Tag Archives: nysearcabno

Emerging Market And Oil: 2 ETFs To Watch On Outsized Volume

In the last trading session, the U.S. stocks were badly hit by China’s 2% devaluation of the yuan, as it raised fears about the health of the world’s second-largest economy and could spur new round of currency wars. Among the top ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) lose 0.9%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) shed 1.2% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) move lower by 1.3% on the day. Two more specialized ETFs are worth noting, as both saw trading volume that was far outside of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This could make these ETFs ones to watch out for in the days ahead to see if this trend of extra interest continues: SPDR S&P Emerging Markets Dividend ETF (NYSEARCA: EDIV ): Volume 3.79 times average This emerging market ETF was in focus yesterday, as around 279,000 shares moved hands, compared to an average of roughly 77,000. We also saw some share price movement, as EDIV lost 1.4% in the last session. The movement can largely be blamed on China’s surprise move that triggered the sell-off in emerging market currencies and can have a huge impact on the stocks like what we find in this ETF’s portfolio. EDIV was down nearly 9.5% in the month, and currently has a Zacks ETF Rank #3 (Hold). The United States Brent Oil ETF (NYSEARCA: BNO ): Volume 2.47 times average This oil ETF was under the microscope yesterday, as more than 323,000 shares moved hands. This compares to an average trading day of 134,000 shares, and came as BNO lost nearly 1.7% on the session. The big move was largely the result of declining oil prices following OPEC’s latest monthly oil report, which showed that it pumped the maximum oil in three years in July. BNO was down nearly 16.4% in the past one-month period. Original Post Share this article with a colleague

Oil ETFs Slide Again: More Pain In Store?

After smooth trading in May and June, oil resumed its decline and trapped in the nastiest downward spiral in July joining the broader selloff in commodities amid the growing global glut and the China slowdown. In fact, U.S. crude oil lost nearly 21% in July, which was the worst month since October 2008. The rout worsened in the first session of August with crude plunging as much as 5% on Monday to around $45.17 per barrel. On the other hand, Brent oil dropped to below $50 per barrel for the first time since January. Inside the Recent Slump The brutal trading on Monday can be attributed to the increase in the number of rig counts, weak China manufacturing data, and downbeat U.S. economic data on manufacturing and construction spending that suggests tepid oil demand growth around the world. China manufacturing activity unexpectedly fell to a two-year low in July, adding to worries on the world’s second-largest economy. Meanwhile, U.S. manufacturing also slipped in July and consumer spending advanced at its slowest pace in four months in June, indicating that the world’s largest economy is losing momentum yet again. Coming to the supply side, the Organization of Petroleum Exporting Countries (OPEC) is pumping up maximum oil in the recent past buoyed up by higher output from Iraq and Saudi Arabia. It is currently producing about 32 million barrels a day against its target of 30 million barrels a day. Additionally, Iran, the world’s fourth-largest reserve holder with 158 billion barrels of crude oil, is gearing up to boost its production immediately after sanctions are lifted, which is expected in late November. As per Iran’s oil minister, Bijan Namdar Zanganeh, production will likely increase by 500,000 barrels a day within a week after relaxation in sanctions and by 1 million barrels a day within a month. Further, oil production in the U.S. has been on the rise and is hovering around its record level. ETF Impact Terrible trading has been felt in the ETF world as well, sending oil ETFs tracking the futures contract in deep red from a one-month look. In particular, the iPath S&P GSCI Crude Oil Index ETN (NYSEARCA: OIL ) stole the show tumbling 19.6%, followed by over 17% declines in the United States Oil Fund (NYSEARCA: USO ) ), the iPath Pure Beta Crude Oil ETN (NYSEARCA: OLEM ) and the United States Brent Oil Fund (NYSEARCA: BNO ) . Two of the most popular leveraged oil ETFs – the ProShares Ultra Bloomberg Crude Oil ETF (NYSEARCA: UCO ) and the VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) – dropped 46.4% and 33%, respectively, in the same time frame. The former provides twice the return of the daily performance of the Bloomberg WTI Crude Oil Subindex while the latter delivers thrice the returns of the S&P GSCI Crude Oil Index Excess Return. Both indices consist of WTI crude oil futures contracts. What Lies Ahead? With deteriorating demand/supply dynamics, the prospect of an oil price rebound in the second half looks faded. In fact, there is a clear sign that oil price might revisit its previous low of the year, pushing the oil ETFs further down. This is especially true as speculators betting on rising oil prices have fallen sharply in recent weeks. Hedge funds reduced their net-long position in WTI to the lowest level in five years for the week ended July 28, according to the U.S. Commodity Futures Trading Commission data. Further, money managers also cut their bullish bets on Brent by 37,527 contracts for the same week, representing the biggest decline since July 2014, as per data from the ICE Futures Europe exchange. That being said, inverse ETFs have been on the tear over the past one month with the VelocityShares 3x Inverse Crude ETN (NYSEARCA: DWTI ) , the ProShares UltraShort Bloomberg Crude Oil ETF (NYSEARCA: SCO ) and the PowerShares DB Crude Oil Double Short ETN (NYSEARCA: DTO ) gaining 68.4%, 42.2% and 30.9%, respectively. As a result, investors bearish on oil could make a short-term play on these ETFs for big gains in a short span, especially if the “trend remains a friend” in this corner of the investing world. Link to the original article on Zacks.com

4 ETFs In Focus As Iran Reaches Nuclear Deal

The tension in the Middle East has eased following the historic nuclear deal between Iran and world powers. After decade-long negotiations, the Islamic Republic is ready to back down the development of nuclear weapons for over a decade in exchange for relief in oil sanctions imposed in the late 2000s. This seems to be a major development for Iran, the U.S. and the six world powers. The deal would open the doors for international oil and gas giants like Royal Dutch Shell (NYSE: RDS.A ), Total S.A. (NYSE: TOT ) and Eni SpA (NYSE: E ), previously barred under sanctions, to invest in the Iranian oil and energy sector thanks to Iran’s huge oil reserve. This is especially true as Iran is the world’s fourth-largest reserve holder of oil with 158 billion barrels of crude oil, according to the Oil & Gas Journal . Notably, it accounts for almost 10% of the world’s crude oil reserves and 13% of reserves held by the Organization of the Petroleum Exporting Countries (OPEC). On the other hand, any relaxation in sanctions would boost Iranian oil exports and production, adding to the global supply glut. However, it will take at least six months for the sanctions to be lifted due to vast legislative procedure involved in the historic deal. Additionally, the relief to oil sanctions will be gradual when it starts and thus could take years or more for Iran to increase oil production significantly or fully ramp up its export capacity. As per Fitch Ratings, Iranian oil production will increase in 2016 but will take a number of years to reach its previous peak. Iran currently exports about 1.1 million barrels per day, which more than halved from 2.6 million barrels per day exported in 2011. The development has put the spotlight on many corners of the investing world with investors keeping a close eye on them for the coming days. In particular, crude oil price has seen huge volatility following the historic nuclear deal. Crude price slumped as much 2.3% on the day but bounced back later to settle 1.6% higher at the close. As a result, we have highlighted four ETFs, which are especially in focus in the wake of nuclear deal: United States Brent Oil Fund (NYSEARCA: BNO ) Oil ETFs which directly deal in the futures market will be on the top of investors’ list. While there are many, the focus would be on Brent crude oil that serves as a major benchmark of oil worldwide instead of WTI, which is more of a benchmark for American prices. The fund provides direct exposure to the spot price of Brent crude oil on a daily basis through future contracts. It has amassed $95.4 million in its asset base and trades in good volume of roughly 215,000 shares a day. The ETF charges 75 bps in annual fees and expenses. BNO gained 0.5% on Tuesday trading session and is down about 9% in the year-to-date period. SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) As Iran is expected to increase oil production after sanctions are lifted, a closer look at the exploration and production sector is warranted. XOP is one of the largest and popular funds in the energy space with AUM of $1.7 billion and expense ratio of 0.35%. It trades in heavy volume of more than 9.7 million shares a day on average. This fund provides an equal-weight exposure to 75 firms by tracking the S&P Oil & Gas Exploration & Production Select Industry Index. None of the firms accounts for more than 1.84% of the total assets. The product is skewed toward small cap securities, as these account for 56% share in the basket, while the rest is almost evenly split between large and mid caps. The ETF surged 3% on the Iran deal but is down 4.8% so far in the year. iShares U.S. Aerospace & Defense ETF (NYSEARCA: ITA ) A nuclear agreement could be a boon for the U.S. defense sector, as it will prompt the Mideast partners to seek improved defense systems from American contractors. While there are other two quality options in the defense space – PPA and XAR – ITA will garner huge investors’ interest for its liquidity and AUM. The fund follows the Dow Jones U.S. Select Aerospace & Defense Index and holds 36 stocks in its basket. It allocates higher weights to the top two firms – Boeing (NYSE: BA ) and United Technologies (NYSE: UTX ) – at over 8% share each. Other securities hold no more than 6.70% of total assets. The fund has accumulated $533.6 million in AUM while charges 44 bps in fees a year. The product is up 0.6% on Tuesday trading session and 6.4% so far this year. Market Vectors Gulf States Index ETF (NYSEARCA: MES ) The deal could be the game changer for the Middle East, as it would make the relationship with the Western countries smoother with increased investments, new business, and a pickup in other economic activities. Given this, MES having AUM of just $15.3 could be potential winner in the coming years. The fund provides exposure to the 63 largest and most liquid stocks in the Gulf region by tracking the Market Vectors GDP GCC Index. Emaar Properties, Qatar National Bank and National Bank of Kuwait occupy the top three spots with at least 6% share each. Other firms hold no more than 4.3% of total assets. From a sector look, financials dominates the portfolio with 66.7% share while industrials and telecom round off the next two spots with double-digit exposure each. The ETF charges 99 bps in annual feeds and trades in a paltry volume of about 6,000 shares. The fund added 1.3% on the day and over 4% in the year-to-date time frame. Original Post