Tag Archives: zacks funds

What Pushed Up These Agricultural ETFs?

Finally, soft commodities are catching up with the hard commodities this year. Several hard commodities including precious metals have made a comeback this year, but soft commodities could not keep pace with them. A stronger dollar, weak global fundamentals that are impacting the demand profile and ample supplies marred agricultural commodity investing. However, many agro-based commodities and the related ETFs have staged a recovery lately. A favorable demand-supply scenario is the major driver of this. Below, we highlight three agricultural ETFs that saw decent gains in the last one month (as of April 26, 2016) and see if the gains can last: Cocoa Cocoa prices have exhibited a wining trend lately due to supply concerns. Worries about lower yield in the mid-crop season in the key growing region of Ivory Coast led to this rise in prices. A long-drawn-out dry weather actually hit crop production. In addition, the demand scenario is also shaping up with cocoa grinding – a key gauge of cocoa demand – in Asia rising 2.9% in the first quarter of 2016. The data came in better than analysts’ expectation of a 1% rise. The double tailwinds put the cocoa market in an upward trajectory and showered gains on cocoa ETFs like the iPath Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NYSEARCA: NIB ) and the iPath Pure Beta Cocoa ETN (NYSEARCA: CHOC ). Cotton Global cotton prices took a beating earlier after talks about China – one of the key growing regions of cotton – preparing to sell some of its 11 million-metric-ton cotton hoard, which is a massive chunk and enough to roil global cotton prices, per Wall Street Journal . Notably, China accounts for about 60% of the world’s cotton inventory. But the ” delay in sales of its giant state cotton reserves” by China kept supplies at check and pushed up prices. Also, raw cotton deliveries to Indian mills have declined 12% this season, giving signs of lesser production. This scenario has boosted cotton exchange-traded products like the iPath Pure Beta Cotton ETN (NYSEARCA: CTNN ) and the iPath Dow Jones-UBS Cotton Total Return Sub-Index ETN (NYSEARCA: BAL ) . Sugar Sugar prices have also recovered lately on ‘ global deficit’ concerns . As per sources, research agencies have predicted a shortfall in supplies globally for the current season that will end in September 2016 (read: Sugar ETFs Hit 52-Week Highs: Time for Sweet Returns? ). Going by a recent Wall Street Journal article, “Brazil, India and Thailand – three of the world’s top producers – are showing ongoing signs of production risk.” Inadequate moisture in these top growing counties spoiled output, especially in Asia. All these led to a reduced number of sugar-cane estimates that spurred deficit concerns and boosted the price (read: Can El Nino Boost Agricultural ETFs? ). The Teucrium Sugar Fund (NYSEARCA: CANE ) and the i Path Pure Beta Sugar ETN (NYSEARCA: SGAR ) were the major beneficiaries of this trend. Bottom Line Having said this, we would like to note that we, at Zacks, are not positive on agricultural ETFs over the medium term. Though the products have gained lately, we expect the trend to lose momentum as the latest drivers are short-lived in nature. Link to the original post on Zacks.com

UnitedHealth Solid Q1 Earnings Put These ETFs In Focus

The largest U.S. health insurer, UnitedHealth Group (NYSE: UNH ), reported solid first-quarter 2016 results. The company continued its long streak of earnings beats. Earnings per share came in at $1.81, surpassing the Zacks Consensus Estimate by 9 cents and the year-ago earnings by 17%. Revenues rose 25% year over year to $44.5 billion, broadly in line with the Zacks Consensus Estimate of $44.7 billion. The company reported medical care ratio of 81.7%, up 30 basis points year over year, thanks to the extra calendar day of service in the quarter. Growth was broad based, with a 54% increase in revenues for Optum, the health services business (see all the Healthcare ETFs here ). Based on solid first-quarter results and business trends, UnitedHealth raised its earnings guidance to $7.75-7.90 per share for 2016 from $7.60-7.80 per share projected earlier. The Zacks Consensus Estimate of $7.85 per share is within the guided range. The company expects revenues to be approximately $182 billion in 2016, which is in line with the current Zacks Consensus Estimate. As a result, the stock jumped 4.8% in the last two trading days (as of April 20, 2016), following the earnings announcement. The stock currently has a Zacks Rank #2 (Buy) with a Value Style Score of “A”. This underscores its potential to outperform in the weeks ahead. In its conference call, UnitedHealth stated that it would pull out of the majority of public exchanges owing to smaller overall market size and a higher risk profile within this market segment. Next year, the company plans to remain in only a few of the states and will not carry any financial exposure from the exchanges into 2017. ETFs in Focus Investors may want to take a closer look at the ETFs having the largest allocation to this health insurance giant, as UNH has shown encouraging trading following its earnings. For those, the iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF ) could especially be on their radar, as UNH takes the top spot in the fund’s portfolio at 12.9% share. IHF This ETF provides exposure to 49 companies offering health insurance, diagnostics and specialized treatment by tracking the Dow Jones U.S. Select Healthcare Providers Index. About 45% of the portfolio is dominated by managed care firms, while healthcare services (26.5%) and healthcare facilities (23.3%) round off the top three. The fund has amassed $709.6 million in its asset base, while volume is good at about 112,000 shares per day, on average. It charges 44 bps in annual fees and expenses, and added 1.9% in the last two trading days following the UNH earnings release (as of April 20, 2016). The product has a Zacks ETF Rank of 1 or “Strong Buy” rating with a Medium risk outlook. Other ETFs Other healthcare ETFs, like the Health Care Select Sector SPDR ETF (NYSEARCA: XLV ) – 4.6%, the iShares U.S. Healthcare ETF (NYSEARCA: IYH ) – 4.3%, the PowerShares DWA Healthcare Momentum Portfolio ETF (NYSEARCA: PTH ) – 3.8%, the Fidelity MSCI Health Care Index ETF (NYSEARCA: FHLC ) – 3.9% and the Vanguard Health Care ETF (NYSEARCA: VHT ) – 4.1%, also have a decent exposure to UnitedHealth. Apart from the healthcare space, UNH is among the top 10 holdings in some large cap ETFs, such as the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) and the PowerShares Dynamic Large Cap Growth Portfolio ETF (NYSEARCA: PWB ), with exposure of 4.9% and 3.4%, respectively. However, these products will be less impacted by the movement of UNH share price. Original Post

Forget Gold; Buy Silver Mining ETFs Instead

While broad-based global growth worries in Q1 and the Fed’s dovish stance in the March meet stalled the strength in the greenback, it spread joy within broad-based commodity investing. Most investors focused on gold taking cues from the Fed’s dovish comments over rate hike. Another corner of the precious metals world – silver – has also done quite well lately. The white metal has seen extremely solid trading in recent times and touched a 10-month high on April 19 owing to some disappointing economic data, mainly from the U.S. The jump was so acute that silver has actually breezed past the yellow metal. Most market participants have now started to expect that the Fed will not act on policy tightening again before the second half of 2016 given persistent volatility in the oil patch, corporate earnings weakness and sluggish U.S. market recovery. All these are likely to keep the greenback soft in the coming days and precious metals strong. Renewed tension in the oil patch after the output freeze deal in Doha failed may also bolster the need to invest in safe havens like silver and gold. Also, silver might see an output crunch ahead, as “Zinc miners have announced production cuts resulting into a proportionate decline in silver output as well, silver being a byproduct of zinc,” going by Business Standard . Apart from this, silver has high usage in industrial activities, with about 50% of total demand coming from industrial applications. With China, the biggest industrial fabricator after the U.S., gaining traction on manufacturing activities, silver might continue to see smooth trading in the coming days. Plus, a pickup in global industrial activities is expected ahead, thanks to a host of stimulus measures in various parts of the globe. Silver Mining Vs. Gold Mining? Whatever the case, the ultra-popular gold bullion exchange-traded fund SPDR Gold Trust ETF (NYSEARCA: GLD ) lost about 0.4% in the last five trading days (as of April 19, 2016), while silver bullion fund iShares Silver Trust ETF (NYSEARCA: SLV ) advanced over 4.7% during the same time frame. Actually, many investors have started to view silver as a leveraged play on gold, as per ETF Securities. Investors should also note that the silver mining industry , at least in terms of its Zacks Industry Rank, is in a decent position, having been ranked in the top 5% overall. Many silver mining companies are presently top-rated as per the Zacks methodology. Investors can tap the surge in silver demand by investing in silver mining ETFs, which often play as a leveraged version of the underlying metal. The case appears to hold true for silver as well. Silver mining funds, including the Global X Silver Miners ETF (NYSEARCA: SIL ), the iShares MSCI Global Silver Miners ETF (NYSEARCA: SLVP ) and the PureFunds ISE Junior Silver ETF (NYSEARCA: SILJ ) gained about 9.9%, 11.9% and 16.3%, respectively, during the last five trading days (as of April 19, 2016). The trio hit a 52-week high on April 19, 2016, with SILJ, SLVP and SIL adding about 10.6%, 9.6% and 9.2%, respectively. On the other hand, gold mining ETFs like the Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ ), the Sprott Junior Gold Miners ETF (NYSEARCA: SGDJ ) and the Market Vectors Gold Miners ETF (NYSEARCA: GDX ) added 7.5%, 5.8% and 4.9%, respectively, on April 19, 2016, though even these hit 52-week highs. Bottom Line It seems buying pressure is intense in the silver mining ETF space, and given the pushback (apparently) in the Fed rate hikes, extra buying is likely. As a caveat, we would like to note that this way up in commodities may be short-lived. Also, silver prices are often more hit than gold when things are against precious metal investing. Thus, risk-loving investors might go for this momentum play and hoard as much gains as possible till the party is on. Original Post