Tag Archives: networking

Tech ETFs That Braved The Storm In February

Among other reasons, the month of February 20 16 will be remembered for the broad-based sell-off in the tech space. In any case, a retreat from high-growth stocks kept this space off the radar, but the tension flared up when LinkedIn Corp. (NYSE: LNKD ) issued a lackluster guidance for the first quarter of 20 16 in early February (read: LinkedIn Crashes: Should You Connect with Social Media ETF? ). Along with LinkedIn, the famous FANGs (Facebook (NASDAQ: FB ), Amazon (NASDAQ: AMZN ), Netflix (NASDAQ: NFLX ) and Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) (i.e. Alphabet) were also hit hard. Notably, the famous four contributed a lot to last year’s tech surge. However, the bloodbath in these stocks dragged down the tech-laden Nasdaq exchange, forcing it to be the worst performing index among the top three U.S. indices. Nasdaq- 100 ETF (NASDAQ: QQQ ) was off over 1.8% in February while Technology Select Sector SPDR ETF (NYSEARCA: XLK ) lost about 1%. Apart from the LinkedIn-induced crash, overvaluation concerns, global growth issues and corporate recession were responsible for last month’s technology tantrum. Almost all ETFs catering to cyber security, the broader Internet, cloud computing and software were the hardest hit in the technology meltdown. Still, there are a few tech ETFs which dared the sell-off to end the month in the green. Below we highlight three such tech ETFs. iShares North American Tech-Multimedia Networking ETF (NYSEARCA: IGN ) – Up 6.8% This ETF provides a concentrated exposure to the domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 26 securities in its basket, Motorola (NYSE: MSI ) takes the top spot with a 9.5% allocation. This is followed by Qualcomm (NASDAQ: QCOM ) (9.35%) and Cisco Systems (NASDAQ: CSCO ) (8.7%). The product has a definite tilt toward small cap securities that account for 43%, followed by mid caps at 34%. It has accumulated $78.9 million in its asset base while sees a moderate volume of around 7 1,000 shares a day. Expense ratio comes in at 0.48%. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a high risk outlook. PowerShares S&P SmallCap Info Tech ETF (NASDAQ: PSCT ) – Up 3.8% This fund tracks the S&P SmallCap 600 Capped Information Technology Index. It has amassed $377.5 million in its asset base and trades in average daily volume of about 4 1,000 shares. The ETF charges 29 bps in fees per year from investors. Holding 102 securities in its basket, the product is well spread across securities with none holding more than 3.5 1% share (read: 5 Small Cap ETFs & Stocks that Beat Russell 2000 in 20 15 ). From an industry look, about one-fourth of the portfolio is allocated toward electronic equipment, followed by semiconductors ( 19.43%) and software ( 16.29%). The product has a Zacks ETF Rank of 2 or a ‘Buy’ rating with a high risk outlook (read: Top Tech ETFs of 20 15: The Best from a Winner ). First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV ) – Up 3. 1% This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $462.9 million in its asset base and trades in moderate volume of about 98,000 shares per day. The ETF charges 50 bps in annual fees and holds about 96 securities in its basket (read: ETFs to Tap on Cisco’s Upbeat Q4 Results ). Cisco occupies the top position in the fund, making up for roughly 8.23% of the assets followed by IBM (NYSE: IBM ) (8.04%) and Microsoft (NASDAQ: MSFT ) (8.0 1%). In terms of industrial exposure, the fund allocates nearly one-fifth portion in semiconductor and semiconductor equipment, followed by diversified telecom services ( 17%), software ( 15.52%), technology hardware, storage & peripherals ( 15.3%), and communications equipment ( 14.6%). Original Post

Best And Worst Q1’16: Telecom Services ETFs, Mutual Funds And Key Holdings

The Telecom Services sector ranks eighth out of the ten sectors as detailed in our Q1’16 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Telecom Services sector ranked eighth as well. It gets our Dangerous rating, which is based on aggregation of ratings of six ETFs and 13 mutual funds in the Telecom Services sector. See a recap of our Q4’15 Sector Ratings here . Figure 1 ranks from best to worst all six Telecom Services ETFs and Figure 2 shows the five best and worst-rated Telecom Services mutual funds. Not all Telecom Services sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 24 to 56). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Telecom Services sector should buy one of the Attractive-or-better rated ETFs from Figure 1. 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 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 Rydex Telecommunications Fund (MUTF: RYMIX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. The iShares North American Tech-Multimedia Networking ETF (NYSEARCA: IGN ) is the top-rated Telecom Services ETF and the Fidelity Wireless Portfolio (MUTF: FWRLX ) is the top-rated Telecom Services mutual fund. IGN earns an Attractive rating and FWRLX earns a Neutral rating. The iShares U.S. Telecommunications ETF (NYSEARCA: IYZ ) is the worst-rated Telecom Services ETF and the Rydex Telecommunications Fund (MUTF: RYTLX ) is the worst-rated Telecom Services mutual fund. Both earn a Very Dangerous rating. 45 stocks of the 3000+ we cover are classified as Telecom Services stocks, but due to style drift, Telecom Services ETFs and mutual funds hold 56 stocks. China Mobile Limited (NYSE: CHL ) is one of our favorite stocks held by Telecom Services ETFs and mutual funds and earns a Very Attractive rating. Since 2012, China Mobile has generated positive economic earnings , maintained a top quintile return on invested capital ( ROIC ) of 20% or higher, and generated a cumulative $22.9 billion in free cash flow. However, CHL remains significantly undervalued. At its current price of $54/share China Mobile has a price to economic book value ( PEBV ) ratio of 0.6. This ratio implies that the market expects China Mobile’s profits to permanently decline by 40% from current levels. If China Mobile can grow profits by just 10% compounded annually for the next five years , the stock is worth $123/share – a 127% upside. Telephone & Data Systems (NYSE: TDS ) is one of our least favorite stocks held by FTUAX and earns a Dangerous rating. Since 2009, Telephone & Data systems after-tax profit ( NOPAT ) has declined by 21% compounded annually. At the same time, its ROIC has fallen from 5% to a bottom quintile 1%. Shares of Telephone & Data remains significantly overvalued given the clear deterioration of its business operations. To justify its current price of $23/share, TDS must immediately achieve pre-tax margins of 3% (0% in 2014) and grow revenue by 10% compounded annually for the next 16 years . Figures 3 and 4 show the rating landscape of all Telecom Services ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Mutual 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, sector 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.