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ETF Stats For February 2015 – Actively Managed Assets Jump 10%

The ETF industry roared back in February after beginning the year with a negative start in January . Twenty-two new products came to market during the month and seven shuttered operations. Assets jumped 5.3% to $2.1 trillion, which by our calculations allowed month-end assets to close above the $2 trillion mark for the first time. Readers should note that we exclude fund-of-fund assets in our calculations to avoid double counting. As such, our year-end 2014 data put assets just a sliver short of that threshold. February’s net addition of 15 active listings brought the year-to-date count back into positive territory at plus five. The month’s launches were heavily skewed with 21 ETFs and just one ETN coming to market. Additionally, six of the seven closures were ETNs, putting month-end listings at 1,667 consisting of 1,462 ETFs and 205 ETNs. Actively managed ETFs saw four additions and one closure. Their count now stands at 123, which is a decline of two for the year. However, actively managed assets surged 10.6% for the month, are up 13.0% year-to date, and now total $19.5 billion. ETFs with more than $10 billion of assets increased by two and now number 49. Although they represent less than 3% of products, they hold more than 58% of industry assets. Products with $1 billion or more in assets increased by nine to 259 and have a better than 89% market share. The smallest 830 products (nearly half) account for just 1% of assets. Trading activity plunged more than 28% with just $1.3 trillion worth of ETFs and ETNs changing hands. There were only 19 trading days in the month, which only partially accounts for the decline. The quantity of products averaging more than $1 billion a day in trading activity dropped from twelve to eight, yet they still accounted for 48.7% of industry dollar volume. February 2015 Month End ETFs ETNs Total Currently Listed U.S. 1,462 205 1,667 Listed as of 12/31/2014 1,451 211 1,662 New Introductions for Month 21 1 22 Delistings/Closures for Month 1 6 7 Net Change for Month +20 -5 +15 New Introductions 6 Months 98 6 104 New Introductions YTD 34 1 35 Delistings/Closures YTD 23 7 30 Net Change YTD +11 -6 +5 Assets Under Mgmt ($ billion) $2,058 $27.6 $2,085 % Change in Assets for Month +5.3% +5.4% +5.3% % Change in Assets YTD +4.3% +2.7% +4.3% Qty AUM > $10 Billion 49 0 49 Qty AUM > $1 Billion 254 5 259 Qty AUM > $100 Million 765 39 804 % with AUM > $100 Million 52.4% 19.5% 48.2% Monthly $ Volume ($ billion) $1,282 $50.2 $1,333 % Change in Monthly $ Volume -28.6% -28.2% -28.6% Avg Daily $ Volume > $1 Billion 7 1 8 Avg Daily $ Volume > $100 Million 80 3 83 Avg Daily $ Volume > $10 Million 296 12 308 Actively Managed ETF Count (w/ change) 123 +3 mth -2 ytd Actively Managed AUM ($ billion) $19.5 +10.6% mth +13.0% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in February (sorted by launch date): RevenueShares Global Growth Fund (NYSEARCA: RGRO ) , launched 2/2/15, holds about 100 securities based on two main selection criteria. First, 5 developed and 5 emerging countries will be chosen by selecting those with the highest percentage growth of their year over year GDP from the prior 2 quarters, with each country getting a 10% weighting. Second, the top 10 revenue-producing companies in each country are weighted by revenue, but they are limited to a 5% portfolio allocation. The expense ratio will be capped at 0.70% until 11/25/15 ( RGRO overview ). ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN (NYSEARCA: SMHD ) , launched 2/4/15, is an exchange-traded note that provides 2x (200%) leveraged exposure (reset monthly) to an index of small-cap stocks having dividend yields that are relatively high compared to other small-cap stocks in the U.S. market. The ETN pays a variable monthly coupon linked to two times the cash distributions paid by index constituents. SMHD has an estimated yield of 16.8% and sports an expense ratio of 0.85% ( SMHD overview ). Fidelity MSCI Real Estate Index ETF (NYSEARCA: FREL ) , launched 2/5/15, is designed to represent the performance of the real estate sector in the U.S. equity market. The fund will not hold all of the positions in the underlying index, MSCI USA IMI Real Estate Index, but will instead select a representative sample of securities that collectively has an investment profile similar to the index. Investors will pay 0.12% annually to own this fund ( FREL overview ). ProShares Russell 2000 Dividend Growers ETF (NYSEARCA: SMDV ) , launched 2/5/15, invests in the companies of the Russell 2000 Index with at least 10 consecutive years of dividend growth. The fund will hold a minimum of 40 stocks equally weighted, and right now it holds 55. The top sectors represented in the fund are Financials and Utilities, each at about 23%. SMDV has an estimated yield of 2.4% and expects to pay dividends quarterly. The fund’s expense ratio will be capped at 0.40% until 9/30/16 ( SMDV overview ). ProShares S&P MidCap 400 Dividend Aristocrats ETF (NYSEARCA: REGL ) , launched 2/5/15, will invest in the companies of the S&P 400 MidCap Index that have at least 15 consecutive years of dividend growth. The fund will hold a minimum of 40 stocks equally weighted, and right now it holds 47. Financials leads the sector lineup at nearly 30%, and the next closest is Materials at 17%. The estimated yield for REGL is 1.8%. The fund’s expense ratio will be capped at 0.40% until 9/30/16 ( REGL overview ). SPDR S&P 500 Buyback ETF (NYSEARCA: SPYB ) , launched 2/5/15, provides exposure to companies in the S&P 500 that have high buyback ratios compared to other stocks. The fund may either hold all of the positions in the underlying index, S&P 500 Buyback Index, or it could instead select a representative sample of securities that collectively has the same risk and return characteristics of the Index. The Index provides exposure to the 100 companies in the S&P 500 that have the highest buyback ratio in the last 12 months, and currently the fund holds 101 positions. The fund sports a 0.35% expense ratio ( SPYB overview ). Guggenheim S&P High Income Infrastructure ETF (NYSEARCA: GHII ) , launched 2/11/15, invests in 50 high-yielding securities of companies in developed markets that engage in various infrastructure-related industries. Sector representations in the fund include Utilities 50.2%, Industrials 33.2%, and Energy 16.7%. Investors will pay 0.45% annually to own this fund ( GHII overview ). KraneShares FTSE Emerging Markets Plus ETF (BATS: KEMP ) , launched 2/13/15, invests in large- and mid-cap companies in emerging market countries and weights the country allocations by gross domestic product. As of the end of 2014, the largest markets represented were China (43.5%), India (17.7%), Brazil (5.2%), Mexico (4.5%), and Russia (3.9%). The fund’s largest holding at 17.5% is KraneShares Bosera MSCI China A ETF (NYSEARCA: KBA ), and it has a 0.68% expense ratio ( KEMP overview ). ProShares Ultra Gold Miners (NYSEARCA: GDXX ) , launched 2/13/15, seeks a daily return that is 2x (200%) the daily performance of an index made up of publicly traded companies involved in gold and silver mining. Companies whose revenues lean toward silver mining are limited to 20% of the holdings. Canada has the largest geographic allocation at 60%. The expense ratio will be capped at 1.11% until 9/30/16 ( GDXX overview ). ProShares Ultra Junior Miners (NYSEARCA: GDJJ ) , launched 2/13/15, seeks a return that is 2x (200%) the daily performance of an index made up of micro- and small-cap companies involved in gold and silver mining that generate at least 50% of their revenues from those activities. Companies whose revenues lean toward silver mining are limited to 20% of the holdings. Canada takes top billing in the geographic allocation at 64%. The expense ratio will be capped at 1.12% until 9/30/16 ( GDJJ overview ). ProShares UltraShort Gold Miners (NYSEARCA: GDXS ) , launched 2/13/15, seeks a daily return that is 2x inverse (-200%) the daily performance of the same index underlying GDXX. The expense ratio will be capped at 0.95% until 9/30/16 ( GDXS overview ). ProShares UltraShort Junior Miners (NYSEARCA: GDJS ) , launched 2/13/15, seeks a daily return that is 2x inverse (-200%) the daily performance of the same index underlying GDJJ. The expense ratio will be capped at 0.95% until 9/30/16 ( GDJS overview ). AdvisorShares Pacific Asset Enhanced Floating Rate ETF (NYSEARCA: FLTR ) , launched 2/19/15, is an actively managed ETF designed to produce a high level of current income. The ETF invests in senior secured and unsecured floating rate loans, secured second lien floating rate loans, and other floating rate debt securities of domestic and foreign issuers. The portfolio manager can choose to invest as little as 80% of the fund or can leverage the portfolio up to 130%. Although the fund is focused on income, an estimated yield is not currently provided on the fund’s website. The expense ratio will be capped at 1.10% until at least 2/13/16 ( FLTR overview ). Sit Rising Rate ETF (NYSEARCA: RISE ) , launched 2/19/15, has an objective to profit from rising interest rates by using futures contracts and options on futures on 2-, 5-, and 10-year U.S. Treasury securities. The underlying index targets a negative 10 year duration, making it an inverse bond fund. The weighting of the instruments are expected to be from 30% to 70% for the shorter duration securities and 5% to 25% for those with 10 year maturities. RISE will issue K-1 tax reports instead of the easier to use 1099. It has an expense ratio of 1.64% based on the breakeven analysis in the prospectus ( RISE overview ). Greenhaven Coal Fund (NYSEARCA: TONS ) , launched 2/20/15, is designed to track the daily price movements of coal futures. The fund will hold an equal number of futures contracts in each of the three months making up the closest calendar quarter. The positions will be rolled over to the next calendar quarter four times a year. TONS will issue K-1 tax reports instead of the more investor friendly 1099. Based on the breakeven analysis in the prospectus, the expense ratio will be 1.23% ( TONS overview ). SPDR DoubleLine Total Return Tactical ETF (NYSEARCA: TOTL ) , launched 2/24/15, is an actively managed income fund designed to provide investors with maximum total return. The fund’s manager, Jeffrey Gundlach, invests in fixed income securities of any credit quality and may include mortgage-backed securities, high yield securities, foreign-denominated instruments, and securities tied to emerging market countries. TOTL characteristics include a current yield of 4.8% and a duration of 3.1 years. The fund’s expense ratio will be capped at 0.55% until 10/31/16 ( TOTL overview ). Tuttle Tactical Management U.S. Core ETF (NASDAQ: TUTT ) , launched 2/25/15, is an actively managed fund-of-funds seeking to deliver relative returns during market uptrends and capital preservation during market downtrends. The fund will combine multiple, uncorrelated tactical strategies. The top two holdings are iShares 7-10 Year Treasury Bond (NYSEARCA: IEF ) at 26.6% and Pimco Enhanced Short Maturity (NYSEARCA: MINT ) at 20.0%. TUTT sports a 1.34% expense ratio ( TUTT overview ). iShares U.S. Fixed Income Balanced Risk ETF (BATS: INC ) , launched 2/26/15, is an actively managed ETF investing in U.S. dollar denominated investment-grade and high-yield fixed-income securities. The portfolio will be designed so that, in the aggregate, the fund’s exposure to credit spread risk and interest rate risk should be equal. In order to achieve the balanced goal, the fund may take short or long positions in U.S. Treasury futures. The fund is currently leveraged with a 25% short position in cash and/or derivatives. The expense ratio will be capped at 0.25% until 2/29/16 ( INC overview ). Lattice Developed Markets (ex-US) Strategy ETF (NYSEARCA: RODM ) , launched 2/26/15, invests in a broad range of companies showing favorable valuation, momentum, and quality characteristics that are located in major developed markets of Europe, Canada, and the Pacific Region. There are currently about 340 holdings. Japan leads the country allocation at 18.6%, and the U.K. follows with 13.7%. Investors will pay 0.50% annually to own this fund ( RODM overview ). Lattice Emerging Markets Strategy ETF (NYSEARCA: ROAM ) , launched 2/26/15, strives to balance risk across emerging market countries, currencies, and companies. It will provide increased exposure to smaller, more locally driven emerging economies and enterprises that have encouraging valuation, momentum, and quality characteristics. ROAM sports a 0.65% expense ratio ( ROAM overview ). Lattice U.S. Equity Strategy ETF (NYSEARCA: ROUS ) , launched 2/26/15, will invest in large-cap U.S. equities that have solid valuation, momentum, and quality characteristics. Financials leads the sector allocation at 19.2%, and Information Technology comes in second at 16.1%. ROUS has an expense ratio of 0.35% ( ROUS overview ). Arrow QVM Equity Factor ETF (NYSEARCA: QVM ) , launched 2/27/15, consists of 50 equally weighted domestic equities selected based on a combined ranking score of their quality, value, and momentum characteristics. To be considered, stocks must have daily dollar volume above $1 million for the last three months and at least a $5 share price. The portfolio is constructed at the end of January and July and is rebalanced quarterly to maintain equal weighting. The expense ratio will be capped at 0.65% until 5/31/16 ( QVM overview ). Product closures/delistings in February : WisdomTree Euro Debt (NYSEARCA: EU ) PowerShares DB 3x Italian T-Bond Futures ETN (NYSEARCA: ITLT ) PowerShares DB 3x Long USD Index Futures ETN (NYSEARCA: UUPT ) PowerShares DB 3x Short USD Index Futures ETN (NYSEARCA: UDNT ) PowerShares DB Italian T-Bond Futures ETN (NYSEARCA: ITLY ) PowerShares DB US Deflation ETN (NYSEARCA: DEFL ) PowerShares DB US Inflation ETN (NYSEARCA: INFL ) iShares moved its four allocation ETFs to its Core lineup effective February 2. Deutsche Bank and Invesco ended their agreement to market DB issued ETNs under the PowerShares brand. The 26 ETNs were renamed effective 2/24/15. The role of “managing owner” for 11 PowerShares DB ETFs transferred from Deutsche Bank to Invesco effective 2/25/15 resulting in the temporary suspension of creation units on the affected funds. Creations were resumed by the following day. The only disruption we noted was PowerShares DB Oil Fund (NYSEARCA: DBO ) traded with about a 3.5% premium for a few hours the morning of 2/25/15. Previous monthly ETF statistics reports are available here . Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Russian Bears, Ukrainian Beets, Battlestar Novorossiya

Two events are driving the global economy: the Russo-Ukrainian war and the collapse of oil. Both the EU and the Russian Federation want to maintain the global economic status quo at the expense of Ukrainian territorial loss. Portfolios should be robust to continued expansion as well as black swan events. Many of the naysayers of the new year 2015 are being proven wrong: there has been no significant market correction in U.S. equities – as Bill Gross of Janus Capital and others had foreseen for 2015 – and Europe is showing signs of slow growth, despite numerous bears claiming the opposite. Timing is notoriously difficult and self-fulfilling with doomsday prophecies. I argue that there are two factors that any portfolio must be robust to, and each of these possesses its own positive or negative drag on the global economic environment: Russia and oil. Vladimir Putin of Russia could start World War III within seconds if he so desired, but he knows the country’s economy simply isn’t ready. Russia’s activity in Eastern Ukraine and the Crimean peninsula has in one year established a new norm in geopolitics: an ebb and flow between Russian aggression and Western appeasement, both of which are understandable from each side’s perspective. President Putin will not accept a loss in Eastern Ukraine because it is antithetical to his ideology that Russia is both under attack from the West and simultaneously superior to it . In comparison, Francois Hollande of France and Angela Merkel of Germany know that any escalation of the Russo-Ukrainian conflict could trigger open war and disrupt the EU’s fledgling recovery – German GDP rose 0.7% in the 4th quarter , after growing 0.1% in the previous 3 months. There is little confidence on Wall Street that the Minsk II agreements signed on February 11th will lead to prolonged peace, as the DJIA surged 72 points after the Minsk Protocol in September 2014 and decreased by 3 points after Minsk II and the German GDP surprise. The other looming fundamental driver is the price of oil. The market seems to lag when oil falls and prosper when oil increases. After flirting with the technically significant price of $43 per barrel, oil markets rallied on substantial CapEx cuts in the industry. However, there is no surety that oil will not plunge into the $30s this year. As Tom Kloza of Oil Price Information iterates , oil prices will bottom in Q2 corresponding with “one of the expirations of the WTI contracts.” The International Energy Agency explained that “ample supplies will raise global inventories before investment cuts begin to significantly dent production.” Combined with the astronomical impact of low oil prices on Russia’s budget, there is reason to suspect that the US is saving oil manipulation as a last economic tactic against further Russian aggression. The question is, which black swan event will happen first – open war in Ukraine or a collapse in oil? U.S. bond and equity markets are rallying despite mediocre economic fundamentals, because the U.S. is the only place to invest globally. Not that the U.S. is a powerhouse of growth and prosperity – it is, relatively, the only space where investors can earn better-than-index returns with a reasonable amount of risk. US Treasury yields are at record lows, because the dollar is strong and the U.S. Treasury is the only entity in the world that investors still believe has zero default probability. U.S. equities continue to trade at unusually high levels for two reasons: first, capital has poured into U.S. equities in search of higher returns in the low interest rate environment, fueling a sustained rally in the stock market (barring the “correction that wasn’t” that took place in October 2014); second, U.S. companies are taking advantage of low interest rates to lever returns at debt ratios not seen since before the collapse in 2008. A collapse in oil could be the catalyst that brings the U.S. equity market down to earth, especially given the heavy interdependencies between Western and Russian corporations. As long as the status quo remains the same and a black swan event doesn’t occur, this bubble may actually last and transition into a normal economic growth cycle. But that’s the catch – can the status quo be maintained? Expect Russian aggression and a collapse in oil to be inevitably linked. If one happens, so will the other. In this scenario, a portfolio overweight with U.S. treasuries and municipal bonds is ideal, with significant cash on hand to buy U.S. equities in the oil space on the dip. The status quo survives if Eastern Ukraine turns into a frozen conflict on the likes of Transnistria and Abkhazia as the U.S. and eurozone transition out of recovery into expansion. In this case, a portfolio overweight in cyclicals is ideal. Each scenario seems equally likely, so a risk-parity portfolio robust to both cases might be the best option. Unfortunately, neither the Ukrainians nor the Russians appear willing to concede territory at any cost, so look here to history for the consequences of inaction. Appealing to the words of Winston Churchill, “An appeaser is one who feeds a crocodile, hoping it will eat him last.” Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.