Tag Archives: zacks funds

Top-Performing Energy Mutual Funds In Q1 2016

After bleeding heavily from the beginning of 2016 through early February, the energy sector made an impressive comeback to end the first quarter on a positive note, all thanks to a strong spike in oil prices. The sector’s rebound also helped energy mutual funds to end the quarter with moderate gains. According to Morningstar, the mutual fund category – Energy Equity – returned 2.2% during the first quarter, after losing nearly 10.5% in its first two months. Meanwhile, the WTI and Brent crude, which slumped 28.7% and 19.2%, respectively, since the start of 2016 to reach multi-year low levels on February 11, gained 4.3% and 6.4% during the first quarter. This was the best quarterly performance of crude since the second quarter of 2015 that came on the back of a strong rebound from February 11 through the end of the quarter, when WTI and Brent crude surged 46.3% and 31.7%, respectively. Against this backdrop, it will be worth watching the top performers from the energy equity mutual fund category in the first quarter. But before going into the discussion about the mutual funds, let’s find out the factors that impacted the movement of oil prices during the quarter. Behind the Early Slump Oil prices witnessed a massive slump since the start of 2016, following concerns including China-led global growth worries and the unwillingness of major oil producers to reduce production despite the persistent fall in oil prices. A flurry of disappointing economic data out of China – one of the major importers of oil – raised concerns that an already weak demand environment may deteriorate further following the weakness in the Chinese economy. Dismal economic data out of the major economic regions, such as the U.S., the eurozone and Japan, intensified worries regarding weak global demand. Meanwhile, the major oil producers continued to produce at high levels without considering weak global demand and an already oversupplied market. Continued increase in crude inventories also played a major role in the oil slump during the first half of the quarter. Separately, Iran, which witnessed a lift-off in sanctions on its oil export, continued to raise its production, adding to the supply glut. These were the reasons why crude prices touched 12-year low levels in early February, which in turn, dragged the major benchmarks to multi-year lows. A Remarkable Recovery Strong intentions of major oil producers to control the supply glut played a catalyst for the rebound. Ministers and officials of both OPEC and non-OPEC countries said that they will be meeting on April 17 to discuss an oil production freeze in order to boost prices. Continued decline in oil rig counts and a lower-than-expected rise in crude inventories also gave a boost to oil prices during the latter half of the first quarter. Meanwhile, improvements witnessed in the economic environment of the U.S. and China also eased concerns over weak global demand to some extent. Separately, a weaker U.S. dollar also played a significant role in increasing oil prices, as it made crude more attractive for investors trading in currencies other than the U.S. dollar. 3 Top Energy Mutual Funds In this section, we have highlighted three fundamentally strong energy mutual funds that gained the most during the first quarter, banking on a strong rebound in oil prices and the energy sector. These funds 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. Besides having impressive first quarter return, these funds also have strong three-month returns. The minimum initial investment is within $5000. Also, these funds also have low expense ratios. Vanguard Energy Fund Inv (MUTF: VGENX ) seeks growth of capital over the long run. It invests the lion’s share of its assets in securities of companies engaged in operations related to the energy sector. The fund primarily invests in common stocks of companies. Currently, VGENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 7.8% and 20.3%, respectively. Its annual expense ratio of 0.37% is lower than the category average of 1.51%. BlackRock Natural Resources Trust Fund A (MUTF: MDGRX ) invests the majority of its assets in equity securities of companies having a significant portion of their assets in natural resources. It invests in securities of companies having operations related to sectors including energy, oil and gas. Currently, MDGRX carries a Zacks Mutual Fund Rank #2. The product has first-quarter and three-month returns of 3.9% and 17.7%, respectively. Its annual expense ratio of 1.10% is lower than the category average of 1.51%. Fidelity Select Energy Portfolio No Load (MUTF: FSENX ) seeks capital growth. It invests a large chunk of its assets in common stocks of companies involved in the energy sector, including oil, gas, electricity and solar power. The fund invests in securities of companies throughout the globe. Currently, FSENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 3.3% and 15.8%, respectively. Its annual expense ratio of 0.79% is lower than the category average of 1.51%. Original Post

S&P 500 Again Shows Weakness: Go Short With These ETFs

After the furious rally since February 12, the S&P 500 has again lost momentum and slipped into the red from a year-to-date look. This is especially true, as investors are apprehensive as to whether the stocks will be able to sustain their gains in the coming weeks given the bleak corporate earnings picture and renewed concerns on global growth uncertainty (read: Top and Flop Zones of Q1 and Their ETFs ). As we are heading into a weak Q1 earnings season, volatility is expected to increase though stabilization in energy prices and the dollar could act as a catalyst. According to the Zacks Earnings Trend , earnings growth will be deep in the negative territory for the fourth consecutive quarter with 10.9% estimated decline. In fact, the magnitude of negative Q1 revisions was the highest among recent quarters with 14 out of the 16 Zacks’ sectors witnessing negative revisions over the past three months. Utilities and retail were the only two exceptions. Revenues will likely be down 2.2% on modestly lower net margins. The release of minutes this week showed that the Fed is unlikely to raise interest rates in April, signaling that weak global growth could hurt the ongoing recovery in the U.S. economy. Further, continued rise in the Japanese currency dampened investors’ faith in central banks’ ability to boost growth across the globe. All these factors coupled with relatively higher valuations have led to risk-off trade, pushing the safe havens higher (read: Q1 ETF Asset Report: Safe Havens Pop; Currency Hedged Drop ). Added to the downbeat note is the International Monetary Fund warning. The agency stated that problems in emerging markets, such as China, could lead to poor stock performance in the U.S. and other developed countries. Given this, the S&P 500 will likely see rough trading ahead and investors could easily tap this opportune moment by going short on the index. There are a number of inverse or leveraged inverse products in the market that offer inverse (opposite) exposure to the index. Below, we highlight those and some of the key differences between each: ProShares Short S&P500 ETF (NYSEARCA: SH ) This fund provides unleveraged inverse exposure to the daily performance of the S&P 500 index. It is the most popular and liquid ETF in the inverse equity space with AUM of nearly $2.5 billion and average daily volume of nearly 7 million shares. The fund charges 90 bps in annual fees. ProShares UltraShort S&P500 ETF (NYSEARCA: SDS ) This fund seeks two times (2x) leveraged inverse exposure to the index, charging 91 bps in fees. It is also relatively popular and liquid having amassed nearly $2 billion in AUM and more than 13.5 million shares in average daily volume. ProShares Ultra S&P500 ETF (NYSEARCA: SSO ) With AUM of $1.6 billion, this fund also seeks to deliver twice the return of the S&P 500 Index, charging investors 0.89% in expense ratio. It trades in solid volumes of more than 4.6 million shares a day on average. ProShares UltraPro Short S&P500 (NYSEARCA: SPXU ) Investors having a more bearish view and higher risk appetite could find SPXU interesting as the fund provides three times (3x) inverse exposure to the index. Though the ETF charges a slightly higher fee of 93 bps per year, trading volume is solid, exchanging more than 6.6 million shares per day on average. It has amassed $728.3 million in its asset base so far. Direxion Daily S&P 500 Bear 3x Shares (NYSEARCA: SPXS ) Like SPXU, this product also provides three times inverse exposure to the index but comes with 2 bps higher fees. It trades in solid volume of about 6.6 million shares and has AUM of $476.8 million. Bottom Line As a caveat, investors should note that such products are suitable only for short-term traders as these are rebalanced on a daily basis. Still, for ETF investors who are bearish on the equity market for the near term, either of the above products could make an interesting choice. Clearly, a near-term short could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this corner of the investing world. Original Post

U.S. Broker-Dealer And Japan: 2 ETFs To Watch On Outsized Volume

In the last trading session, U.S. stocks ended on a weaker note thanks to renewed global growth concerns. Among the top ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) go down 1.2%, the S PDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) lose 0.99% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) shed 1.44% on the day. Two more specialized ETFs are worth noting as both saw trading volume that was far outside of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This could make these ETFs the ones to watch out for in the days ahead to see if this trend of extra-interest continues: iShares U.S. Broker-Dealers ETF (NYSEARCA: IAI ) : Volume 3.73 times average This U.S. broker-dealer ETF was under the microscope yesterday as nearly 417,000 shares moved hands. This compares to an average trading day of 117,000 shares and came as IAI lost about 3.3% in the session. The movement was due to the dovish Fed minutes as lower rates hamper the income for broking companies. However, the fund has a Zacks ETF Rank #3 (Hold). IAI was down about 3.8% in the past one-month period. iShares MSCI Japan ETF (NYSEARCA: EWJ ) : Volume 2.36 times average This Japan ETF was in focus yesterday as roughly 117.6 million shares moved hands on that day compared to an average of roughly 50.9 million. We also saw some share price movement as shares of EWJ lost 0.5%. The movement can largely be blamed on the strengthening of the yen against the dollar. It could have a big impact on Japan stocks that we find in this ETF portfolio. For the past one month, EWJ was down 3.4%. The fund currently has a Zacks ETF Rank #3 with a Medium risk outlook. Link to the original post on Zacks.com