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You Hungry? Have A Look At This Food And Beverages ETF

Summary This Food and Beverage ETF is poised to grow in the coming years. It offers a solid diversification of highly valued growth stocks in the food and beverage industry. The majority of the holdings in this ETF expect to have higher earnings in the future which offsets the current valuation. “So long you have food in your mouth, you have solved all questions for the time being” Quote by Franz Kafka Food and beverages, from sausages to drinks, there is always demand for something delicious. As the population of the world is growing, I am expecting that demand for food and beverages will continue to surge. The PowerShares Dynamic Food & Beverage Portfolio ETF (NYSEARCA: PBJ ) offers a perfect opportunity to take advantage of the ever growing food industry. This article will cover a fundamental analysis of PBJ. Dynamic Food & Beverage ETF This ETF is based on the Dynamic Food & Beverage Intellidex Index. This Intellidex index includes a variety of American food and beverage firms active in the production, manufacturing, sale and distribution of food and beverage products. Some of its holdings are well-known firms such as Starbucks (NASDAQ: SBUX ), Heinz-Kraft (NASDAQ: KHC ), Monster Beverages (NASDAQ: MNST ) and many more. In my view, these are typical expensive growth stocks and they certainly do not come cheap. As these are stocks with high P/E ratio’s I can understand that for some investors it carries too much unique investment risk . This food and beverage ETF offers the opportunity to diminish this unique risk as it’s well diversified. Therefore, it makes this ETF an interesting candidate for a retired investor who would like to invest in the fast growing food and beverage industry but not carry a large individual investment risk. Food and Beverage ETF: Profile Source: ETFDB The issuer of this ETF is Invesco , a large independent investment management company incorporated in Bermuda. The expense ratio of 0.61% is a reasonable number and should not be considered expensive. With 188 million assets under management it’s not a large ETF. The fund is rebalanced quarterly, every February, May, August and November. This ETF is currently trading 2% under its year high. Food and Beverage ETF: Return This ETF has pleased investors over the last few years as can be seen in the line chart underneath: (click to enlarge) Source: Ycharts Food and Beverage ETF: Sector Breakdown (click to enlarge) Source: ETFDB The Food and Beverage ETF has an excellent mixture between small and large cap stocks. Sector wise, holdings are mostly consumer defensive with a small part in the consumer cyclical sector and the rest in industrials . Food and Beverage ETF: Top Holdings Source: Invesco The main holdings of this ETF are Monster Beverages, Kraft-Heinz, Mondelez (NASDAQ: MDLZ ), Starbucks and General Mills (NYSE: GIS ). Together they consist of more than 26% of the entire ETF. Source: Ycharts As can be seen in the line chart above, the main holdings have yielded normal to abnormal returns in the last 2 years. Monster Beverages has done As can be seen in the line chart above, the main holdings have yielded normal to abnormal returns in the last 2 years. Monster Beverages has done especially well. Unfortunately, these large growth players do not come at a discount, as their current P/E is relatively high as shown underneath: Source: Ycharts Nevertheless, when looking at the forward P/E (the ratio of current price divided by predicted earnings), the 4 firms all have a lower P/E. This indicates that earnings are predicted to increase . That’s exactly the kind of growth you are looking for. This is an ETF with substantial expected growth in the future . That sheds a more positive light on the current valuation of this ETF. The Food and Beverage ETF: The main 3 holdings Monster Beverages is a firm that manufactures energy drinks, natural soft drinks and fruit drinks including their most known brand Monster Energy. The firm currently has a market cap of over 30 billion. It’s a firm with a high P/E, yet its expecting to grow significantly in the future as shown underneath: Monster Beverages estimates Source: 4traders The expected EPS of Monster in 2017 is $4.68, a substantial increase in comparison to today’s earnings per share. Kraft-Heinz is a firm which resulted out of the merger of Kraft Foods and Heinz, backed by 3G Capital and Berkshire Hathaway (NYSE: BRK.A ). They currently own 13 brands. It currently holds a P/E of around 50 which labels it not cheap. Mondelez is a large confectionery, food and beverage conglomerate with revenue over $30 billion. Recently, Bill Ackman bought a 5.5 billion stake in Mondelez. In his views the firm should accelerate revenue’s and cut costs or sell itself to a competitor such as Kraft-Heinz for example. This is positive news as it gives the ETF some short term boost. ETF Fund Characteristics Source: Invesco The overall P/E ratio of this ETF is around 22. This is not considerably high or low for an exchange traded fund. An earlier ETF I covered from Invesco was the PowerShares Water Resources Portfolio ETF (NYSEARCA: PHO ), which is currently valued at a P/E of over 30. Even as I laid out in that article, there were plenty of reasons for that ETF to surge in the future. I don’t consider the current P/E of 22 a red flag for this ETF and also see plenty of reasons for this ETF to continue to rise as I discussed earlier in this article. Conclusion The food and beverage industry is a sector with significant growth and relatively high valuations. Buying such stocks is an incredibly difficult endeavor as many of these firms have a high P/E and for many investors that does not sound like good value for money. However, this ETF is an excellent opportunity for a retiree which aims to take part in the growing food and beverage industry. The market cap breakdown shows a perfect mix between micro, small and large cap stocks. This diversity makes it an interesting stock for retirees as an investment in a single stock would yield too much unique risk . I consider PBJ a safe investment for a retired investor. It might not be poised to explode the coming months, but I consider it strong enough to weather any conflict that might happen due to one of its (overvalued) holdings falling over. Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PBJ over 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.

Best Performing Aggressive Growth Funds Of Q2 2015

Aggressive growth funds’ second-quarter performance did not justify its characteristic of high capital gains. Except for the top 2 gainers, none of the funds could cross a 4% return in the second quarter of 2015. However, a higher number of non-aggressive growth funds posted returns over 4%. Gains for certain growth funds such as the Driehaus Micro Cap Growth Fund (MUTF: DMCRX ) and the Berkshire Focus Fund (MUTF: BFOCX ) soared as much as 10.7% and 9%. While average gains for the top growth funds performers of second quarter 2015 reached 6.8%, the average gain for top 10 aggressive growth funds was 3.2%. However, it was a tough second quarter for the broader markets. Markets had a dismal run in the second quarter, wherein the S&P 500 and Dow declined 0.2% and 0.9%; however, the NASDAQ did gain 1.8%. Just 41% of mutual funds could manage to finish in the green in the second quarter. This is less than half of the 81% gains scored by mutual funds in the first quarter. These losses, however, owed a lot to the selloff on the eve of the quarter’s end. Of the 289 funds under the study, 124 funds finished in the green while 3 funds had a breakeven return. The average gain for these 124 funds stood at 1.5%. As for the remaining 161 funds that finished in negative territory, the average loss was 1.1%. (Note: This number includes the same funds of varied classes) Aggressive Growth Funds Investors looking for the highest capital gains should look no further than investing in aggressive growth mutual funds. These funds invest in companies that show high growth prospects, but also comes with the risk of share price fluctuations. This category of funds also invests heavily in undervalued stocks, IPOs and relatively volatile securities in order to profit from them in a congenial economic climate. Securities are selected on the basis of their issuing company’s potential for growth and profitability. This category of instruments has a strong positive correlation with market movements and provides good returns during a market upswing. Such performance is achieved by investing in securities issued by companies with strong growth potential and in IPOs which are often resold quickly at a handsome profit. Many aggressive growth mutual funds may also invest in options to achieve their goal of high returns. Best Performing Below we present the top 15 aggressive growth mutual funds with best returns of Q2 2015: Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5000 have been excluded. Q2 % Rank vs. Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. An interesting thing about the list of top gainers is that the 15 funds are all from different fund families. Certain major names include the Federated Kaufmann Fund A (MUTF: KAUAX ), the American Century Ultra Fund A (MUTF: TWUAX ), the Rydex NASDAQ-100 Fund Inv (MUTF: RYOCX ), the Fidelity New Millennium Fund (MUTF: FMILX ) and the Franklin Growth Opportunities Fund Adv (MUTF: FRAAX ). These are respectively from Federated , American Century , Guggenheim Investments , Fidelity and Franklin Templeton . While, KAUAX and FMILX carry a Zacks Mutual Fund Rank #4 (Sell), TWUAX, RYOCX and FRAAX hold a Zacks Mutual Fund Rank #3 (Hold). Talking of fund families, not many fund families had strong second-quarter performance. The best gain for a Franklin Templeton mutual fund lagged Fidelity’s best gain of 11.6% . Separately, Vanguard had a dismal second quarter and their best gain was just 3.8%; however, it should be noted that Vanguard has more passive funds than other fund families. Meanwhile, funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) are the Hartford Growth Opportunities Fund A (MUTF: HGOAX ), the Wasatch Ultra Growth Fund (MUTF: WAMCX ) and the White Oak Select Growth Fund (MUTF: WOGSX ). Separately, the Cambiar Aggressive Value Fund Inv (MUTF: CAMAX ), the Baron Partners Fund Adv (MUTF: BPTRX ) and the Jacob Micro Cap Growth Fund (MUTF: JMCGX ) hold a Zacks Mutual Fund Rank #2 (Buy). Original Post

ETFs To Move On Yuan Devaluation

China has been hitting headlines this year for one reason or the other. While the economy has been reeling under pressure for long given the protracted slowdown in the domestic manufacturing sector, credit crunch concerns and a property market slowdown, its stock market has been through a wild ride on overvaluation concerns. Meanwhile, the economy’s exports plunged 8.3% year over year in July, massively falling short of analysts’ expectation of a 1.5% decline as well as the 2.8% drop-off recorded in June. Though a 1.3% fall in exports to the U.S. was not that alarming, exports plummeted 12.3% and 13% in the EU and Japan, respectively. These two regions are presently under QE policy and thus see relatively weak currencies against the greenback. This gave the Chinese policymakers a wake-up call that it is high time to devalue its currency, yuan, to maintain the export competitiveness. As a result, China undervalued its currency yen against the U.S. dollar by a historic amount, i.e., 100 bps on August 11. Yuan has now plunged to the 2012 levels. Per Reuters , China’s central bank fixed the midpoint for its currency at 6.2298 per dollar, down from 6.1162 seen on August 10. The bank also indicated that it was eyeing a currency devaluation of 2%. As per Barrons.com , the Chinese government viewed yuan as an extremely strong currency. Given the looming Fed policy normalization and its depreciating impact on a basket of currencies, any shift in yuan ‘from market expectations’ seems unreasonable. However, such an epic move in the Chinese currency market will definitely leave an impact across the globe. Below we highlight a few asset classes and their ETFs, which may be among the biggest movers. Currency Needless to say, the move will lead the Chinese currency ETF, the WisdomTree Chinese Yuan ETF (NYSEARCA: CYB ), to losses while the dollar ETF, the PowerShares DB USD Bull ETF (NYSEARCA: UUP ), will gain strength. The Aussie dollar lost about 1% following the announcement, putting Australia ETF, the CurrencyShares Australian Dollar Trust ETF (NYSEARCA: FXA ), at risk. Per Reuters, the Australian dollar is often regarded as a liquid proxy for the Chinese currency. China is a major trading partner of Australia and thus the currencies of the duo share a high correlation. Currencies like the Singapore dollar, South Korean won and Taiwan dollar will be stressed as these countries are manufacturing destinations and thus act as competitors to China on the export front. Market experts apprehend a currency war among these Asian tigers in the near future. Gold How much more pain will gold have to bear? The yellow metal already crossed its five-year low level on its way down hit by the dollar strength thanks to the impending Fed rate hike, a deflationary environment prevailing in most part of the developed world and reduced demand from the key consuming nation China because of its waning economy. Now, currency devaluation will likely curb the import demand of gold from China as a feebler currency will turn imports pricier. The SPDR Gold Trust ETF (NYSEARCA: GLD ) tracking the gold bullion will bear the brunt the most, while the impact will not be unnoticed by the gold mining ETF, the Market Vectors Gold Miners ETF (NYSEARCA: GDX ). Apart from gold, several industrial metals will likely see a negative pricing trend in the near term as the Chinese economy accounts for about half of the global consumption of the industrial commodities and is the second-biggest purchaser of oil. The iPath Dow Jones-UBS Nickel Total Return Sub-Index ETN (NYSEARCA: JJN ), the UBS E TRACS CMCI Industrial Metals Total Return ETN (NYSEARCA: UBM ), the ELEMENTS Rogers International Commodity Metal ETN (NYSEARCA: RJZ ) and the United States Copper Index ETF (NYSEARCA: CPER ) are some of the ETFs which might succumb to a slowdown. Equities As we already know that the South Korean and Taiwanese economies thrive on exports, these nations will now be losing on currency competitiveness to China. There are several South Korean companies, namely Samsung Electronics ( OTC:SSNLF ), Hyundai Motor ( OTC:HYMLF ) ( OTC:HYMTF ), LG Corp. and Daewoo, which have big export markets and Taiwan houses one of the largest semiconductor companies in the world – Taiwan Semiconductor. In short, these two countries’ stock markets will be hit by the yuan devaluation in a passive way. This puts the iShares MSCI South Korea Capped ETF (NYSEARCA: EWY ), the Horizons Korea KOSPI 200 ETF (NYSEARCA: HKOR ) as well as the iShares MSCI Taiwan ETF (NYSEARCA: EWT ) and the First Trust Taiwan AlphaDEX ETF (NASDAQ: FTW ) in focus. While this move might help some Chinese sectors and equities, investors should note that most of the Chinese equities ETFs are not hedged to the greenback and thus may see some downward pressure on U.S. exchanges. Some Chinese equities ETFs to watch in the coming days are the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEARCA: CNXT ), the Market Vectors ChinaAMC A-Share ETF (NYSEARCA: PEK ), the iShares China Large-Cap ETF (NYSEARCA: FXI ) and the iShares MSCI China ETF (NYSEARCA: MCHI ). Original Post