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Regional Banks And Canadian Dollar: 2 ETFs Trading With Outsized Volume

In the past trading session, U.S. stocks were broadly mixed as relatively positive bank earnings and a favorable Chinese GDP data outweighed imminent rate hike worries. Among the top ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) shed 0.03%, the SPDR Dow Jones Industrial Average ETF DIA move higher by 0.01% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) gain 0.11% on the day. Investors can take note of two more specialized exchange-traded products in particular, as both saw trading volume that was far ahead of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This makes these ETFs ones to watch in the days ahead to see if this trend of extra-interest continues. iShares U.S. Regional Banks ETF (NYSEARCA: IAT ): Volume 6.61 times average This regional banking ETF was in focus today, as over 1.36 million shares moved hands, compared to an average of roughly 227,000 shares. We also saw some share price movement, as shares of IAT gained 1.3%. The movement can largely be credited to the Fed’s latest indication of a rate hike later this year. This can have a big impact on regional banking stocks like what we find in this ETF’s portfolio. Also, relatively upbeat expectations for banking earnings led to this heavy trading. Though for the month IAT was down 0.2%, the fund currently has a Zacks ETF Rank #2 (Buy). CurrencyShares Canadian Dollar Trust ETF (NYSEARCA: FXC ): Volume 3.66 times average This Canadian dollar ETF was under the microscope today, as nearly 195,500 shares moved hands today. This compares to an average trading day volume of 53,400 shares. FXC lost about 1.4% in the session. The big move today was largely the result of depreciation of the Canadian dollar after the Bank of Canada slashed its key interest rate to 0.5%. FXC was down about 4.7% in the past month, though the shares currently have a Zacks ETF Rank #3 (Hold). Original Post Share this article with a colleague

Comparing 2 Monthly Eaton Vance Income Closed End Funds EOS And EOI

Summary EOI has a steady monthly income ($0.0864) of 7.8%. EOS has a steady monthly income ($0.0875) of 7.6%. Total return for both funds beat the DOW average over the last 30-month test period. EOS Fund is higher than 30% in Tech companies. Moderate downside protection and income from covered call writing. This article compares the Eaton Vance Enhanced Equity Income Fund II (NYSE: EOS ) and the Eaton Vance Enhanced Equity Income Fund (NYSE: EOI ), for steady monthly income. The differences between these two funds and how each fund has its place in the investment world, will be shown by looking at total return, company allocation, the use of covered calls and the distribution break down of each fund. Both funds use covered calls on a different group of companies to smooth out some of the volatility of the market. The EOI fund and EOS fund both invest in large Cap and Mid Cap companies and would be a good addition to a portfolio needing more diversification in this category. The big difference between them is that EOS tries to model the Russell 1000 and EOI tries to model the S&P 500. Both of these funds would be good for a tax deferred account because of the large amount of long term and short term capital gain in the distribution amounts. If you need a similar fund for a taxable account please see my articles on the Eaton Vance Tax-Managed Buy-Write Opportunities Fund (NYSE: ETV ). Yearly Income percentage and Total Return Being in retirement, my goal is to have a steady monthly income, without the swings of dividends that are paid on a quarterly or yearly basis. The EOI fund distribution of 7.8% ($0.0864/Month) return in today’s low interest rate environment is fantastic. This distribution is slightly higher than the EOS yearly distribution of 7.5% ($0.0875/Month). I calculated the total return of EOS and EOI over a two-year plus six-month period starting with January 1, 2013 till July 2015 YTD, 30 months in total. I chose this time frame since it included the great year of 2013, the moderate year of 2014 and the moderate year of 2015 YTD. EOS outperformed the DOW average by over 18%. For the 30-month period, the DOW total return was 37.52% and EOS beat it at 56.13%. EOI total return was 46.18%, beating the DOW total return by 8.66%. Fund Symbol Total Return For last 30 months Yearly Distribution Difference from DOW Baseline Difference EOI 46.18% 7.8% 8.66 EOS 56.13% 7.5% 18.61 DOW Baseline 37.52% —— Company Allocation The Eaton Vance website gives a full list of the companies and percentage of each in the fund portfolios for the latest quarter. The table below gives the top ten companies for each fund and their percentage in their individual portfolios. Using price chart data, I calculated the total return of the EOI top 10 companies out of 61 that the fund owns. Seven outperformed against the DOW average in total return over the 30-month test period and three missed the total return baseline of 37.52%, Qualcomm (NASDAQ: QCOM ) at 14.82%, General Electric (NYSE: GE ) at 36.9% and Exxon (NYSE: XOM ) at 4.56%. Similarly for EOS, all ten of the companies beat the DOW baseline total return. The total percentage of the portfolio for the top ten companies of each fund is shown at the bottom of the table. EOS Company Percentage In Portfolio EOI Company Percentage In Portfolio Apple (NASDAQ: AAPL ) 6.60% Apple 4.63% Google Inc. (NASDAQ: GOOG ) 5.29% Google Inc. 4.08% Facebook (NASDAQ: FB ) 3.18% JPMorgan Chase (NYSE: JPM ) 2.69% Amazon (NASDAQ: AMZN ) 3.01% Exxon Mobil Corp 2.51% Visa (NYSE: V ) 2.74% Visa 2.36% Biogen Inc (NASDAQ: BIIB ) 2.70% General Electric Co. 2.36% Celgene (NASDAQ: CELG ) 2.69% Qualcomm Inc. 2.31% Medtronic PLC (NYSE: MDT ) 2.45% Amazon 2.27% Priceline Group Inc. (NASDAQ: PCLN ) 2.14% Walt Disney (NYSE: DIS ) 2.26% Walt Disney 2.13% Medtronic PLC 2.14% Total 32.93% Total 27.61% Source: Eaton Vance EOI pretty much follows its S&P 500 index while EOS is a bit heavy in tech compared to its Russell 1000 index at 31.77% of the portfolio Covered Calls Both funds sell covered calls for income and downside protection, but there is a difference in what they do. EOS sells covered calls against 48% of their individual company positions with an average duration of 26 days and 6.3% out if the money. EOI sells covered calls against 46% of their individual company positions with an average duration of 24 days and 5.4% out of the money. Covered calls provide both EOS and EOI fund portfolios some downside risk protection and extra income to smooth out the normal market gyrations. The management in using covered calls, has the time to use covered call exit methods, if the market price goes against them. The big difference is that EOS tries to follow the Russell 1000 and EOI tries to follow the S&P 500. For both funds selling covered calls on individual company positions provides a steady income that does well in total return in a strong up market and gives some downside protection in a moderate market. If you want to learn about covered calls, I recommend the books written by Alan Ellman on the subject. Distributions Each month, both funds issue a statement saying which part of the distribution comes from short-term capital gains, long-term capital gains, investment income and return of capital. It is best to have both funds in a tax-deferred account so that you do not have to handle the tax calculations for the different categories of the distribution and most of the income is taxable. The EOS distribution through June 2015 YTD was 7.9% investment income, 0.0% short-term capital gains, 65.0% long-term capital gains and 27.1% return of capital. The EOI distribution through June 2015 YTD was 17.1% investment income, 0.0% short-term capital gains, 60.8% long-term capital gains and 22.1% return of capital. This is typical with short-term and long-term gains being a significant part of the EOS and EOI distributions. The funds do really well in a strong up market and follows the market in an average market. The fund managers advise against drawing any performance conclusions from the distribution breakdown. They do manage the fund payouts to try and keep the monthly payment constant. For a full explanation of return of capital, please refer to the articles written by Douglas Albo (CEFs and Return Of Capital: Is It As Bad As It Sounds). Conclusion EOI does not perform (Total Return) as well as EOS so EOS gets the nod here. Both funds follow the market and provide steady income, with fund price muted both on the upside and down side swings. Both funds are a good income vehicle in a tax-deferred account. they give a high monthly distribution , which is steady and beats the DOW averages over the test period of 30 months. They also provide someone like me, who generally picks his own companies an easy means of buying a diversified portfolio of large Cap and Mid Cap tech companies, without having to research each company in detail. EOS and EOI are a good complement to individual company positions. The Good Business Portfolio has a 5.5% position in EOS because of its better total return and high technology component. This is the only fund in the Good Business Portfolio. Of course this is not a recommendation to buy or sell and you should always do your own research and talk to your financial advisor before any purchase or sale. This is how I manage my IRA retirement account and the opinions on the companies are my own. I am long on EOS, GE, DIS and ETV and do not own or intend to buy any other companies mentioned in the article. Disclosure: I am/we are long EOS, ETV, DIS, GE. (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.

Economic Lethargy Continues To Bankroll The U.S. Stock Bull

Both wage growth and employment have shown lackluster improvement since the end of the Great Recession in mid-2009. Americans do not believe the economy is improving because they are not earning more money or securing higher-paying employment. The weaker the economic picture, the more likely the stock bull will prevail. Over the past century, the U.S. stock market typically turned down prior to the onset of a recession. You did not need to predict economic contraction; rather, you monitored the Dow and the S&P 500 because the benchmarks acted like leading indicators of bad times ahead. (Investors checked the market internals to get a sense for whether or not stocks themselves might “roll over.”) Stocks demonstrated their predictive powers as recently as October of 2007. The bear market eroded 20%-30% of value before the National Bureau of Economic Research (NBER) even acknowledged the recession’s inception date (12/07) in October of 2008. On the flip side, U.S. equities in today’s world do an atrocious job at recognizing economic sluggishness. The skepticism of chief financial officers (CFOs) at the largest corporations just hit two-year lows. Small business optimism registered its worst reading in 15 months. Meanwhile, you’d have to travel back to November of 2014 to find the sort of pessimism that exists today on the part of the American public. “Gary,” you protest. “People do not always act based upon the way that they feel.” Just the facts, then? The industrial sector – an economic segment that incorporates manufacturing, mining, and utilities – posted its weakest year-over-year (YOY) growth in more than five years. Wholesale sales (YOY) have been in steady decline since 2011, contracting 3.4% in June. Retail sales plummeted in June as well. (No snow. Was it just too hot outside?) And perhaps most importantly, both wage growth and employment (as a function of the population) have shown lackluster improvement since the end of the Great Recession in mid-2009. The take-home is twofold. First, Americans do not believe the economy is improving because they are not earning more money or securing higher-paying employment. For instance, the erosion of roughly one-and-a-half million higher-paying manufacturing jobs has been supplanted by the same number of lower-paying waiter/bartender positions. This dynamic hardly represents economic well-being. Second, the weaker the economic picture, the more likely the stock bull will prevail. In fact, the entire reason that the Federal Reserve needed to enact three rounds of electronic money creation via quantitative easing ($3.75 trillion in “QE”) on top of six-and-a-half years of zero percent overnight lending rates is because the economy has been too weak to tighten borrowing costs. Ironically, Fed chairwoman Yellen maintains that she anticipates hiking rates some time in 2015. Even though annual economic growth throughout the recovery has been stuck near the 2% level? Even as the Fed has downgraded its own expectations for economic expansion for the seventh consecutive year? Even as the the Fed has overestimated the pace of expansion in each of the last seven years? The bond market via the iShares 7-10 Year Treasury Bond ETF (NYSEARCA: IEF ) is not entirely sure if overnight lending rates will be bumped up or not. The fact that the slope of the 50-day moving average has turned lower here in 2015 suggests higher yields in the future, in much the same way that the announcement of QE tapering sent bond yields skyrocketing in 2013. However, IEF’s higher lows over the past five weeks coupled with strong resistance for the 10-year yield near 2.5% may suggest otherwise. Even more intriguing is the likelihood that the pace of any rate hikes may be more important than the timing of the first shot. September? Doubtful. December. Probably. Yet fed funds futures have only priced in a rate of 0.75% by the end of 2016. Only three rate hikes over the next 18 months? Or maybe it will be six at 0.125% so that the pace is even slower than the seemingly preordained quarter-point moves. (You heard the concept of one-eighth of a point here first!) Impressively, stocks continue to benefit from every economic downgrade as well as the lowered expectations for the rate hike timeline. If the European Central Bank (ECB) in Europe can successfully kick Greek debt woes down the pathway – if Chinese authorities can successfully decree that “thou shalt buy-n-hold Shanghai shares” – U.S. stocks may not have much too fear. Indeed, the uptrends for core holdings like the iShares S&P 100 ETF (NYSEARCA: OEF ), the Health Care Select Sect SPDR ETF (NYSEARCA: XLV ) and the Vanguard Information Technology ETF (NYSEARCA: VGT ) remain intact. At the same time, we’re holding a larger-than-usual amount in cash/cash equivalents (15%) in most portfolios. Debt-fueled excess in Greece, Puerto Rico and China gave us a peek of the challenges that central banks around the world will be facing. Global economic deceleration and sky-high U.S. valuations are another. We anticipate an opportunity in the 2nd half of 2015 to buy quality assets at significantly lower prices. Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.