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5 American ETFs Enjoying Independence

A marked growth in the U.S. economy has increased the confidence in its people. Yet the U.S. stock market is caught in a bull-bear tug of war this year. This is especially true as the S&P 500 recorded its worst performance in five years, gaining just 0.2% in the first half. Meanwhile, Dow Jones shed over 1% in the same time period. A massive decline thanks solely to the Greece crisis spoilt the market mood in the final days of the first half. The debt drama in Greece climaxed after the deal talk collapsed last weekend, forcing prime minister Alexis Tsipras to close the country’s banks and impose capital controls. Further, rounds of downbeat economic data, strong dollar, global economic slowdown concerns, and the prospect of higher interest rates kept the stock prices at check. Yet in such a sluggish backdrop, some specific zones like small caps, health care, technology and many others shone. The financial sector too is pinning all hopes on the likely interest rates hike later this year. In fact, the tech-heavy Nasdaq Composite Index and the small cap Russell 2000 Index have been on a tear, having returned respectively 5.3% and 4.1%. Nasdaq has been blessed this year. It crossed the 5,000 milestone for the first time in early March since the 2000 dot-com bubble and touched multiple highs at regular intervals. Robust performances were driven by growing demand for novel and advanced technologies, and better job prospects. Economically sensitive sectors like technology generally pick up in an expanding economic cycle and most of the tech companies are sitting on a huge pile of cash, which ensures their strength in the rising rate environment. On the other hand, small caps ensure higher returns when the American economy is arguably leading the way. These pint-sized stocks are closely tied to the U.S. economy and generate most of their revenues from the domestic market, making them safer bets than their large and mid cap counterparts during a global turmoil. Due to their less international exposure, these stocks remained relatively unscathed by the strong dollar and Grexit fears. Given this, we have highlighted five star-spangled ETFs with handsome returns of at least 10% in the first six months of 2015. These funds focus exclusively on American equities and could definitely be worth a look for investors seeking a domestic tilt to their portfolio following the Fourth of July Holiday. Also, these are free from external threats, and move independently from the major indices: ALPS Medical Breakthroughs ETF (NYSEARCA: SBIO ) This fund targets companies with one or more drugs in Phase II or Phase III FDA clinical trials by tracking the Poliwogg Medical Breakthroughs Index. It provides a well spread out exposure to 82 stocks in its basket with none holding more than 4.50% share. SBIO is a small cap centric fund, having amassed $124.7 million in its asset base since its debut six months ago. The product charges 50 bps in fees per year from investors and trades in average daily volume of around 78,000 shares. It has delivered excellent returns of about 38% in the first half driven by its dual nature – small cap exposure and non-cyclical sector. Aging population, Obamacare, an endless hunt for new drugs, merger mania and cost cutting efforts added to the further strength. Barclays Return on Disability ETN (NYSEARCA: RODI ) This product is also the new entrant in the space, having debuted last September. It provides exposure to the companies that have acted to attract and serve people with disabilities and their friends and family as customers and employees. The fund follows the Return on Disability US LargeCap ETN Total Return USD Index, which measures the 100 largest companies that are outperforming in the disability market. The note charges 45 bps in annual fees from investors and trades in a meager volume of under 1,000 shares. The ETN was up over 26% in the same timeframe. ARK Web x.0 ETF (NYSEARCA: ARKW ) This is an actively managed fund focusing on companies that are expected to benefit from the shift of technology infrastructure from hardware and software to cloud enabling mobile and local services. These companies will primarily be either developers or users in fields such as cloud computing, wearable technology, big data, cryptocurrencies, social media, services and data mining, Internet of Things and digital education. The fund holds 45 stocks in its basket with a tilt toward the top firm – Athenahealth (NASDAQ: ATHN ) – at 7% while other firms hold less than 5% share. It has amassed $11.4 million in its asset base within less than a year while sees average daily volume of around 2,000 shares. Expense ratio came in at 0.95%. The fund has added over 12% in the first six months of this year. Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSEARCA: RZG ) This fund targets the small cap U.S. market and follows the S&P SmallCap 600 Pure Growth Index. Holding 133 securities in its basket, it is well spread out across components with each holding less than 2.2%. Health care, financials, consumer discretionary, information technology, and industrials are top five sectors with double-digit allocation each. The fund has amassed $182.8 million in its asset base while trades in light volume of about 18,000 shares a day on average. It charges 35 bps in fees per year from investors and gained nearly 12% in the same time period. PowerShares KBW Regional Banking Portfolio ETF (NYSEARCA: KBWR ) This fund offers exposure to the regional banking corner of the broad financial market. It tracks the KBW Regional Banking Index and holds 50 stocks in its basket. The product is widely diversified across components with none accounting more than 4.01% share. It is a small cap centric fund as these account for 79% of the portfolio while the rest goes to mid caps. The ETF is often overlooked by investors as depicted by its AUM of $41.5 million and average daily volume of under 6,000 shares. It charges 35 bps in annual fees and added nearly 11% in the first half of 2015. Original Post

3 Small-Cap Growth ETFs To Buy For Q3

Contrary to popular believe, the Fed dove is still to fly far from the border of the U.S. economy. In its latest June meeting, the Fed remained accommodative and hinted at a slower rate hike trail when the step is actually taken. To add to this, the Fed slashed its projection for the benchmark interest rate for 2016 and 2017, though the guidance for the ongoing year was kept unchanged. This indirectly promised investors a few more months of cheap money inflows. On the other hand, the U.S. economy is taking root. Fed officials even went on to say that the rebounding U.S. economy is strong enough to endure one or two rate hikes this year and insisted that the rate hike decision will be solely economic data reliant. The ”soft patch” of Q1 has disappeared with “moderate” economic growth momentum in Q2. The economy wrote a turnaround story with better than expected job growth data along with strong construction spending, automobile sales and housing numbers. Some dampeners of Q1 including a harsh winter and strikes at the Western Coast ports will not be present in Q3, though a relatively stronger greenback (against a basket of currencies) might cause occasional threats to U.S. exports and the large-cap stocks. This economic development set the stage for the small-cap growth ETF’s outperformance. Small cap stocks are broadly leading the market higher this year and are comfortably surpassing their large cap cousins. The ultra-popular small cap ETF iShares Russell 2000 ETF (NYSEARCA: IWM ) is up 6.9% year to date (as of June 19, 2015) against 2.4% gains in the SPDR S&P 500 ETF Trust (NYSEARCA: SPY ) . This trend will likely continue in the coming quarter, presuming that a risk-on sentiment will hang on in the marketplace and the focus will stay on the domestically exposed stocks. Investors should note that small-cap stocks are seen as an indicator of the domestic economy. These pint-sized companies deal mainly with the domestic economy. Due to their less global exposure, these stocks remain relatively less ruffled by a strong dollar. So this part of capitalization would be one of the best bets if the Fed takes the rate hike plunge later on the year. Moreover, indecisiveness is prevalent in the global markets due to Greek debt worries, slowdown in China and Japan, rate issues in the U.S. and the consequent movement in the greenback and finally the volatility in oil prices. These happenings might weigh on large-cap stocks leaving small-cap growth stocks and ETFs as intriguing choices. These growth focused small caps have actually outperformed the broad market small cap ETFs lately by a pretty wide margin and have the potential to carry forward the trend. Small-Cap Growth ETFs Upgraded to Buy Rating Below, we highlight three small-cap growth ETFs all with Zacks Rank #1 (Strong Buy) or #2 (Buy), any of which could be an excellent play in the third quarter. Investors should note that each of these ETFs went through a Zacks rank upgrade recently. SPDR S&P 600 Small Cap Growth ETF (NYSEARCA: SLYG ) This ETF was upgraded from Zacks ETF Rank #3 (Hold) to Zacks ETF Rank #1. The ETF tracks the S&P SmallCap 600 Growth Index. Holding 351 securities, this fund is also well spread out across each sector and security. Each security accounts for less than 1.27%, while sector wise, Financials, Consumer Discretionary, Healthcare, Information Technology and Industrials take the top five spots each with double-digit exposure, leaving a decent allocation for the utilities and telecom sectors. This $575 million fund trades at a paltry volume of 20,000 shares a day suggesting additional cost beyond the expense ratio of 0.15%. The ETF is up 9.6% year to date (as of June 19, 2015). iShares Morningstar Small-Cap Growth ETF (NYSEARCA: JKK ) The product was upgraded from Zacks ETF Rank #3 to #2. This is an overlooked choice in the small cap space with AUM of $141.5 million and average trading volume of close to 2000 shares a day. The 252-stock fund tracks the Morningstar Small Growth Index. It is well spread out across components as none of these holds more than 1.15% of assets. Sector wise, information technology (28.90%), and healthcare (22%) take the top two spots. The fund charges 30 bps in annual fees from investors and has gained 10.4% so far this year. Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSEARCA: RZG ) This ETF was upgraded from Zacks ETF Rank #3 to #1. The fund targets the small cap U.S. market and follows the S&P SmallCap 600 Pure Growth Index. Holding 132 securities in its basket, it is well spread out across components with each holding less than 2.17%. Financials, Healthcare, Consumer Discretionary, Information Technology, and Industrials are the top five sectors with double-digit allocation each. The fund has amassed $166 million in its asset base and trades in light volume of about 20,000 shares a day on average. Expense ratio comes in at 0.35%. The product has surged 14.5% so far in the year. Original Post