARTX and earns a Very Dangerous rating. Clean Harbors had built a successful business prior to the global recession in 2008-2009. Unfortunately, the company has failed to regain the heights of 2008-2009. Since 2010, Clean Harbors has grown NOPAT by only 3% compounded annually while its NOPAT margin has declined from 8% to 3%. Similarly, the company’s ROIC has fallen from 13% in 2010 to a bottom-quintile 3% on a TTM basis. Meanwhile, the stock remains valued as if Clean Harbors were still operating at pre-recession levels, which makes it greatly overvalued. To justify its current price of $42/share, Clean Harbors must maintain its 2014 pre-tax margin (7.1%) and grow NOPAT by 12% compounded annually for the next 16 years . This expectation seems rather optimistic given Clean Harbors deteriorating margins and profits since 2010. Figures 3 and 4 show the rating landscape of all Large Cap Blend ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Goldman Sachs Files For 2 New ETFs

In the last couple of years, ETFs have witnessed surging popularity as they continue to grow and evolve. With a number of products being launched and fees being slashed, ETFs have grown more competitive over time, forcing issuers to foray into spaces where none has gone before. Goldman Sachs (NYSE: GS ), which has recently filed two new ETFs, Goldman Sachs Hedge Fund VIP ETF and Goldman Sachs High Sharpe Ratio ETF , will use the bank’s own research reports, Hedge Fund Trend Monitor and U.S. Weekly Kickstart strategy report, respectively, as the basis of selection. Let’s dig a little deeper. Proposed Funds in Detail As per the SEC filing, the proposed Goldman Sachs Hedge Fund VIP ETF will track the performance of the Goldman Sachs Hedge Fund VIP Index. The Index provides exposure to equity stocks, which are expected to influence the long portfolios of hedge funds. These equity securities generally appear most frequently among the top ten equity holdings of U.S. hedge funds that select their positions based on fundamental analysis. The index comprises 50 securities with a market capitalization of approximately $2.5 billion to $715.6 billion, as per the filing. Meanwhile, Goldman Sachs High Sharpe Ratio ETF will track the performance of the Goldman Sachs High Sharpe Ratio Index, thereby providing exposure to large-cap U.S. stocks with the highest projected Sharpe ratio – a widely used measure of risk-adjusted return. The index comprises 50 securities with a market capitalization of approximately $4.2 billion to $212.3 billion, as per the filing. The constituents of the index are equal-weighted with a 2% basket weight each. This is the first ETF to be constructed around the Sharpe ratio. Both the funds are expected to be listed on the NYSE Arca. The expense ratio and the ticker code of the funds are yet to be disclosed. How Does it Fit in a Portfolio? The proposed Goldman Sachs Hedge Fund VIP ETF will be a good option for investors seeking high returns and who possess a healthy risk appetite. As per an Investopedia report, The Goldman Sachs Hedge Fund VIP Index has appreciated approximately 80% since mid-2012 while the S&P 500 was up approximately 51% in the period. Thus, the Hedge Fund VIP Index outperformed the S&P 500 even during a raging bull period. However, given the current bearish environment led by global growth worries, China turmoil and slump in oil prices, investors should be cautious (read: Best ETF Strategies to Survive Market Turmoil ). Goldman Sachs High Sharpe Ratio ETF will be an innovative product providing risk-adjusted return with low concentration risk. The Sharpe ratio can be defined as excess return i.e. difference between asset return and risk free return for per unit of risk dominated by standard deviation. However, the Sharpe ratio is sometimes criticized as it does not differentiate between upside and downside deviation. Thus, it penalizes stocks for its potential to gain. Although the filing did not state the fees the new ETFs will charge, it is expected that they will not be very high, considering Goldman’s strategy of charging below-average fees for a number of ETFs including smart-beta ETFs. The Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEARCA: GSLC ) launched in September 2015 has accumulated $300.8 million in its asset base and has an expense ratio of 0.09% (read: Can Goldman Dominate the Smart Beta ETF Industry? ). ETF Competition These new funds, if approved, could be interesting options for investors seeking a diversified exposure amid the current market turmoil. Goldman Sachs High Sharpe Ratio ETF doesn’t have a direct contender. The fund would definitely get the first mover advantage, as it will be the first ETF in the space. Meanwhile, Goldman Sachs Hedge Fund VIP ETF providing exposure to a niche market may face competition from other ETFs tracking hedge funds’ stock holdings. The Global X Guru ETF (NYSEARCA: GURU ) is one of the popular ETFs in this space with an AUM of $119.7 million and trades in average volume of almost 40,000 per day. The fund has a high expense ratio of 0.75% and returned slightly almost 10% so far this year. Another ETF is this space is the AlphaClone Alternative Alpha ETF (NYSEARCA: ALFA ) with an AUM of $106.4 million. The fund trades in average volume of almost 44,000 per day. The fund has a high expense ratio of 0.95% and returned slightly almost 7% so far this year. So, the road ahead is definitely promising for the new ETF as it has potential to provide a lucrative option to investors. Link to the original post on Zacks.com

Alternative ETFs To Gain On First Solar’s Q4 Beat

Leading U.S. solar-panel manufacturer First Solar (NASDAQ: FSLR ) reported its fourth-quarter 20 15 results after the closing bell yesterday. The company beat our estimates on earnings and revenues, but lowered its sales guidance for 20 16 that remains much above our estimate. Earnings per share came in at $ 1.60, which comfortably surpassed the Zacks Consensus Estimate of 80 cents, but declined 15.3% from the year-ago quarter. Revenues decreased 6.5% year over year to $942 million, but edged past our estimate of $93 1 million. For 20 16, the company maintained its earnings per share guidance of $4.00-4.50, but slashed its revenue outlook to $3.8-4.0 billion from $3.9-4. 1 billion. The midpoints of both the guided earnings and revenues are much higher than the current Zacks Consensus Estimate of $4. 10 and $3.78 billion, respectively. Shares of this thin-film solar PV maker rose 2.9% in the after-market hours. The stock currently has a Zacks #3 (Hold) with a solid Value Style Score of B and a robust industry rank in the top 6%, suggesting a bright near term. ETFs in Focus Following the earnings beat, the ETFs having larger allocations to this solar giant have been in focus and could make great plays over the coming days. Below we have highlighted them: Market Vectors Solar Energy ETF (NYSEARCA: KWT ) This fund manages $ 14.4 million in its asset base and provides global exposure to 29 solar stocks by tracking the Market Vectors Global Solar Energy Index. Here, FSLR takes the top spot with a 10% allocation. In terms of country exposure, U.S. and China account for the top two countries with 34.9% and 24.9% share, respectively, closely followed by Taiwan ( 18.3%). The product has an expense ratio of 0.65% and sees a paltry volume of about 2,000 shares a day. The ETF has lost 23% in the year-to-date time frame. First Trust NASDAQ Clean Edge Green Energy Index ETF (NASDAQ: QCLN ) This fund provides exposure to the U.S. clean energy companies across a wide range of industries, including solar power, biofuels, advanced batteries, as well as the installation of new technological systems. It tracks the NASDAQ Clean Edge Green Energy Index and manages assets worth $65.5 million. It charges 60 bps in fees per year while the volume is light at nearly 24,000 shares. In total, the product holds 45 securities with FSLR being the top firm, accounting for 9.6% of its basket. From a sector look, technology firms dominate this ETF, accounting for nearly 30% of assets while oil & gas companies take another one-fourth share. QCLN has shed 16% so far this year and has a Zacks ETF Rank of 3 with a High risk outlook. Market Vectors Global Alternative Energy ETF (NYSEARCA: GEX ) This ETF provides global exposure to stocks that are primarily engaged in the business of alternative energy by tracking the Ardour Global Index. The fund holds about 3 1 stocks in its basket with an AUM of $84. 1 million while charging 62 bps in fees per year. Average daily volume is paltry for this fund at around 8,000 shares. First Solar occupies the fourth position in the basket with an 8.6% share. From a sector perspective, industrials takes the largest share at 47. 1% while information technology (29.7%) and utilities ( 13.4%) round off the next two spots. In terms of country exposure, the fund is skewed toward the U.S. with a 50.8% share followed by Denmark and China. The ETF has lost 12.4% in the same period. iShares S&P Global Clean Energy Index ETF (NASDAQ: ICLN ) This fund provides global exposure to 3 1 clean energy stocks, including solar, wind and other renewable sources, by tracking the S&P Global Clean Energy Index. Out of these, FSLR occupies the top spot at 7.62% of assets and charges 48 bps in annual fees and expenses. It has amassed just $75.3 million in its asset base while volume is also light at about 38,000 shares. U.S. and China take the top two spots in terms of country exposure with 24.7% and 23.5% share, respectively. The ETF is down about 16.4% in the year-to-date time frame. Guggenheim Solar ETF (NYSEARCA: TAN ) This ETF follows the MAC Global Solar Energy Index, holding 29 stocks in the basket. First Solar occupies the top position with 7.7% share. American firms dominate the fund’s portfolio with nearly 55.9% share, followed by China ( 17.9%) and Hong Kong ( 15%). The product has amassed $22 1.6 million in its asset base and trades in solid volume of more than 196,000 shares a day. It charges investors 70 bps in fees per year. The fund has lost 28.3% in the year-to-date time frame and has a Zacks ETF Rank of 3 or “Hold” rating with a High risk outlook. Original post