Tag Archives: nreum

Taking A Look At Kevin O’Leary’s New ETF

Kevin O’Leary is venturing into the ETF world with his new fund-OUSA. The ETF tracks a new multi-factor index by FTSE Russell which focuses on bigger companies with good dividends and low volatility. With an expense ratio of .48, this ETF is a decent choice but it will be hard to compete with Vanguard’s lower cost funds. Kevin O’Leary has just introduced his first ETF through O’Shares, after running a family of mutual funds for several years. The O’Shares FTSE U.S. Quality Dividend ETF (NYSEARCA: OUSA ). The focus of this particular fund is on dividend paying stocks with low volatility. The target index that this ETF tracks the performance of is the FTSE U.S. Qual/Vol/Yield Factor 5% Capped Index, and this index was just released by FTSE Russell. The design of this multi-factor index is to include quality large-cap and mid-cap U.S. companies that have high dividends and lower volatility. Also, the index is designed to keep a cap of 5% on any one company, which will keep it from being too concentrated. Ron Bundy, who is the CEO Benchmarks North America, FTSE Russell, explains : We are seeing growing demand in the investment community for more sophisticated indexes that can tap into market exposures efficiently and, in many cases, combine multiple factors. We are excited to introduce factor indexes that help clients like O’Shares target the specific exposures they seek. Here is what Kevin O’Leary has to say on this index: We believe now is the time to provide our time tested investment principles through a simple, transparent, efficient and cost effective index-based investment product. So we are launching our new family of global index-based ETFs for investors and joining forces with leading global index provider FTSE Russell. This is not the only new fund though, as O’Leary will be rolling out four more ETFs within the next 90 days: O’Shares FTSE Europe Quality Dividend ETF O’Shares FTSE Europe Quality Dividend Hedged ETF O’Shares FTSE Asia Pacific Quality Dividend ETF O’Shares FTSE Asia Pacific Quality Dividend Hedged ETF Here are more details of OUSA. The holdings are diversified into 10 different sectors. (click to enlarge) These are the top 10 holdings in the fund: Johnson & Johnson (NYSE: JNJ ) Exxon Mobile Corp. (NYSE: XOM ) Apple Inc. (NASDAQ: AAPL ) AT&T (NYSE: T ) Microsoft Corp. (NASDAQ: MSFT ) Verizon Comm. (NYSE: VZ ) Pfizer (NYSE: PFE ) Proctor & Gamble (NYSE: PG ) Phillip Morris Intl. (NYSE: PM ) Chevron (NYSE: CVX ) Here is a look at how OUSA stacks up against other dividend ETFs in regards to yield and expenses. ETF Ticker Symbol 12-Mo Yield Expense Ratio OUSA 3.2%* 0.48% Vanguard High Dividend Yield ETF ( VYM) 3.05% 0.10% iShares Select Dividend ETF (NYSEARCA: DVY ) 3.26% 0.39% Vanguard Dividend Appreciation ETF (NYSEARCA: VIG ) 2.23% 0.10% iShares MSCI USA Quality Factor ETF ( QUAL) 1.50% 0.15% Global X Super Dividend U.S. ETF (NYSEARCA: DIV ) 6.03% 0.45% WisdomTree U.S. Dividend Growth ETF ( DGRW) 2.01% 0.28% WisdomTree LargeCap Dividend ETF ( DLN) 2.59% 0.28% *Average yield of holdings While choosing to go with an ETF instead of mutual funds is definitely more in line with what investors are wanting these days, the expense ratio is still a bit high for my liking and it just shows what a competitive advantage that Vanguard has with it’s low fees. With that said, this ETF is a decent choice for what it offers and investors looking for a simple buy and hold ETF to compound the dividends or receive income might be pleased with this new choice. There is not much that makes this fund extremely unique though, and there are better choices out there. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

How To Avoid The Worst Style Mutual Funds: Q2’15 In Review

Summary The large number of mutual funds has little to do with serving your best interests. Below are three red flags you can use to avoid the worst mutual funds. The following presents the least and most expensive style mutual funds as well as the worst overall style mutual funds per our 2Q15 style ratings. Question: Why are there so many mutual funds? Answer: Mutual fund providers tend to make lots of money on each fund so they create more products to sell. The large number of mutual funds has little to do with serving investors’ best interests. Below are three red flags investors can use to avoid the worst mutual funds: 1. Inadequate Liquidity This issue is the easiest issue to avoid, and our advice is simple. Avoid all mutual funds with less than $100 million in assets. Low levels of liquidity can lead to a discrepancy between the price of the mutual fund and the underlying value of the securities it holds. Plus, low asset levels tend to mean lower volume in the mutual fund and larger bid-ask spreads. 2. High Fees Mutual funds should be cheap, but not all of them are. The first step here is to know what is cheap and expensive. To ensure you are paying at or below average fees, invest only in mutual funds with total annual costs below 1.95%, which is the average total annual cost of the 6391 U.S. equity Style mutual funds we cover. Figure 1 shows the most and least expensive style mutual funds. Empiric provides one of the most expensive mutual funds while Vanguard mutual funds are among the cheapest. Figure 1: 5 Least and Most Expensive Style Mutual Funds Sources: New Constructs, LLC and company filings Investors need not pay high fees for quality holdings. The E aton Vance Hexavest U.S. Equity Fund (MUTF: EHUIX ) earns our Very Attractive rating and has low total annual costs of only 1.22%. On the other hand, no matter how cheap a mutual fund, if it holds bad stocks, its performance will be bad. The quality of a mutual fund’s holdings matters more than its price. 3. Poor Holdings Avoiding poor holdings is by far the hardest part of avoiding bad mutual funds, but it is also the most important because a mutual fund’s performance is determined more by its holdings than its costs. Figure 2 shows the mutual funds within each style with the worst holdings or portfolio management ratings . Figure 2: Style Mutual Funds with the Worst Holdings Sources: New Constructs, LLC and company filings Northern Lights appears more often than any other providers in Figure 2, which means that they offer the most mutual funds with the worst holdings. Our overall ratings on mutual funds are based primarily on our stock ratings of their holdings. The Danger Within Buying a mutual fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on mutual fund holdings is necessary due diligence because a mutual fund’s performance is only as good as its holdings’ performance. PERFORMANCE OF MUTUAL FUND’s HOLDINGs = PERFORMANCE OF MUTUAL FUND Disclosure: David Trainer and Max Lee 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. (More…) 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.

GREK: A Deal Is Near, But The Game Is Not Over Yet

Summary A deal between Greece and its creditors is near, but the Greek parliament must accept austerity measures by Wednesday. Greek banks need liquidity but the ECB won’t provide it to them if the parliament doesn’t pass the measures. Bank shares represent 25% of GREK’s portfolio and they may push its share price significantly upwards as well as downwards. GREK has a lot of upside potential after the new deal is closed, but investors should monitor steps of Greek government closely, as the Greek politicians are highly unreliable. As I wrote back in March , the Global X FTSE Greece 20 ETF (NYSEARCA: GREK ) has a significant upside potential, after the current situation is resolved. A lot of things have changed, but the situation hasn’t been resolved yet. GREK lost half of its value over the last 12 months, but the decline has slowed down significantly over the last couple of months. The $9 line wasn’t breached and the recent developments indicate that it maybe won’t be retested anytime soon. But the Greek debt saga hasn’t ended yet and the current optimism may turn into a huge sell off as soon as on Wednesday. Do we have a deal? Although the deal between Greece and its creditors is close, the game is still not over. After 17 hours of negotiations, there is an agreement that Greece will not have to leave the eurozone and that it will get another €86 billion, but the Greek parliament must approve austerity measures by Wednesday. The Greeks have to reform their VAT system, reduce pensions and make some immediate budget cuts. Greece will also create a trust fund that will manage state assets worth approximately €50 billion. The fund should be based in Greece but it will be managed by an external agency. The assets held by the fund should be privatized and the proceeds should be used primarily for debt repayments. It is expected that shares of Greek banks will represent a big part of the assets, as the Greek government will buy new shares of the banks in order to refinance them. The shares will be transferred to the fund subsequently. All of the measures must be accepted by the Greek parliament by Wednesday. And it is not sure whether all of the proposals will really pass, as there is a lot of Greek politicians who are against the austerity measures. Tsipras will need votes of the opposition, as he can’t rely on support of his own party. The Wednesday deadline is important also for the cash-strapped Greek banks. They desperately need liquidity from the ECB but it is expected that the ECB won’t provide them any liquidity if the austerity measures are not accepted by the parliament on Wednesday. If the measures pass on Wednesday, the GREK share price should start to realize its upside potential. Although there is a significant danger that there will be some complications. In this case the EU will probably postpone the deadline by a couple of days (the EU is really great in postponing deadlines and Greece is really great in missing deadlines) in order to enable another voting, but the reaction of investors may be very nervous. A breakage of the $9 level isn’t excluded. GREK composition and growth prospects The table below shows complete holdings of GREK, as of July 10. The biggest holding is Coca-Cola HBC ( OTC:CCHBF ) that represents almost 21% of GREK’s portfolio. A strong position has also Hellenic Telecommunications Organization ( OTC:HLTOY ). Both of the companies should be relatively stable. The problem is that GREK also holds a lot of bank shares. Source: own processing, using data of globalxfunds.com The National Bank of Greece (NYSE: NBG ), Alpha Bank ( OTC:ALBKY ), Eurobank Ergasias ( OTC:EGFEY ) and Piraeus Bank ( OTC:BPIRY ) represent almost 25% of GREK’s portfolio. These shares may lead the rally if the austerity measures are accepted and the ECB provides liquidity to Greek banks. On the other hand if there are some complications, shares of banks will be most probably the biggest losers. Conclusion I still believe that GREK has a significant upside potential, in the longer term. After the austerity measures are accepted, we can expect a relief rally. But the investors should be careful, as the Greek politicians have shown that they are highly unreliable. They had agreed to make some economic reforms in the past, but they violated their promises only a couple of months later. Even if the Greek parliament accepts the current proposals, there is no warranty that the Greek government will play by the rules. In this case, GREK shareholders should be prepared to liquidate their positions as soon as possible, to avoid losses similar to those recorded by GREK over the last 12 months. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.