Tag Archives: political

3 Healthcare Funds To Buy On Biotech Rebound

After being beaten down during the first three months of the year, biotech stocks made a remarkable rebound over the past few days. Though the iShares Nasdaq Biotechnology ETF (NASDAQ: IBB ) is still down 17% in the year-to-date frame, it posted an increase of 5.9% on Wednesday, witnessing the best percentage gain since March 12, 2009. In fact, the 7.9% rise in IBB over the past one-month period also propelled healthcare mutual funds, which gained 2.9% during the same period. Mutual funds from this category may be profitable for investors, who are looking to gain from this encouraging trend. Reasons for the Recent Surge Strong gains of 5% and 3.5% respectively in Pfizer Inc. (NYSE: PFE ) and Allergan plc (NYSE: AGN ) played an important role in lifting biotech stocks on Wednesday. The increase was prompted when the companies mutually called off their merger after tougher tax inversion rules were imposed by the U.S. Treasury Department and Internal Revenue Service. Leaving the deal behind, Allergan CEO Brent Saunders said that the company, “could act immediately if” it gets “the right opportunity with the right growth profile and the right strategic logic.” Meanwhile, it is now speculated that names of other UK-based firms like GlaxoSmithKline plc (NYSE: GSK ) are on Pfizer’s radar. Moreover, a surge of nearly 17% in shares of Edwards Lifesciences Corp. (NYSE: EW ) gave a boost to this sector. According to the company, data from the trial revealed that a procedure which uses its SAPIEN 3 valve shows better results than open heart procedures for certain patients. What’s Ahead? In spite of the recent surge, some of the concerns that affected the performance of biotech stocks at the start of 2016 may continue to impact the sector in the near future. Calls for reducing the prices of several drugs had played an important role in dragging down the sector. Hillary Clinton’s comments on the prohibitive pricing of certain medications drew much attention last year, weighing down on the sector’s stocks. Moreover, the U.S. Treasury Department’s adaptation of new rules to contain inversion-related deals may lower the volume of overseas merger and acquisition deals in the near term. Moreover, mixed earnings results during the fourth quarter affected the sector to quite an extent. Also, continued decline in the first-quarter earnings forecast is likely to hurt the sector’s performance in the days ahead. First-quarter earnings from the healthcare sector are anticipated to grow only 0.6% from the year-ago level compared with 9.3% growth witnessed in the previous quarter. Moreover, the year-on-year revenue growth rate is projected to decline to 8.8%, lower than the fourth quarter’s growth pace of 9.7%. However, an innovative product pipeline, product approvals and impressive performances by key products may act as growth catalysts and help the sector to overcome the above-mentioned concerns. Moreover, favorable valuation can make smaller companies within the sector attractive bets for acquisition. Separately, positive results from clinical trials also lift the sector’s stocks. They are difficult to predict, but come as welcome surprises for investors. 3 Healthcare Funds Picks Given this strong recovery, we have highlighted three healthcare mutual funds that either have a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund. These funds have encouraging one-month and three-year annualized returns. The minimum initial investment is within $5000. Also, these funds have a low expense ratio and no sales load. Delaware Healthcare Fund I (MUTF: DLHIX ) invests a large chunk of its assets in equity securities of companies that are engaged in operations such as production, development and of products and services related to healthcare sector. DLHIX is a non-diversified fund. Along with a Zacks Mutual Fund Rank #1, DLHIX has one-month and three-year annualized returns of 5.9% and 16.8%, respectively. Annual expense ratio of 1.11% is lower than the category average of 1.35%. Fidelity Select Biotechnology Portfolio (MUTF: FBIOX ) seeks growth of capital. FBIOX invests the lion’s share of its assets in companies primarily involved in the research, development, manufacture, and distribution of various biotechnological products. The fund invests in securities of companies throughout the globe. Along with a Zacks Mutual Fund Rank #2, FBIOX has one-month and three-year annualized returns of 5.1% and 16.8%, respectively. Annual expense ratio of 0.72% is lower than the category average of 1.35%. Live Oak Health Sciences Fund (MUTF: LOGSX ) invests the majority of its assets in common stocks of healthcare companies or those related to medicine and life sciences. Though LOGSX primarily focuses on acquiring domestic securities, it may allocate a small portion of its assets in securities of foreign firms and ADRs. Along with a Zacks Mutual Fund Rank #2, LOGSX has one-month and three-year annualized returns of 3.9% and 15.9%, respectively. Annual expense ratio of 1.08% is lower than the category average of 1.35%. Link to the original post on Zacks.com

India ETFs To Soar On Rate Cut?

The Reserve Bank of India (RBI) lowered its key rate to an over five-year low on April 5, 2016. This was the first cut in 2016 followed by four rate cuts in 2015. On Tuesday, the central bank slashed its key interest rate by 25 basis points (bps) to 6.50%, in line with the market expectations, to bolster business in the economy. The Indian stock market took giant strides in 2014 on pro-growth political changes only to lose in 2015, probably due to political deadlock. So far this year (as of April 4, 2016), most of the India ETFs are in the red, but could turn around on monetary policy easing. Not only this, the Reserve Bank of India hinted at accommodative monetary policy going forward, giving market experts reasons to see another 25 bps cut later this year, per Reuters . The move was prompted by easing inflation. Raghuram Rajan, the RBI governor, sounded hopeful of hitting the 5% inflation target for March 2017. The next target is 4.2% by March 2018. Investors who put more emphasis on slowing GDP data for the U.S. economy for the October-December quarter (7.3% followed by 7.7% growth rate in the second quarter), will now find some reason to invest in Asia’s third-largest economy. This along with stubbornly low oil prices in the global market and a relatively stable currency in the wake of a subdued greenback should propel the Indian stock market in the days to come. After all, India is heavily reliant on imports to meet its energy requirements. So, a massive drop in oil prices last year came as a boon to the economy and saved India’s significant foreign exchanges. While all India ETFs should bounce following the rate cut, below we highlight three small-cap ETFs that might get an edge over their peers. This is because small-cap stocks rebound more than the larger ones when the domestic economy picks up. These pint-sized stocks are less affected by global market turmoil than their larger counterparts. iShares MSCI India Small Cap Index Fund (BATS: SMIN ) This product provides exposure to the small cap segment of the broad Indian stock market by tracking the MSCI India Small Cap Index. Holding 236 securities in its basket, it is widely spread out across number of securities with each holding less than 1.96% of assets. Consumer discretionary takes the top spot making up for one-fifth of the portfolio, closely followed by industrials (20.4%) and financials (17.8%). The fund is unpopular and illiquid with AUM of $63.1 million and average daily volume of 17,000 shares. It charges 74 bps in annual fees from investors. The fund is down 7.7% so far this year (as of April 4, 2016). India Small-Cap Index ETF (NYSEARCA: SCIF ) This fund also targets the small cap segment and tracks the Market Vectors India Small-Cap Index. Here again, financials occupies the top position from a sector look at 28.8% while industrials and consumer discretionary round off the next two spots. The fund has so far amassed $153.8 million in its asset base while charging 89 bps in annual fees. Volume is decent exchanging more than 84,000 shares in hand a day. The fund is up 10% so far this year (as of April 4, 2016). India Small Cap ETF (NYSEARCA: SCIN ) This $19.2 million fund invests about 23% in the financial sector followed by 22.85% in the industrial sector. Technology and utilities sectors also got double-digit exposure in the fund. In total, the fund gives exposure to 74 stocks. It charges 85 bps in fees and has lost about 13.1% so far this year (as of April 4, 2016). EGShares India Infrastructure ETF (NYSEARCA: INXX ) Apart from small-cap ETFs, infrastructure stocks and ETFs will also get a boost from this move. As this sector is debt-heavy in nature, a decline in interest rates will favor it. This ETF provides exposure to 30 Indian stocks. It is pretty well spread out across components with none of the securities holding more than 5.98% of assets. With respect to sector holdings, construction & materials takes the top spot at 17.3%, followed by electricity (16.5%), mobile telecommunications (15.1%) and industrial engineering (10.6%). The product has managed assets worth $40 million and trades in volume of nearly 22,000 million shares a day. It has an expense ratio of 0.85% and has lost 2.8% so far this year (as of April 4, 2016). Original Post

ETF Update: Smart Beta Launches As Far As The Eye Can See

Welcome back to the SA ETF Update. My goal is to keep Seeking Alpha readers up to date on the ETF universe and to gain some visibility, both for the ETF community and for me as its editor (so users know who to approach with issues, article ideas, to become a contributor, etc.). Every other week (depending on the reader response and submission volumes) we will highlight fund launches and closures for the week, as well as any news items that could impact ETF investors. As you might have noticed from the title, smart beta funds were on my mind this week. This might have something to do with the last 8 launches falling into that self-proclaimed category. It might also be due to a great read from Abnormal Returns, ” Finance blogger wisdom: smart beta bubble? ” In the linked article the author presented the following question to his online peers: The ‘smart beta’ or factor-investing bubble seems to be in full bloom. Is ‘smart beta’ simply the new active investing? If so, what happens to the entire fund industry which was built on the high fees associated with active management? This is a question that many have also covered on Seeking Alpha, but the most recent example is from Benjamin Lavine, CFA , whose article was posted on Wednesday (3/30). I would highly recommend it for any readers wondering what is behind the smart beta trend and how to interpret the term when considering an investment. With that disclaimer aside, let’s jump into the most recent round of smart beta launches: Fund launches for the week of March 21st, 2016 Principal expands into smart beta (3/22): The Principal Price Setters Index ETF (NASDAQ: PSET ) and the Principal Shareholder Yield Index ETF (NASDAQ: PY ) are the first smart beta launches from Principal Funds; both target mid- and large-cap domestic firms. However, PSET “focuses on companies with sustainable pricing power, consistent sales growth, high/stable margins, quality earnings, low leverage, and high levels of profitability,” while PY is for investors more concerned with “sustainable shareholder yield, strong cash flow generation, and capacity to increase dividends and/or buybacks.” Both funds are a relatively large departure from the Principal EDGE Active Income ETF (NYSEARCA: YLD ), which was launched in July 2015. This first venture into ETFs is an active fund investing across multiple income-producing asset classes in search of high-income investments. Victory Capital Management rolls out an emerging market fund (3/23): The Victory CEMP Emerging Market Volatility Wtd Index ETF (NASDAQ: CEZ ) was the third smart beta launch of the week. The in-house CEMP Emerging Market 500 Volatility Weighted Index “combines fundamental criteria with volatility weighting to seek to improve an investor’s ability to outperform traditional indexing strategies.” It is worth noting that the top countries represented at this time are Taiwan, China, South Korea and India; all of which are still considered emerging by MSCI , but many have argued that they are quickly evolving out of the traditional definition. Fund launches for the week of March 28th, 2016 Fund closures for the weeks of March 21st and 28th, 2016 Direxion Value Line Conservative Equity ETF (NYSEARCA: VLLV ) Direxion Value Line Mid- and Large-Cap High Dividend ETF (NYSEARCA: VLML ) Direxion Value Line Small- and Mid-Cap High Dividend ETF (NYSEARCA: VLSM ) ALPS Sector Leaders ETF (NYSEARCA: SLDR ) ALPS Sector Low Volatility ETF (NYSEARCA: SLOW ) ALPS STOXX Europe 600 ETF (NYSEARCA: STXX ) Global Commodity Equity ETF (NYSEARCA: CRBQ ) iSharesBond 2016 Corporate Term ETF (NYSEARCA: IBDA ) iSharesBond 2016 Corporate ex-Financials Term ETF (NYSEARCA: IBCB ) Have any other questions on ETFs or ETNs? Please comment below and I will try to clear things up. As an author and editor, I have found that constructive feedback is the best way to grow. What you would like to see discussed in the future? How can I improve this series to meet reader needs? Please share your thoughts on this first edition of the ETF Update series in the comments section below. Have a view on something that’s coming up or a new fund? Submit an article. 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.