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3 ETFs To Add To Your Celebrations On July Fourth

As one of the busiest travel holidays, this Fourth of July promises big business as pockets are heavier and confidence is on the rise. While the strength in the U.S. economy has translated into rising income, cheaper fuel has led to increased savings for long weekend getaways. This is especially true as gasoline price has been on the downtrend over the past couple of weeks. As per the AAA, drivers paid an average of $2.77 per gallon as of July 1, which is below 91 cents per gallon from the year-ago price and the lowest on this date since 2010. This trend is likely to continue over the Independence Day weekend and July 4 gas price will likely be the lowest in at least five years, spurring travelling demand. AAA estimates that 41.9 million Americans will travel 50 miles or more during the holiday weekend (July 1 to July 5) with 85% (35.5 million) choosing to travel by car. This represents maximum travelling since 2007. But the celebration is incomplete without fireworks, barbecues and of course shopping. In fact, Independence Day marks the beginning of the busiest half of the year for retailers. Many retailers are already flashing exciting deals for July Fourth and massive discounts are in the cards for a specific day. Among the most notable, Best Buy (NYSE: BBY ) is offering up to 40% discount on major appliances, including refrigerators, ranges and dishwashers while the departmental store Macy’s (NYSE: M ) is offering the “lowest prices of the season” on indoor and outdoor furniture, and mattresses on Independence Day. The online e-commerce behemoth Amazon (NASDAQ: AMZN ) will celebrate with limited-time price cuts on movies, books, music and more. About 23% of consumers would hit the stores in search of decorative items, apparels, and groceries. Spending per household is estimated at $71.23, up from $68.16 last year, according to the National Retail Federation (NYSE: NRF ). Further, Americans are expected to spend $6.6 billion on food alone. That being said, this holiday will be a celebration of not only freedom, but also economic growth. Along with the spirit of the Americans, this July Fourth weekend should lift revenues and profits in various corners. Industries like transportation, lodging, hotel, restaurants, food and retail will benefit the most. Investors seeking to tap the July Fourth fanfare could ride on these industries through the following ETFs: iShares Dow Jones Transportation Average ETF (NYSEARCA: IYT ) The ETF provides exposure to the broad transportation sector by tracking the Dow Jones Transportation Average Index. The fund holds a small basket of 20 stocks with heavy concentration and dominance in the top 10 holdings. Railroad takes the top spot at 46.3% while airfreight & logistics and airlines round off to the next two spots with double-digit allocation each. The fund has accumulated $841 million in its asset base while it sees good trading volume of around 442,000 shares a day. It charges 43 bps in fees and expenses and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook. SPDR S&P Retail ETF (NYSEARCA: XRT ) This product tracks the S&P Retail Select Industry Index, holding 104 securities in its basket. It is widely spread across each component as none of these hold more than 1.15% of total assets. In terms of sector holdings, about one-fourth of the portfolio is allotted to apparel retail while specialty stores, Internet retail and automotive retail also receive double-digit allocation each. XRT is the most popular and actively traded ETF in the retail space with AUM of about $1.1 billion and average daily volume of about 2.1 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a Medium risk outlook. PowerShares Dynamic Leisure and Entertainment Portfolio ETF (NYSEARCA: PEJ ) This fund tracks the Dynamic Leisure and Entertainment Intellidex Index and holds a small basket of 30 US leisure and entertainment companies. The product is pretty well spread out across various securities as none accounts for more than 5.14% of total assets. From an industrial look, the fund is heavy on airlines and restaurants that collectively make up for 58% share, closely followed by hotels & leisure facilities (20%). The ETF has amassed $181.2 million in its asset base and trades in light volume of 49,000 shares a day on average. Expense ratio came in at 0.63%. PEJ has a Zacks ETF Rank of 3 with a Medium risk outlook. Original Post

ETF Asset Report Of H1: Currency Hedging Tops; U.S. Flops

As we step into the second half of 2015, it might be useful to look at how the $2.16-billion ETF industry performed in the first half of the year. After analyzing, we can conclude that currency-hedged ETFs and developed markets were the star performers in terms of asset gathering, as these saw maximum inflows, while the broader U.S. market was the laggard. Though “Grexit” worries in June had a last-minute impact on the half-yearly asset report, it could not totally derail the original sentiments. Let’s find out the top gainers and losers in terms of asset growth in the first half of 2015 (Source: etf.com ). Gainers Currency Hedging – WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) Currency hedging as a technique rocked in the first half of this year when it came to playing the developed economies like Europe. The rounds of monetary easing and the launch of the QE policy revived the eurozone this year. While policy easing devalued European currencies, the greenback strengthened on rising rate worries in the U.S. This policy differential made the currency hedging theme a shining star in 1H. Thanks to this trend, HEDJ, an ultra popular Europe ETF, was at the helm, having amassed over $14 billion in assets so far. Another exchange-traded fund, the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEARCA: DBEF ), which tracks the stocks from Europe, Australia and the Fast East, also added about $10.7 billion to its asset base and took the second spot. Developed Economies – iShares MSCI EAFE ETF (NYSEARCA: EFA ) Since accommodative policies were common in developed nations, from Europe to Japan to Australia and some emerging economies, EFA and the Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA ) took the third and tenth spots in the list, respectively. EFA hauled in about $6 billion, while VEA gathered about $2.7 billion in assets. Among the developed economies, Japan drew sizeable investor attention on stepped-up economic stimulus and after having come out of a technical recession in the final quarter of 2014. Though aggressive stimulus devalued the yen and bolstered the appeal for the hedged Japan ETFs, regular funds also did well in the first half. As a result, the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) and the iShares MSCI Japan ETF (NYSEARCA: EWJ ) – taking the sixth and seventh spots – saw inflows of $4.4 billion and $3.24 billion, respectively. Europe ETFs also gave an all-star performance, despite Greek debt default worries. Accordingly, the Vanguard FTSE Europe ETF (NYSEARCA: VGK ) and the iShares MSCI Germany ETF (NYSEARCA: EWG ) – the eighth and ninth position holders, each stacked up over $2.7 billion in assets. Vanguard ETFs – Vanguard Total Stock Market ETF (NYSEARCA: VTI ) and Vanguard S&P 500 ETF (NYSEARCA: VOO ) Since the relatively smaller market cap U.S. stocks rocked the show in 1H being better bets to guard from the rising dollar, the success behind VTI was self-explanatory. As the name suggests, VTI targets stocks across the capitalization spectrum and amassed about $4.9 billion assets. However, this does not seem the sole reason for the fund’s success. Vanguard’s low-cost approach was immensely popular in the last few years, which is why the issuer saw its asset base growing by leaps and bounds. Probably this was why VOO saw net asset inflows of $4.5 billion in 1H, despite the broader market underperformance. Losers U.S. – SPDR S&P 500 ETF Trust (NYSEARCA: SPY ) SPY, having witnessed an outflow of $42.7 billion in assets to-date, was the hardest hit. Though it started to gain traction on several occasions this year in line with the broader U.S. economic recovery, it could not woo investors. After all, the S&P 500 was flat in the first half. A soaring greenback and a harsh winter in the first quarter wrecked havoc on this benchmark index. Another fund by iShares, the iShares Core S&P 500 ETF (NYSEARCA: IVV ), also lost about $2.37 billion in assets. Investors should note that other ultra-popular ETFs that track key U.S. bourses like the Nasdaq and Dow Jones saw assets bleeding out of their products. The PowerShares QQQ Trust ETF (NASDAQ: QQQ ), which looks to track the tech-heavy Nasdaq, shed about $2.83 billion in assets and became the third-highest loser of 1H. The SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) too was in no better position, having lost about $1.67 billion in assets. Emerging Markets – iShares MSCI Emerging Markets (NYSEARCA: EEM ) The fund comes as a distant second, seeing a net exodus of about $3 billion in assets. The Fed rate hike worry was the major reason for investors’ aversion to the space. An anticipation of a cease in cheap dollar inflows may have caused investors to flee the space. Rate-Sensitive Sectors – Consumer Staples Select SPDR ETF (NYSEARCA: XLP ) and iShares U.S. Real Estate ETF (NYSEARCA: IYR ) Rate hike concerns sent jitters in the high-yielding sectors of the U.S. economy, leading investors to shy away from consumer staples and REIT ETFs, known for their high dividend yield. As a result, XLP had to sacrifice about $2.66 billion in net assets, while IYR surrendered about $1.61 billion. Original Post

Insurance ETFs Jump As ACE Agrees To Buy Chubb

A loud applause can be heard across the insurance industry, which is whole-heartedly rooting for the largest deal ever (in life and property casualty insurers’ space) on July 1, 2015. Swiss insurance company ACE Ltd. (NYSE: ACE ) announced that it would purchase high-end property insurer and its competitor Chubb Corp. (NYSE: CB ) in a $28.3 billion deal. Per the agreement, Chubb shareholders will get $62.93 per share in cash and 0.6019 in ACE shares, while ACE shareholders will be in possession of about 70% of the merged entity. The new company will take on Chubb’s name and will be led by ACE’s Chief Executive, Evan Greenberg. The deal is expected to be sealed in the first quarter of 2016 . Post announcement, Chubb skyrocketed over 26% and kept adding gains after market too. The merged entity will likely become ” a global leader in commercial and personal property and casualty (P&C) insurance”. It will help both the entities to unlock value, bolster the balance sheet and make better use of diversification. The combined entity will focus heavily on the growth criteria. Bloomberg noted that the insurance industry lately been thriving on an M&A spree, and that it has not seen such extravaganza in the last 12 years. Experts expect more such activity in the industry going forward. In any case, corporate America is seeing a flurry of mergers & acquisitions. In the first half of 2015, the activity hit a historic $1.03 trillion , never made possible by a country in a semi-annual time frame. While Chubb’s shares jumped over 26%, with more than 28 times its average daily volume, to close at $119.99, ACE shares closed 0.80% higher on the day, with 17 times higher the average daily volume, following the announcement of the deal. Below, we have highlighted four ETFs, two having exposure to the concerned companies and two that do not. Whatever the case, the news acted as a driver for the entire industry and pushed the funds higher yesterday (see all Financials ETFs here ). PowerShares KBW Property & Casualty Insurance Portfolio ETF (NYSEARCA: KBWP ) This fund closely tracks the KBW Property & Casualty Index, a modified market capitalization-weighted index, which seeks to reflect the performance of approximately 24 property and casualty insurance companies. The $13.2-million product charges a reasonable 35 basis points per year in fees. It currently pays out a decent dividend that yields 1.78% annually. More than half of its assets are invested in the top 10 holdings. The in-focus Chubb takes the second spot (7.68%) in the fund, while ACE Ltd. accounts for 7.52% of the basket, taking the fifth position. The fund was up 3.6% on Wednesday, and is up 4.4% so far this year. It holds a Zacks ETF Rank of #3 with a moderate risk outlook. iShares U.S. Insurance ETF (NYSEARCA: IAK ) IAK tracks the Dow Jones U.S. Select Insurance Index. The $121-million product holds 63 stocks in its basket. It has a moderate dividend yield of 1.47% and charges investors 43 basis points a year in fees. With a medium level of risk, the fund holds a Zacks ETF Rank of #3. The ETF is slightly top-holdings focused, with more than half of its assets invested in the top 10 securities. ACE Ltd. takes up 5.75% of the fund, acquiring the fourth spot, while Chubb takes the eighth position, with a 3.79% focus. The fund was up 2.3% yesterday, and is up 7.8% so far this year. PowerShares KBW Insurance Portfolio ETF (NYSEARCA: KBWI ) KBWI follows the KBW Insurance index, which comprises 24 insurance companies. The $7-million product charges investors just 35 basis points a year in fees. It pays a decent dividend that yields 1.54% annually. Though none of the in-focus players are among the fund’s top 10 holdings, the news itself gave a boost to this ETF. KBWI was up 2.11% on July 1, while the fund has advanced 1.4% in the year-to-date frame. It carries a Zacks ETF Rank of #3 and a high level of risk. SPDR S&P Insurance ETF (NYSEARCA: KIE ) KIE closely follows the S&P Insurance Select Industry Index, which is an equal-weight index. The product manages $69 million in assets, which are currently invested in 52 securities. The product charges a reasonable 35 basis points per year in fees. It currently pays out a decent dividend that yields 1.69% annually. In terms of holdings, over 37% of the assets are invested in the property and casualty insurance space. Neither Chubb nor ACE gets a space in its top 10 holdings. Still, the fund gained 2.1% on Wednesday. The fund is up 2.8% so far this year (as of July 1). KIE carries a Zacks ETF Rank of #3 and a medium level of risk. Original Post