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Fintech - >>> How To Cash In On Money's Coming Makeover
Investors Business Daily
MATT KRANTZ
12/19/2019
https://www.investors.com/etfs-and-funds/sectors/fintech-stocks-invest-in-money-cash-technology/?src=A00220&yptr=yahoo
Money is about to get a face-lift. And investors are looking to which fintech stocks will cash in.
Everything about money — from the way it's spent, stored and invested — is up for new forms of digitization. Investors see a massive opportunity.
Nearly $25 billion in venture capital funding poured into financial technology firms this year through the third quarter, says industry tracker CBInsights. The latest deluge of funding comes just one year following a record-breaking $40.6 billion put into the industry in 2018. And this year's haul is more than the $18.8 billion invested in all of 2017.
These are private companies. But leading public fintech stocks are up big too this year. Which fintech stocks let investors play the future of money now?
There are three primary ETFs to help you buy into the public companies leading the fintech charge -
ETFMG Prime Mobile Payments ETF (IPAY) is the largest with assets of $782.8 million.
The ETF owns 40 publicly traded companies at the epicenter of payment services and processing. The ETF's largest holding, at 7.5%, is Global Payments (GPN). The company processes digital, credit card and check payments. It operates not only in North America, but also Europe and Asia.
Shares of Global Payments are up 75% this year as investors applaud its robust growth. The company's revenue jumped more than 29% in the third quarter to $1.1 billion. Analysts are looking for the company's revenue to grow 62% in 2020 and earnings per share to rise 22% to $7.55.
Such strong fundamentals and chart action explain why Global Payments carries a sky-high 97 IBD Composite Rating.
What makes ETFMG Prime Mobile somewhat unique is its large stakes in credit card processors, says Todd Rosenbluth, director of ETF and mutual fund research at CFRA. The ETF, for instance, puts a more than 18% combined weighting in Visa (V), Mastercard (MA) and American Express (AXP).
The credit card companies have performed strongly this year and are turning into important plays to get into fintech stocks. Visa, the largest company of the three, has seen shares jump 41% this year. The credit card stocks are among the top performers in the S&P 500 this year.
ETFMG Prime Mobile Payments charges 0.75% annually. It's up 41.6% this year through Dec. 17, 2019.
A Narrower Fintech Stock ETF
Another major player in the fintech ETF space is -
Global X FinTech ETF (FINX). The ETF, with assets of $414 million, owns 34 stocks.
The Global X FinTech ETF's largest holding, at 14%, is Fiserv (FISV). Shares of the payment processing provider are up nearly 60% this year.
There are strong fundamentals to back up Fiserv's stock price gains, too. The company's profit this year is on track to rise nearly 30% to $4.02 a share. And in 2020? Analysts are calling for an annual profit of $4.91 a share, up 22% from 2019.
The Global X FinTech ETF charges 0.68% annually. And it's up 35.8% this year through Dec. 17.
Another Approach
ARK Fintech Innovation ETF (ARKF) is a new entrant in the industry. It traces its inception to Feb. 4, 2019. It brings an active selection process to find ways to buy into new products or services "that potentially (change) the way the financial sector works."
The fund is still small, with assets of roughly $82 million. But it's looking to differentiate itself from the larger options. The ETF's top holding is payment services provider Square (SQ) at 9.5% of the portfolio. But the ETF adds shares of companies working different angles than other fintech stocks.
For instance, the ETF's second-largest holding after Square is Apple (AAPL) at 6.1%, followed by China's Tencent (TCEHY).
And that's why Rosenbluth, when looking at the fintech ETFs, warns: "Despite similar sounding names what's inside these thematic funds and their performance records in 2019 are quite different."
Dave Nadig, managing director of ETF.com, has a larger warning. He points out these ETFs are limited to publicly traded firms. That's a big drawback in fintech, he says. "The vast majority of interesting fintech companies are still private, so this is probably money chasing already richly valued, public companies," he said.
Three Ways To Play Fintech Stocks
ETF Symbol YTD % Ch. Assets ($ millions) Expense Ratio
ETFMG Prime Mobile Payments ETF IPAY 41.6% 782.8 0.75%
Global X FinTech ETF FINX 35.8% 414.4 0.68%
ARK Fintech Innovation ETF ARKF 18.4% 81.7 0.75%
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>>> 3 Soaring Cloud Computing ETFs
Benzinga
May 11, 2020
https://finance.yahoo.com/news/3-soaring-cloud-computing-etfs-221015316.html
The technology sector is proving to be a premier source of strength this year. Just look at the tech-heavy Nasdaq-100 Index (NDX), which was the first of the major domestic equity benchmarks to return to positive territory following the March market swoon.
Within the broader technology universe, several sub-groups are standing out, including cloud computing. For example, the ISE CTA Cloud Computing Index entered Monday with a year-to-date gain of 9.54%.
For awhile, the universe of dedicated cloud computing exchange traded funds was sparsely populated, but that's changed over the past couple of years and some of the new additions to the group are performing well this year. Consider some of the following ideas.
Global X Cloud Computing ETF (CLOU)
The Global X Cloud Computing ETF (NASDAQ: CLOU) remains one of the success stories of the thematic ETF realm. At just about 13 months old, the Global X ETF has nearly $597 million in assets under management, indicating there's room for competition and innovation in the cloud ETF space.
CLOU follows the Indxx Global Cloud Computing Index and is a play on “companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware,” according to Global X.
Recently on a string of hitting all-time highs, including Monday, CLOU is up an impressive 18.82% year to date.
WisdomTree Cloud Computing Fund (WCLD)
The WisdomTree Cloud Computing Fund (NASDAQ: WCLD) is another emerging success story in the cloud ETF arena with nearly $80 million in assets under management after coming to market just last September. WCLD follows the BVP Nasdaq Emerging Cloud Index, which is an equal-weight benchmark.
“Cloud computing has become ingrained in nearly every aspect of our lives by fundamentally altering how we consume, process and share information in the digital age,” according to WisdomTree. “Through our research, WisdomTree believes this trend toward cloud-based solutions offers a compelling, long-term opportunity for investors to gain exposure to one of the most exciting segments of the technology sector.”
Although WCLD is an equal-weight ETF, it's benefiting from high-flying Zoom Video (NASDAQ: ZM) being its top component. That's helping WCLD to a 2020 gain of 24%. The WisdomTree ETF also hit an all-time high on Monday.
First Trust Cloud Computing ETF (SKYY)
The First Trust Cloud Computing ETF (NASDAQ: SKYY) is the fund that got the cloud ETF party started nearly nine years ago and while it's a behemoth compared to its aforementioned rivals with $3.2 billion in assets, it's not necessarily the best fund in this category.
SKYY is a fine idea for investors looking to lean toward the largest cloud companies. Think Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT), among others. Undoubtedly, that helps, but SKYY's performance is restrained by the mega-cap holdings as it's up just 9.5% this year. Of course, that's better than the broader market.
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>>> An Internet ETF Crushing Its Competition
by Todd Shriber
Benzinga
May 07, 2020
https://www.benzinga.com/trading-ideas/long-ideas/20/05/15974340/an-internet-etf-crushing-its-competition?utm_campaign=partner_feed&utm_source=yahooFinance&utm_medium=partner_feed&utm_content=site
An Internet ETF Crushing Its Competition
Dozens of exchange traded funds are dedicated or offered exposure to internet stocks. With some of those equities among the names supporting U.S. indexes this year, it's not surprising investors have a lot of enthusiasm for these ETFs.
What To Know
An overlooked name among internet ETFs is the O'Shares Global Internet Giants ETF OGIG, though that overlooked status could and probably should be shed because OGIG is killing some of its larger rivals this year.
The O'Shares ETF is up 16.41% year to date after hitting an all-time high on Wednesday, making it one of just 13 ETFs to accomplish that feat. Not only that, but OGIG is beating the Dow Jones Internet Composite Index, one of the most widely followed gauges of internet stocks, by nearly 1,000 basis points this year.
Why It's Important
Internet stocks and funds are benefiting from the stay-at-home policies permeating the U.S. because of the coronavirus, but that doesn't mean OGIG will wilt when the virus eases. In fact, the fund has impressive long-term credentials, which are helped by its geographic diversity. That is to say while some internet ETFs are domestically focused, OGIG is not.
“Developed countries are nearing internet adoption saturation. North America and Europe account for roughly 15% of the world’s population and are nearing full adoption at 89% and 88%, respectively,” said O'Shares in a recent note. “Asia and Africa on the other hand, have populations exceeding 4 billion and 1 billion, respectively, accounting for over 70% of the world’s population but have much lower adoption rates.”
International equities represent about a third of OGIG's weight. The 10 ex-U.S. exposures in the fund include eight developed and two emerging economies.
What's Next
With e-commerce and online retail expected to continue capturing a greater slice of the retail pie, OGIG stands to benefit. As O'Shares notes, last year, the U.S. commanded 17% of the e-commerce market. That sounds impressive and it is, but it's dwarfed by the 54% controlled by China, OGIG's second-largest geographic weight.
Data indicate the law of large numbers isn't yet kicking because China's e-commerce market is growing at twice the rate of the U.S.
Data also say investors are starting to wake up to the OGIG story. The fund, which turns 2 years old next month, has $92.50 million in assets under management of which about $35 million has poured in just this year.
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>>> 3 Biotech ETFs Up 10% Or More Over The Last Month
by Todd Shriber
Benzinga
May 07, 2020
https://www.benzinga.com/general/biotech/20/05/15974487/3-biotech-etfs-up-10-or-more-over-the-last-month?utm_campaign=partner_feed&utm_source=yahooFinance&utm_medium=partner_feed&utm_content=site
Something's been brewing in the health care sector, the second-largest group in the S&P 500. Since the start of the second quarter, the Health Care Select Sector SPDR XLV is one of the top asset-gathering exchange traded funds.
The iShares Nasdaq Biotechnology ETF IBB thanks to plenty of help from Gilead Sciences GILD, is up almost 14% over the past month. Much of the recent biotechnology ebullience is attributable to progress on the coronavirus treatment and vaccine front.
IBB is the largest biotechnology ETF by assets, but it's not the only one delivering impressive returns in recent weeks. Here's a trio of biotech ETFs that are knocking the cover off the ball.
Virtus LifeSci Biotech Clinical Trials ETF (BBC)
The Virtus LifeSci Biotech Clinical Trials ETF tracks the LifeSci Biotechnology Clinical Trials Index. That benchmark is a collection of companies with drugs and therapies in clinical trials, which means BBC is at the right place at the right time in the battle to quash coronavirus.
BBC's holdings are basically equally weighted, but that doesn't distract from the fact that Moderna MRNA is the fund's top holding. Overall, BBC holds about 90 stocks, most of which dwell at the lower end of large-cap territory or are mid- or small-cap names.
In addition to Moderna, several other BBC components have coronavirus treatment exposure and roughly a dozen are credible takeover targets. That's enough to have BBC up nearly 27% over the past month.
ARK Genomic Revolution ETF (ARKG)
In the health care space, the ARK Genomic Revolution ETF (CBOE: ARKG) has been one of the best-performing funds for several years, trouncing traditional health care and biotechnology ETFs for several years, speaking to the capabilities of the fund's active managers.
ARKG typically holds 30 to 50 stocks and currently holds 34, several of which are coronavirus plays — and that doesn't even begin to underscore the fund's virus detection exposure, which highlights ARKG's deep CRISPR exposure.
“As government officials re-open the US, testing for the COVID-19 virus will be a critical step. A new CRISPR-based test called DNA Endonuclease-Targeted CRISPR Trans Reporter (DETECTR) could help speed the process along,” ARK analyst Ali Aurman said in a recent note.
ARKG is higher by nearly 32% over the past month.
Principal Healthcare Innovators Index ETF (BTEC)
is a departure from the other funds mentioned here because it's not drug/therapy-centric. Rather, BTEC tilts more toward medical device, equipment and life sciences firms.
The fund “invests in companies that are leading the charge toward innovative solutions, rather than spending money on marketing and distribution,” according to Principal.
BTEC's nearly 210 holdings are considered research and development-intensive companies and the fund's methodology screens out companies with negative or inconsistent earnings. The fund is higher by almost 25% over the past month.
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>>> 6 ETF Areas Beating S&P 500 in 2020
by Sanghamitra Saha
Zacks
May 8, 2020
https://finance.yahoo.com/news/6-etf-areas-beating-p-163004389.html
The first quarter of 2020 was the worst one for Wall Street since the fourth quarter of 2008, for European stocks since 2002 and for emerging markets since 2008 due to the coronavirus outbreak. The S&P 500 saw its worst first quarter ever (down 20%) (read: Top ETF Stories of First Quarter).
Wall Street fell into bear market in mid-March only to spring higher from late March and score the 82-year best April. Gigantic Fed and government stimulus facilitated this rally. The winning momentum is being carried into May thanks to the reopening of economies.
Moreover, China – which enacted lockdown pretty earlier than the rest of world – reported a 3.5% year-over-year rise in exports in April, crushing analysts’ expectations of a decline in 15.7%. This flared optimism on the same level of global recovery in the coming days.
Overall, the S&P 500 is down 10.8% this year, after a massive recovery in April. Against this backdrop, we highlight a few ETF areas that have beaten the S&P 500 this year.
Biotech
Healthcare and biotech stocks and ETFs soared higher amid the ongoing medical emergency. Biotech stocks, in fact, had their best monthly gain in two decades in April. Large pharma and biotech companies are working on medicines, vaccines and testing kits. Most recently, Gilead GILD indicated that the trial for coronavirus treatment Remdesivir has met its initial goal. And Remdesivir received the FDA nod for emergency use for coronavirus as an experimental drug. Moderna Inc. MRNA, which is developing experimental vaccines, said it has entered into an agreement to manufacture a billion doses a year. This optimism should keep Wall Street charged up.
VanEck Vectors Biotech ETF BBH — Up 6.1%
iShares Nasdaq Biotechnology ETF IBB — Up 3.4%
Technology
Tech stocks have been investors’ darlings this year despite the coronavirus outbreak. In fact, social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge online and work as well as learn from home. This new lifestyle has boosted various corners of the technology sector, ranging from enterprise cloud computing, cyber security, remote communications, video gaming and e-commerce to online payments.
First Trust Dow Jones Internet ETF FDN — Up 4.5%
iShares Expanded TechSoftware Sector ETF IGV — Up 2.6%
SPDR NYSE Technology ETF XNTK — Up 1.8%
Large-Cap Growth
April’s torrid stock market rally was mainly spurred by large-cap growth stocks. Amid pandemic, small-cap stocks were initially beaten-down as these lack financial stability lesser than their larger peers.
iShares Morningstar LargeCap Growth ETF JKE — Up 0.3%
Vanguard Mega Cap Growth ETF MGK — Down 1.2%
China
Despite being the perpetrator of the pandemic, China stocks beat Wall Street surprisingly in Q1, having lost only 11% in dollar terms. Note that the epidemic began in China in January leading to lockdowns in cities. Still, several China stocks and ETFs lost very little in the quarter. Compelling valuations, the signing of the phase-one trade deal and policy easing probably helped China ETFs hold up well this year. Latest recovery is another positive (read: These China ETFs Hardly Felt Any Coronavirus Pain in Q1).
VanEck Vectors ChinaAMC SMEChiNext ETF CNXT — Down 0.13%
KraneShares CSI China Internet ETF KWEB — Down 5.42%
Xtrackers MSCI China A Inclusion Equity ETF ASHX — Down 5.43%
Retail
Retail — predominantly dependent on consumer discretionary activity — had a painful stretch in the peak of the pandemic due to store closures. However, before the virus outbreak, the sector was steady.
VanEck Vectors Retail ETF RTH — Down 0.13%
Clean Energy
Upbeat earnings and Tesla’s TSLA optimistic solar plan boosted solar ETF investing in early 2020. Investors should note that the United States is putting focus on clean electricity generation. China is a major player building a green environment. The European Union’s (EU) 28 member states’ efforts on this ground is also commendable. All these explain the rally in clean energy ETFs before the virus outbreak (read: Bet on "American Magic" With 4 Solid Small-Cap Sector ETFs).
Invesco Solar ETF TAN — Down 5.0%
First Trust NASDAQ Clean Edge Green Energy ETF QCLN — Down 5.1%
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>>> Nasdaq Settles ETF Legal Fight Over 'HACK'
ETF.com
May 4, 2020
https://finance.yahoo.com/news/nasdaq-settles-legal-fight-over-171500801.html
A years-long battle over control of the world’s first cybersecurity exchange-traded fund may soon be over.
Nasdaq and ETF Managers Group announced May 1 plans to settle their dispute over the ETFMG Prime Cyber Security ETF (HACK) and four other ETFs with combined assets of $2.1 billion. Nasdaq will take over the funds from ETFMG in the second half of 2020, according to the press release.
What’s at stake is control of the funds along with the lucrative fund fees paid by investors. In December, a federal judge ordered ETFMG to pay $80 million to Nasdaq for breach of contract, but did not grant Nasdaq’s request to wrest day-to-day control of the funds away from ETFMG.
The brief statement gave few details. It’s unclear whether all of the disputed funds will be covered by the deal. It’s also unclear what role, if any, ETFMG or Sam Masucci, the firm’s founder and chief executive officer, will play in the funds after the settlement. Financial terms were not disclosed. A spokesman for Nasdaq declined to comment; a spokesman for ETFMG did not immediately respond to a request for comment.
Cash Payments & Change Of Control
Nasdaq and ETFMG have agreed to certain cash payments from ETFMG to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain ETFMG intellectual property and related assets, to a Nasdaq affiliate, according to the May 1 statement. “The transaction is expected to close in the last half of 2020.”
The settlement marks the end of a tangled feud that began nearly four years ago, shortly after Nasdaq bought the International Securities Exchange. The acquisition included ISE’s small ETF incubator, which helped would-be issuers bring new funds to market.
One such hopeful was Andrew Chanin, a former ETF trader and co-founder of PureShares, a New Jersey ETF startup. ISE provided the financial backing for Chanin’s PureFunds ETFs in exchange for the lion’s share of any profits—a risky venture, since most new funds fail.
Cash Payments & Control Transfer
HACK was by far the partnership’s biggest success. The fund debuted in November 2014, days before Sony Pictures suffered a massive cybersecurity breach. The publicity helped HACK raise $1 billion in assets in its first year.
To manage day-to-day business of the PureFunds ETFs, Chanin and ISE hired ETFMG, a New Jersey firm run by Masucci, a former mortgage trader turned ETF entrepreneur.
As the advisor to the funds, ETFMG collected the management fees from investors—at times as much as $600,000 a month from HACK alone—and used the money to pay the fund’s bills, including ETFMG’s own fees. Any profits—at times more than $300,000 a month just from HACK—were forwarded to ISE, which paid Chanin his share.
Nasdaq reaped the bulk of the profits while the ETFs traded under Chanin’s PureFunds brand, but the arrangement gave Masucci significant operational control. Masucci also led the board of trustees for the funds.
Arrangement Breakdown
The arrangement began to fray after Nasdaq bought ISE in June 2016. The final rupture came in 2017 when ETFMG stripped the PureFunds brand from the ETFs, renamed the funds with the ETFMG moniker, and claimed that ETFMG was entitled to keep all the fees for itself. Nasdaq sued in October 2017 in the U.S. District Court for the Southern District of New York.
In December 2019, Federal Judge Paul Engelmayer sided largely with Nasdaq, ordering ETF Managers Group to pay $80 million to Nasdaq. Engelmayer ruled that ETFMG had breached its contracts with Nasdaq and misappropriated millions of dollars in fund management fees.
Though ETFMG appealed, it was a major setback. Engelmayer called ETFMG’s conduct “little more than an act of theft.” In his 166-page judgment, Engelmayer described portions of Masucci’s testimony as “contrived and unpersuasive,” “threadbare and unconvincing,” “incredible—and clearly false,” consisting of “uncorroborated after-the-fact assertions,” “demonstrably false,” “knowingly false” and “fictitious” and “overwhelmingly disproven by the evidence at trial.”
(The full text of Engelmayer’s Dec. 20 opinion can be found at www.pacer.gov. The case is Nasdaq Inc. v. ETF Managers Group, LLC et al, in the U.S. District Court for the Southern District of New York.)
The deal announced May 1 will also settle a separate lawsuit brought by PureShares against ETFMG in New Jersey Superior Court. Chanin declined to comment.
Unanswered Investor Questions
The brief statements from Nasdaq and ETFMG leave several questions unanswered.
It’s unclear whether the deal covers all five of the former PureFunds ETFs now trading under the ETFMG name. All five are passive funds tracking industry indexes. HACK is by far the largest, with $1.29 billion in assets under management.
The other ETFs are:
ETFMG Prime Junior Silver Miners ETF (SILJ) with almost $140 million in assets under management.
ETFMG Prime Mobile Payments ETF (IPAY) with about $561 million in assets
Wedbush ETFMG Video Game Tech ETF (GAMR) with about $81 million in assets
And the fund now known as the Wedbush ETFMG Global Cloud Technology ETF (IVES), which has about $32 million in assets. Until recently, IVES invested in the drone industry and traded under the ticker IFLY, but last month the fund changed its name, index, ticker and investment objective.
The settlement announcement also leaves a number of unanswered questions for investors.
The settlement is still “subject to future negotiations and approvals among independent third parties,” the statement said. It’s unclear whether the PureFunds brand will be restored to the funds, or indeed whether PureFunds will have any future role in the marketing or operation of the ETFs.
It is also unclear whether the settlement requires Masucci to resign from the board of trustees governing the funds, or whether the deal seeks to replace other independent trustees. It’s additionally unclear whether Nasdaq will continue to use benchmarks created by Prime Indexes, a firm run by a former Nasdaq employee who had been involved in ISE’s ETF business before Nasdaq’s acquisition.
For the time being, little has changed for investors. The funds continue to trade under the same tickers, tracking the same indexes.
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>>> 4 ETFs For Investing In FinTech And The Payments Industry
Nasdaq.com
by Prableen Bajpai
JUL 8, 2019
https://www.nasdaq.com/articles/4-etfs-for-investing-in-fintech-and-the-payments-industry-2019-07-08
Technological advancements are disrupting various industries, challenging traditional players to make timely adaptions in order to remain relevant. The payments industry is no exception. The innovations based artificial intelligence, cloud and biometrics coupled with demand for fast and secure cashless transactions, use of smart devices, internet penetration, increasing adoption of e-commerce and changing consumer demographics is bringing in a wave of digital transformation.
Here’s an overview of the payments industry and a look at the exchange traded funds (ETFs) providing an investment opportunity in this space.
Global revenue from payments surpassed $2 trillion in 2018 and is set to approach $3 trillion within the next five years. While cash continues to be king, the potential for digital payments is immense. The Digital Money Index of 84 countries that track the development of digital money readiness shows an improvement of 5.5% over the last five years.
China continues to lead the movement away from cash with the share of electronification increasing by more than ten-fold over the last five years, according to a McKinsey report. In terms of regions, North America is the first region to execute more than half of its transactions electronically. India is pushing its initiative dubbed as ‘Digital India’ which highlights “faceless, paperless, cashless” as one its professed roles.
Several studies recommend the potential benefits of digitized payments, ranging from time savings among consumers, increased sales revenues among businesses, reduced government administrative costs and higher tax collections. A research by Citi shows that “a 10% increase in digital money adoption by countries (constituting the index) would deliver a $150 billion lift in consumer spending, which raises business revenues, while digital payments also cut cash handling costs for services and businesses by $100 billion. Meanwhile, governments pocket $100 billion more in taxes and savings of $200 billion by digitizing disbursements. In total, up to $1 trillion of new flows would enter the formal economy.”
Here’s a look at some exchange traded funds which invest in companies that are a part of the transformation that’s underway.
The ETFMG Prime Mobile Payments ETF (IPAY) is a one of the oldest exchange traded funds providing exposure to stocks in the payments industry which is experiencing a shift from credit card and cash transactions to digital and electronic methods. The fund was launched in 2015 and has Prime Mobile Payments Index as its underlying benchmark index. In terms of geographies, the ETF has majority exposure to the U.S. with smaller exposure towards France, Netherlands, Germany and Japan. The ETF has a portfolio of around 40 stocks with the top ten holdings adding up to 48.62%.
The top ten holdings in its portfolio are:
Mastercard
Visa
American Express
PayPal Holdings
Fidelity National Information
Worldpay
FinServ
Square
First Data
Discover Financial Services
The ETF has $680.43 million as assets under management, 0.75% as expense ratio and has posted 35.14% year-to-date (YTD) returns.
Tortoise Digital Payments Infrastructure Fund (TPAY) is one of the recent ETFs, launched in 2019 providing access to the payments space. The ETF tracks the Tortoise Global Digital Payments Infrastructure Index represents 53 companies which are a prominent part of the global digital payments landscape. The ETF has $4.58 million as assets under management and an expense ratio of 0.40%. In the last three-months, it has given 8.93% returns.
The top holdings have a 45.62% allocation and comprise of companies such as:
Fleetcor Technologies
Square
First Data
FinServ
Worldpay
Fidelity National Information
American Express
MasterCard
Total System Services
Wirecard
Next is the Global X FinTech ETF (FINX). Launched in 2016, the ETF seeks to invest in companies that are on the leading edge of the emerging financial technology sector and are looking at industries such as insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The ETF tracks the Indxx Global Fintech Thematic Index. The country-wise break-up reflects 70% exposure to the U.S., followed by countries such as Switzerland, Germany, Australia, New Zealand, Demark and Brazil.
With $415.58 million as assets under management and an expense ratio of 0.68% as expense, the fund has delivered 33.82% YTD returns. The ETF has close to 40 stocks in its portfolio with top ten holdings that combine to almost 55% of the portfolio.
First Data
FinServ
Fidelity National Information
Wirecard
Intuit
Square
PayPal Holdings
Adyen
Guidewire Software
Black Knight
ARK Fintech Innovation (ARKF) is another ETF has been launched in 2019. ARKF is an actively managed ETF with a focus on companies engaged in the theme of fintech innovation. The ETF holds a portfolio between 35-55 stocks with a large-cap bias. The ETF has posted 4.93% YTD returns. It has $72.09 million as assets under management and an expense ratio of 0.75%.
The top ten holdings of the ETF are:
Square
Tencent
Apple
Zillow
com
Alibaba
PayPal
Rakuten
LendingTree
Line
Final Word
Global investment in financial technology ventures more than doubled in 2018, to $53.3 billion. A major part of it came for a single record funding round worth $14 billion in Ant Financial, best known for its mobile payments service Alipay.
Juniper Research projects that the number of people using digital wallets touch nearly 50% of the world’s population by 2024, pushing wallet transaction values up by more than 80%. Overall, the global digital payments market is expected to reach $7.64 trillion by 2024, recording a CAGR of 13.7% (2019-2024).
With the advancement in payments industry and colossal scope for growth, these ETFs are a favorable way to be a part of the digital journey, which has begun across the globe.
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Sector Performance week of April 3, 2020
Energy -------------------------- up 5.4%
Consumer Staples ---------- up 3.5%
Health Care -------------------- up 2.0%
Communication Services ---- (1.4%)
Information Technology -- (2.0%)
Materials ------------------------ (3.8%)
Industrials ---------------------- (4.5%)
Consumer Discretionary ---- (4.7%)
Real Estate -------------------- (6.2%)
Financials ----------------------- (6.8%)
Utilities -------------------------- (7.1%)
Sector Performance Jan - April 3, 2020
(% loss)
Consumer Staples ---------- 12.0%
Health Care -------------------- 14.9%
Information Technology -- 15.9%
Utilities ------------------------- 19.9%
Communication Services ---- 20.8%
Consumer Discretionary ---- 23.6%
Real Estate -------------------- 24.3%
Materials -------------------------30.6%
Industrials ---------------------- 30.8%
Financials ------------------------36.3%
Energy -------------------------- 49.8%
>>> Best & Worst ETFs During Market Chaos
ETF.com
March 05, 2020
by Sumit Roy
https://www.etf.com/sections/features-and-news/best-worst-etfs-during-market-chaos?nopaging=1
Not many areas of the market have been immune to the enormous gyrations the financial markets have seen lately. In the two weeks since the S&P 500 peaked, most exchange-traded funds have fallen. Likewise, most ETFs rose when the market had two extraordinary rallies of more than 4% on Monday and Wednesday.
But while most ETFs have been moving in tandem, the gains and losses haven’t been equal. Since its Feb. 19 top, the SPDR S&P 500 ETF Trust (SPY) is down 10.6% through March 4 (it was down as much as 12.4% on a closing basis, and 15.8% on an intraday basis at its trough on Feb. 28). On a year-to-date basis, SPY is down about 6%.
SPY’s performance in the past two weeks sits at about the middle of the pack; some ETFs have done better, while others have done worse.
Safe Havens
Inverse ETFs aside, it’s been extremely difficult to generate gains in the market since the Feb. 19 peak. It comes as no surprise that one of the few segments to perform well in that time frame is the bond market. Treasuries and other investment-grade bond ETFs have simply been on fire.
The iShares 20+ Year Treasury Bond ETF (TLT) and the iShares 7-10 Year Treasury Bond ETF (IEF) gained 9.1% and 5.2%, respectively, since Feb. 19. On a year-to-date basis through March 4, the two funds are up 17.4% and 8.4%.
Those are fantastic returns, and come as interest rates hover at record lows (bond yields and prices move inversely).
Another safe-haven winner during the past two weeks is gold. The yellow metal leapt to seven-year highs of $1,689/oz on Feb. 24. Since then, prices cooled down a little bit to around $1,670, but the SPDR Gold Trust (GLD) is still up 3.8% since Feb. 19 and 10.2% on a year-to-date basis—not as good as long-duration Treasuries, but better than IEF, the 7-10 year Treasury fund.
Gold Near A 7-Year High
China ETFs
Who could have imagined that stocks trading in China, the epicenter of the coronavirus, would end up being among the best performers of the past two weeks? But that’s precisely what’s happened.
The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) is up 4.3% in the period and 1.7% year-to-date. Two explanations for this puzzling performance come to mind. One, China got hit by the virus first, the government took drastic action to combat it, and there are signs the epidemic may be peaking in the country. The market may be anticipating that China will be the first country to recover from the crisis thanks to decisive action from the authoritarian government.
Another explanation is that the Chinese government may be propping up the financial markets. It wouldn’t be the first time that China lent support to its equity markets to prevent panic and provide confidence to its financial system.
Surprising Strength In ASHR
Sector Outperformers
Within the U.S. equity market, sector performance has deviated significantly. The S&P 500 may be down 10.6% over the past couple of weeks, but relatively safe consumer staples stocks are down only 3.8%, as measured by the Consumer Staples Select Sector SPDR Fund (XLP).
The Utilities Select Sector SPDR Fund (XLU) and the Real Estate Select Sector SPDR Fund (XLRE) are also outperforming, with losses of 3.6% and 5%, respectively, in the same period. The two sectors have been aided by plunging interest rates.
Then there is the Health Care Select Sector SPDR Fund (XLV), which has fallen 6.1% since the correction began. XLV made up a lot of ground on Wednesday, when it surged 5.7%, its biggest single-session gain since 2008. Surprise victories by Joe Biden in the Super Tuesday democratic primaries reduced concerns about Medicare-for-all and other health care measures that could negatively impact the sector’s profits.
On a year-to-date basis, XLP is down 1.5%; XLU is up 4.7%; XLRE is up 1.3%; and XLV is down 4.1%.
XLU Is Up Year-To-Date
Sector Laggards
On the flip side of the sector ledger are laggards like the Energy Select Sector SPDR Fund (XLE) and the Financial Select Sector SPDR Fund (XLF). The two worst-performing sectors, energy and financials, were down 17.9% and 15%, respectively, in the two weeks since Feb. 19.
In a way, financials are the flip side of real estate. The latter gets a boost from lower rates, while the former is hurt by them. Investors in financials certainly don’t want to see a situation like that in Europe, where negative interest rates have decimated the profitability of the region’s banking sector.
Additionally, the energy sector, already a pariah among investors, was hit yet again by the coronavirus-induced sell-off in oil prices. Crude was last trading below $46/barrel as traders anticipate the biggest slowdown in oil demand since the financial crisis.
The only saving grace for energy investors are the sky-high dividend yields the sector provides. XLE was last yielding nearly 5%.
XLE At An 11-Year Low
Other Laggards
XLE isn’t the only energy ETF to be walloped in the past two weeks. Two popular ETFs with exposure to smaller companies in the space, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the VanEck Vectors Oil Services ETF (OIH) each tumbled more than 25% in just the past two weeks alone and are down by more than 37% on a year-to-date basis.
Meanwhile, cheaper fuel prices haven’t been enough to offset the plunging demand for travel that airlines are facing. The US Global Jets ETF (JETS) sank nearly 30% since the market top and by a similar amount for the year as a whole.
On Wednesday, United Airlines announced that it is cutting its international flights by 20% and its domestic flights by 10% next month.
JETS Losing Altitude
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>>> Inverse ETFs to Bet on Market Sell-off
Zacks
Sanghamitra Saha
January 6, 2020
https://finance.yahoo.com/news/inverse-etfs-bet-market-sell-130001272.html
Inverse ETFs to Bet on Market Sell-off
Geopolitical tensions took center stage at the start of the New Year. A U.S. drone strike near Baghdad international airport killed Iran’s top commander General Qassim Soleimani, fueling tensions between Iran and the United States. The U.S. move followed a New Year Eve attack by Iran-backed militias on the U.S. Embassy in Baghdad
Investors should note that the United States’ sanctions against Iran were put into place in August 2018. The sanctions were on cars, metals and minerals as well as U.S. and European aircraft. The second part of the sanctions that bans import of Iranian energy was enacted in November 2018.
The result of the U.S. air strike and the killing of Iranian commander was Iraq’s demand for an expulsion of all foreign troops and Iran’s pulling back from the 2015 nuclear deal. Strategists expect the U.S.-Iran tensions to flare up in the medium term.
Germany called for “crisis meeting of EU foreign ministers” over Middle-East tension. Volatility in the stock market rose with iPath Series B S&P 500 VIX Short-Term Futures ETN VXX gaining about 5.3% on Jan 3.
Global equities fell with the S&P 500-based ETF SPDR S&P 500 ETF Trust SPY and SPDR Dow Jones Industrial Average ETF Trust DIA losing about 0.8% and Invesco QQQ Trust QQQ shedding around 0.9%, respectively. All-world ETF iShares MSCI ACWI ETF ACWI was off 0.9% on Jan 3. Safe-haven trade intensified as the yield on the 10-year benchmark U.S. Treasury fell to 1.80% on Jan 3 from 1.88% recorded the earlier day.
How to Profit
Given the upheaval, investors could easily tap the opportunity by going short on global equities, at least for the near term. Below we highlight a few of them (read: Guide to the 10 Most-Popular Leveraged Inverse ETFs).
S&P 500
Investors can go against the S&P 500 with ProShares Short S&P500 ETF SH (up 0.8% on Jan 3) and Direxion Daily S&P 500 Bear 1X Shares SPDN (up 0.7% on Jan 3).
Dow Jones
Investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 DOG (up 0.8% on Jan 3), ProShares UltraShort Dow30 DXD (up 1.7% on Jan 3) and ProShares UltraPro Short Dow30 SDOW (up 2.4% on Jan 3).
Nasdaq
ProShares Short QQQ PSQ (up 0.8% on Jan 3), ProShares UltraShort QQQ QID (up 1.8% on Jan 3) and ProShares UltraPro Short QQQ SQQQ (up 2.7% on Jan 3) are good to play against the Nasdaq.
Small-Cap
One can short small-cap U.S. equities with ProShares Short Russell2000 RWM (up 0.4% on Jan 3).
EAFE
ProShares Short MSCI EAFE EFZ (up 0.3% on Jan 3) could be a good way to short stocks from the EAFE region and avoid the spillover effect of the geopolitical tension (read: Country ETFs to Top/Flop on US Air Raid at Baghdad).
Emerging Markets
Short MSCI Emerging Markets ProShares EUM added more than 1.7% on Jan 3. The fund tracks the inverse (opposite) of the daily performance of the MSCI Emerging Markets Index. The index covers equites from 21 emerging market country indexes.
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>>> The Feds Want To Take Some Of Your ETFs Away
Investor's Business Daily
MATT KRANTZ
02/06/2020
https://www.investors.com/etfs-and-funds/etfs/inverse-etfs-feds-want-take-some-etfs-away/?src=A00220&yptr=yahoo
Can you handle leveraged and inverse ETFs? You might think so, but regulators want to be sure.
The Securities and Exchange Commission is proposing new limits on leveraged and inverse ETFs — potentially cutting off investors' access to these tools used to control returns. Rules announced in late 2019, if finalized, would require brokers and advisors to ask a variety of questions before selling these ETFs to investors.
Answers to the questions determine if the investor understands the risk. Leveraged ETFs use options and derivatives to amplify returns either on the upside or downside. Inverse ETFs use derivatives so their value moves opposite of the primary index.
If used properly, these funds can boost returns or temper volatility. If used incorrectly, they can amp up volatility. There are more than 250 leveraged ETFs in the U.S., says Morningstar Direct.
Some think more regulation, if adopted, will put these ETFs out of reach for many.
"We are concerned that some investors could be prevented from buying these products by an overly burdensome qualification process," Michael Sapir, chairman of leading leveraged ETF seller ProShares, told Investor's Business Daily. "Some brokerage firms could even stop offering these funds altogether given the complexity of implementing the regulations."
ProShares emailed all its clients this month urging them to voice their opinions on the rule. The SEC could not be reached for comment.
Curious Timing Going After Inverse ETFs
The SEC's move to control leverage and inverse ETFs now is a head-scratcher, says Ben Johnson, head of ETF research at Morningstar. Leveraged and inverse ETFs have existed for more than 15 years.
Sapir agrees. "It is hard to see why the SEC is making this proposal now, especially since the proposal doesn't actually show a real problem that needs to be solved," he said.
For instance, the nearly $2 billion in assets ProShares Short S&P 500 ETF (SH) launched more than a decade ago, in June 2006.
"I liken the SEC's proposal to going to shut the barn door after the horse has bolted only to find that someone else has already shut the door," Johnson said. "After widespread misuse of these funds years ago, most brokerages and platforms have either disallowed these funds outright or made them otherwise more difficult to access."
Now, most investors who know how to use these funds are using them, he says. "These products seem to have found their natural audience and reached saturation," Johnson said. ProShares is still a market leader but isn't seeing growth in these ETFs, Johnson says. The "ProShares range of leveraged and inverse products ... first hit $21 billion in assets at the end of 2009 and were around that same level at the end of 2019."
Limiting Access To ETFs
The question is whether the new rules would block some investors, who know how to properly use leveraged ETFs, from using them. "The measures the SEC is proposing would put them even further out of reach," Johnson says.
But Todd Rosenbluth, head of ETF and mutual fund research at CFRA, thinks the fans of these ETFs will jump over the required hurdles. He also thinks the SEC is looking to drive home how different these ETFs are from more traditional stock ETFs.
"It's going to make it a step or two harder for people to buy" these ETFs, Rosenbluth says. "But the type of investor that these products appeal to, which are highly tactical and short term in nature, should be comfortable saying yes to a questionnaire."
Largest Leveraged And Inverse ETFs By Assets
ETF Symbol Net Assets ($ billions)
ProShares UltraPro QQQ (TQQQ) $5.12
ProShares Ultra S&P 500 (SSO) $2.91
ProShares Ultra QQQ (QLD) $2.61
ProShares Short S&P 500 (SH) $1.90
Direxion Daily Financial Bull 3X (FAS) $1.59
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>>> Gold ETF Fee War Gets Complicated
ETF.com
April 26, 2019
by Lara Crigger
https://www.etf.com/publications/etfr/gold-etf-fee-war-gets-complicated?nopaging=1
In the ETF fee wars, the tickers may differ, but the story stays the same: Investors flock toward whichever fund on the market is cheapest, even if that ETF undercuts by a basis point or less—except, it seems, in the gold market.
Year-to-date, physical gold ETFs have brought in more than $1 billion in new net investment assets. But these flows have bucked precedent, in that the cheapest fund on the market isn’t the one raking in cash.
That’s because there’s more to the story in gold than just a headline sticker price. Nuance matters, and more expensive funds actually possess a subtle structural detail that, for buy-and-hold investors, can make all the difference.
When Cheap Isn’t Enough
With an expense ratio of 0.17%, the $904 million Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL) is technically the cheapest physical gold ETF on the market. We say “technically,” because the $467 million GraniteShares Gold Trust (BAR) has an expense ratio of 0.1749%, which rounds down in most data services—including FactSet, which powers ETF.com’s fund reports—as 0.17%.
Last December, SGOL, the third-largest physical gold ETF, slashed its fees from 0.39% to 0.17%, an aggressive move that put the fund just a hair cheaper than BAR, which, up to that point, had been the cheapest gold ETF on the market.
Rather than usher in a wave of new investor cash, however, SGOL has limped along since its fee cut, bringing in just $45 million in new net assets since Dec. 1, 2018. Meanwhile, BAR has brought in $144 million over the same period.
2018: A Year Of Price Drops
SGOL’s fee drop was only the latest salvo in a months-long price war among gold ETFs. When BAR launched in August 2017, its expense ratio of 0.20%—half that of the segment’s existing leader, the $33 billion SPDR Gold Trust (GLD)—immediately made BAR the cheapest-in-class.
However, BAR was itself undercut last summer by two new ETFs: the $654 million SPDR Gold MiniShares Trust (GLDM) and the $109 million Perth Mint Physical Gold ETF (AAAU). Both funds launched with an expense ratio of 0.18%.
A few months later, BAR cut its expenses from 0.20% to 0.1749%, making it once again the cheapest gold ETF until SGOL’s move last December.
All this horse-jockeying makes it easy to forget that, once upon a time, the second-largest fund in the space, the $12.7 billion iShares Gold Trust (IAU), also launched as a low-cost competitor. However, with its expense ratio of 0.25%, IAU now seems downright pricey compared with the current generation of gold ETFs.
GLDM: Breakout Hit
That said, flows into BAR are being swamped by IAU and GLDM, two more expensive competitors (see Figure 1).
Year-to-date, IAU has brought in $849 million in new net inflows, while GLDM has brought in $248 million.
The numbers look even better over a one-year period: IAU has seen its assets rise by $1.3 billion, while GLDM has risen by $603 million. What’s more, in the nine months since its launch, GLDM has never seen a day of outflows.
Compare that with AAAU, which costs the same as GLDM, and which launched around the same time; it’s only seen about $17 million in new net inflows year-to-date.
Why would investors gravitate specifically to IAU and GLDM? What is it about these two funds that make them so attractive to investors looking to allocate to gold?
Gold-Per-Share Ratio Matters
The answer boils down to a nuance that many investors less familiar with gold might overlook: gold-per-share ratio.
GLDM is essentially a modified version of GLD: Its vaulting and custody arrangements remain the same, but whereas each share of GLD represents 1/10th of an ounce of gold metal, each share of GLDM represents 1/100th of an ounce (the same as IAU).
That smaller gold-per-share ratio especially appeals to retail investors, who generally seek to place smaller trades to fulfill a buy-and-hold asset allocation strategy. A smaller gold-per-share ratio brings down the ETF’s share price, making it possible for investors with smaller asset bases to allocate meaningfully to gold.
As a result, smaller gold-per-share ETFs often see wider distribution in robo platforms or in ETF portfolio models by strategists, who don’t necessarily want to switch between products depending on their clients’ existing asset base.
“Advisors need to cater to millennial clients who may only have $2,000 to invest, as well as to their parents, who might have $2 million,” said Matt Bartolini, head of SPDR Americas Research. “They just want to have one product, one model open to everybody.”
Larger Share Price Benefits Traders
While a smaller gold-per-share ratio benefits buy-and-hold investors, it does little for short-term or tactical traders, who prize liquidity over low expense ratios.
“The more active a trader you are, the larger a [gold-per-share ratio] you want to see,” said Greg Collett, director of investment products for the World Gold Council. “That’s because the more shares you have to buy for the same amount of money, the higher your trading costs become.”
Most traders likely won’t be swapping en masse from GLD, which trades with pennywide spreads and minimal premiums and discounts.
But BAR—which has the same gold-per-share ratio as GLD, but at half the cost—has been able to lure at least a few traders, given its inflows of $445 million over the past 12 months.
“A lot of our clients are entrepreneurs and business owners. They run their own practice,” said Will Rhind, CEO and founder of GraniteShares, and formerly of the World Gold Council and ETF Securities. “For them, price is important; but the insight from our team’s experience and the relationship they can have with us matters too.”
Liquidity = Versatility
For the most frequent traders, BAR is additionally attractive, because it offers a lower spread (0.06%) than GLDM, which has a spread of 0.08%.
BAR also possesses a much lower creation unit size of 10,000 shares versus GLDM’s 100,000 shares, meaning it’s easier to create bulk trades in discrete sizes.
That may also be part of the reason BAR has amassed assets at SGOL’s expense, as the two ETFs have the same gold-per-share ratio as GLD, but new shares of SGOL can only be created in blocks of 50,000 shares or more.
At this point, we’ll probably never see GLD dethroned from its position as the king trading vehicle for gold investors. But so long as low-cost competitors can devise a better mousetrap, we’ll continue to see them chip away at GLD’s dominance. Over the past 12 months, for example, GLD saw outflows of $2.7 billion. Meanwhile, all other gold ETFs combined saw net inflows of $2.3 billion.
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>>> The Top 5 China ETFs for 2020
Investopedia
By NATHAN REIFF
Updated Dec 13, 2019
https://www.investopedia.com/top-china-etfs-for-2018-4580541
Friday the 13th was a lucky day in December 2019 for investors and market analysts anxiously watching the U.S.-China trade war. The news officially broke of a limited trade agreement that would roll back American levies on some Chinese goods to 7.5% (from 25%) and cancel an impending new set of tariffs. The phase-one deal also included China's commitment to buy more U.S. agricultural products, to protect U.S. firms operating in China, and to strengthen laws regarding intellectual property and technology and currency exchange.
Trade tensions or not, many U.S. exchange-traded funds (ETFs) remain interested in investing in China; in fact, a number of ETFs are focused exclusively on Chinese equities. For many of these funds, the fallout from the U.S.-China trade war has been disastrous (after 50% returns in 2017, they ended 2018 in the red), and the future could still be unsettled, despite this recent news. In this article, we take a closer look at some of the best—or in many cases, the least bad—ETF performers investing in Chinese companies right now.
All data is current as of Dec. 13, 2019.
KEY TAKEAWAYS
Despite the U.S.-China trade war, some ETFs focused on Chinese stocks are performing well.
Some potential plays include the iShares China Large-Cap ETF, the SPDR S&P China ETF, the iShares MSCI China ETF, and the KraneShares Bosera MSCI China A Share ETF.
For a bearish play, the Direxion Daily CSI 300 China A Share Bear 1X Shares ETF is a possibility.
iShares China Large-Cap ETF (FXI)
In contrast to CHAD, the iShares China Large-Cap ETF (FXI) is one of the largest funds invested in China in the world, with assets of $4.27 billion and an average trading volume of nearly 24 million.
After a robust 2017, FXI faltered in 2018 (returns were a negative 12.41%) but it's up 6.05% YTD. Its NAV is $41.44 and it's yielding 2.13%.
FXI tracks 50 of the largest Chinese stocks traded on the Hong Kong Stock Exchange. It focuses on H-shares, P-chips, and Red Chips, as well as A-shares and other Chinese large-cap names, with over 45% of the portfolio weighted in financial services. The fund's three largest holdings are China Construction Bank Corp. (with a weight of close to 9%), Tencent Holdings (8.83%), and Ping An Insurance (8.01%).
SPDR S&P China ETF (GXC)
With $1.18 billion in assets under management (AUM), the SPDR S&P China ETF (GXC) focuses on a broad index of Chinese shares, seeking to mirror the performance of the S&P China BMI Index. GXC does not focus on market size, although the fund is cap-weighted, with large-caps receiving the largest share. Unsurprisingly, 2018 was rough—the fund lost 18.67%— but it's up 14.86% year-to-date. On a NAV of $99, it's yielding 2.06%.
GXC focuses on consumer cyclical, financial services, and communication services stocks. The fund's largest holding is the Alibaba Group, with a weight of 13.62% of the portfolio. Next up is Tencent Holdings, with 10.77%. A distant third is China Construction Bank Corporation, weighing in at 3.52%.
iShares MSCI China ETF (MCHI)
Like GXC, the iShares MSCI China ETF (MCHI) tracks an index—specifically, the MSCI China Index—of investable Chinese shares covering all market-cap sizes. Similarly, MCHI is also cap-weighted, although it tends to focus its investments on financials and technology.
It's worth noting that MCHI is about four times larger than GXC, asset-wise: It has over $4 billion in AUM. It too posted a loss in 2018 but is returning 15.88% so far in 2019. Its NAV is $61 and it has a yield of 1.48%.
The fund emphasizes the sectors as GXC, and in fact, MCHI's top three holdings are exactly the same as those of GXC, although they are weighted somewhat differently. Alibaba Group comes in first at just over 17%, followed by Tencent Holdings at 12.30%, then China Construction Bank Corporation at 3.87%.
KraneShares Bosera MSCI China A Share ETF (KBA)
As its name implies, the KraneShares Bosera MSCI China A Share ETF (KBA) tracks the MSCI China A Index (not to be confused with the aforementioned MSCI China Index), focusing on large- and mid-cap Chinese equities listed on the Shenzhen or Shanghai Stock Exchanges. It holds net assets of $533.54 million. KBA's strategy has netted it a 26.93% return this year—a nice bounceback from its 2018 loss of 26.25%—and a yield of 1.68%. The NAV is currently $31.
More varied than its fellow funds', KBA's portfolio focuses on the financial services, consumer defensive, industrial, and technology sectors. Top holdings include Kweichow Moutai Co. (5.23% weight), Ping An Insurance Group (3.34%), and China Merchants Bank (2.74%).
Direxion Daily CSI 300 China A Share Bear 1X Shares (CHAD)
When it's been a bad year for stocks, that probably means it's been a good year for inverse ETFs, which use various derivatives to profit from a decline in the value of an underlying benchmark. As the "bear" in the name suggests, holders of inverse exposure funds like the Direxion Daily CSI 300 China A Share Bear 1X Shares ETF (CHAD) see positive returns when stocks decrease in price. That is, the fund seeks to profit from the inverse of the performance of the CSI 300, an index comprised of the largest and most liquid stocks in the Chinese A-share stock market.
CHAD stands out for being the only China-focused ETF to win double-digit gains in 2018—the opposite of its fellow funds. Not surprisingly, as they've bounced back, its performance in 2019 has been rockier—it's down 24.37% year to date, though it's rallied a bit in November and December. On a NAV of $29, its yield is currently 3.41%.
CHAD is still a relatively small fund, with total net assets of just $20.86 million and an average volume of 12,309. With over one-third of the portfolio weighted towards the financial sector, the fund's top three holdings include Ping An Insurance Co. of China (7.62% of the portfolio), Moutai (4.66%), and Merchants Bank (2.89%).
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>>> SmartETFs Launch Smart Transportation & Technology ETF ‘MOTO’
ETF Trends
by AARON NEUWIRTH
NOVEMBER 15, 2019
https://www.etftrends.com/innovative-etfs-channel/smartetfs-launch-smart-transportation-technology-etf-moto/
SmartETFs Funds launched a new, actively managed transportation and technology ETF on Friday that invests in companies believed to benefit from the current revolution in transportation.
The SmartETFs Smart Transportation & Technology ETF (MOTO) seeks long term capital appreciation from investments involved in the manufacture, development, distribution, and servicing of autonomous or electric vehicles and companies involved in related developments or technologies to support autonomous or electric vehicles including infrastructure, roadways, or other pathways.
As noted, the ETF is actively managed, as well as fully transparent, investing in approximately 35 equally weighted positions on a global basis. This includes companies that manufacture, distribute, service, offer, support, or enable the following: electric vehicles, autonomous vehicles, transportation as a service, flying autonomous vehicles, autonomous or electric public transportation, and hyperloop-based transportation, for passengers or goods.
Adapting To Tech Change
Jim Atkinson, CEO for Guinness Atkinson Asset Management, which manages SmartETFs, spoke to ETF Trends about MOTO and how it will adapt to changes in the technology sector.
The technology demands for autonomous and electric vehicles are high and the competition to win, particularly in the autonomous challenge, is fierce, Atkinson stated.
“It is very difficult to pick the winners in this competitive challenge,” he said. “We know some firms have an obvious lead, most notably Waymo and Tesla in autonomous technology and Tesla in the EV space. But how this plays out over the next decade is hard to predict.”
Atkinson added how this is one reason SmartETFs believes an actively managed strategy is preferable. Their style is low turnover, but the managers are acutely aware of these challenges and will seek to position the portfolio to take advantage of developments over time.
MOTO: A Progressive ETF
In discussing how MOTO is a progressive ETF looking at future revolution, Atkinson also noted how he believes a transportation revolution is underway.
“We’re at the beginning so it doesn’t look like much at the moment but as EVs gain market share and self-driving vehicles begin to be deployed in larger numbers our entire system of transportation may change,” he said. “The combination of electric autonomous vehicles and application-based ride-hailing may mean an end to the own and drive transportation model. The average automobile in the US is idle 95% of the time.
“A more efficient utilization means a cheaper, safer and more convenient alternative. It isn’t entirely clear where this revolution is headed but the direction of travel is for safer, cleaner, cheaper and better transportation.”
As far as where this ETF fits in a portfolio and who it’s for, Atkinson explained that MOTO is for investors who recognize the changes coming in transportation. That said, this is not a core holding and most investors that want to invest in the smart transportation revolution will likely want this as a small portion of their overall portfolio.
The SmartETFs Smart Transportation & Technology ETF (MOTO) is now available to trade on NYSE. Learn more about MOTO by visiting SmartETFs webpage.
<<<
>>> Electric Vehicles to Rev Up in 2020: Play These ETFs
Zacks
Sanghamitra Saha
January 9, 2020
https://finance.yahoo.com/news/electric-vehicles-rev-2020-play-130001956.html
With automation and technological breakthrough emerging rapidly, the fast pickup in autonomous vehicles is in the cards. Elon Musk’s Tesla TSLA’s solid growth momentum and amazing one-year stock performance supports the fact.
Electric vehicle maker Tesla's shares have surged 39.9% in the past year, breezing past the S&P 500’s 25.7% (as of Jan 7, 2019). It clearly performed better than other car makers as Ford F was up 10.5%, Honda Motors HMC and General Motors GM were almost flat and Toyota Motor TM gained 15.7%.
Tesla’s previous issues like production delays and heavy financial losses are really a matter of the past. The company delivered approximately 367,500 vehicles last year, marking a notable jump of 50% jump from 2018. The deliveries were within the range of the company’s guidance but higher than Wall Street estimates. The stock has a Zacks Rank #2 (Buy) and a Growth Score of A.
Not only Tesla, Japanese tech giant Sony has built a prototype electric car, as part of its new Vision-S initiative, which is targeted at mobility. CEO of Sony sees huge growth in the vehicles industry that are “connected, autonomous, shared and electric” and expects strong “social and environmental impacts” of this.
There is also growing enthusiasm for Tesla’s all-electric “Cybertruck,” whichis releasing in 2021 and 2022. Other electric trucks, including Rivian R1T and the electric version of Ford F-150, will also be hitting the markets soon.
Global electric vehicle sales rose to an all-time high of 1.2 million units sold between January and October 2019. It accounted for 7% of all auto sales globally. China is the market with 45% market share, followed by Europe’s 24% and the United States’ 22%.The global stock of electric passenger cars marked an increase of 63% in 2018 from the previous year, per IEA.
In the recent past, more than 10 automakers have come up with their EV plans. If these plans materialize, the sector will be able to manufacture and sell about 25 million units (of more than 400 models) by 2025, or 20% of all global cars sold, per Frost & Sullivan. General Motors, Toyota and Volvo have all fixed a target of 1 million EV sales by 2025. Plus, there are other automakers like BMW, Aston Martin and the Renault Nissan & Mitsubishi Group that are considering lucrative EV plans.
Needless to say, the enthusiasm over the EV space has prompted ETF issuers to come up with EV and battery-related funds. In past two years, there was a surge in the launches of these ETFs, with which investors can tap this accelerating industry.
Amplify Advanced Battery Metals and Materials ETF BATT
Such an uptick in the EV market should provide a boost to the battery industry as well. The fund, launched in June 2018, looks to provide exposure to lithium, cobalt, nickel, manganese and graphite via publicly-traded stocks. Companies that are in the business of mining, exploration, production, development, processing or recycling of advanced battery metals and materials, get entry to the fund. The fund charges 72 bps in fees (net).
Global X Autonomous & Electric Vehicles ETF DRIV
Launched in April 2018, the fund gives exposure to companies involved in the development of autonomous vehicle technology, electric vehicles, and its components and materials. The fund charges 68 bps in fees.
Innovation Shares NextGen Vehicles & Technology ETF EKAR
The fund debuted in February 2018. It measures the performance of a portfolio of companies that have business involvement in the development or use of or investment in New Energy Vehicles and Autonomously Driven Vehicles. The fund charges 65 bps in fees (read: An ETF to Invest in Self-driving & Electric Cars).
KraneShares Electric Vehicles and Future Mobility Index ETF KARS
Launched in January 2018, the fund follows companies engaged in the production of electric vehicles or their components or engaged in other initiatives that may change the future of mobility. The fund charges 70 bps in fees.
Global X Lithium & Battery Tech ETF LIT
The fund invests in the full lithium cycle, from mining and refining the metal, through battery production. The fund charges 75 bps in fees (see all Materials ETFs here).
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>>> Indexing Was Huge in 2019 But the Real Money Was in Index Stocks
Bloomberg
By Claire Ballentine and Vildana Hajric
December 31, 2019
https://www.bloomberg.com/news/articles/2019-12-31/indexing-was-huge-in-2019-but-the-real-money-was-in-index-stocks?srnd=premium
Stock prices of S&P and MSCI have outperformed S&P 500 Index
Shift to passive lifted benchmark providers, not fund managers
As money managers bemoan the fees lost to passive investing, there’s one sector of the financial world just fine with the shift: The companies that create the indexes tracked by trillions of dollars in assets.
S&P Global Inc., the creator of financial benchmarks including the S&P 500 Index, is up 60% this year, more than double the return of its flagship gauge of U.S. stocks. Meanwhile, rival MSCI Inc. has jumped 74%, its best yearly gain in a decade.
MSCI, S&P Global outpaced S&P 500 this year
Such eye-popping performances show just how transformative the meteoric rise of indexed investing can be for the companies at its heart. Although passive strategies have been luring cash from actively managed approaches for some time, this year assets in U.S. indexed equity mutual funds and ETFs topped those in active stock funds for the first time ever. The providers of the gauges underpinning those funds earn a slice of every dollar tracking their benchmarks.
“There’s this big secular growth because of the movement to passive,” said Hamzah Mazari, a managing director at Jefferies in New York. “Over time, that will continue to be a pretty strong tailwind for these companies.”
Cost savings are a key driver of that shift, with passive equity funds charging an average 10 cents per $100 invested in the U.S., versus about 70 cents for active funds.
However, companies that provide indexes and benchmarks have benefited from the trend because they typically charge a licensing fee based on how much money is pegged to their gauges. So, the more money that is passively managed, the more revenue they bring in.
S&P Global reported a 9% increase in revenue in the third quarter from a year earlier, led by growth in its ratings and index divisions. MSCI’s share price jumped at the end of October after results showed a rise in operating revenue, driven in part by a 10% increase in its index segment.
A spokesman for S&P described 2019 as an exciting year for the company, highlighting S&P’s recent acquisitions of Kensho Technologies to boost its artificial intelligence expertise, and RobecoSAM’s ESG ratings business. A representative for MSCI was not immediately available to provide a comment.
But while index companies’ share prices have skyrocketed, the asset managers that license their benchmarks aren’t generating the same enthusiasm. A gauge of fund companies and custody banks has lagged the broader market, rising 22%. And BlackRock Inc. -- the world’s largest issuer of exchange-traded funds -- has returned slightly less than the S&P 500’s 28% advance.
“Every fund manager is benchmarking against the S&P 500 or MSCI and it’s very, very tough to replace that,” said Mazari. “These index providers have a very big moat around their business.”
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>>> Global X Internet of Things ETF (SNSR)
Expense Ratio: 0.68%
https://investorplace.com/2019/02/5-of-the-best-thematic-etfs-to-consider/
The Internet of Things (IoT) is at the epicenter of scores of everyday functions. Those include development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet, according to Global X.
The Global X Internet of Things ETF (NASDAQ:SNSR) is the first ETF to provide dedicated IoT access. This thematic ETF tracks the Indxx Global Internet of Things Thematic Index and holds 50 stocks, most of which are technology names, but there is some healthcare exposure as well.
Bolstering the case for SNSR is IoT’s myriad consumer and industrial applications. The latter includes cloud computing, robotics and more.
“In addition to the development of smart transportation systems to support autonomous vehicles, the IoT is expected to improve energy grid efficiency, utilities services, commercial and residential property management, and the overall growth of smart cities,” according to Global X research. “The global smart grid market is forecasted to reach $61.3 billion by 2023, up from $23.8 billion in 2018, with a compound annual growth rate (CAGR) of 20.9%.”
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>>> 3 Cybersecurity ETFs With Loads of Growth Potential
Yahoo Finance
Todd Shriber
•July 17, 2019
https://finance.yahoo.com/news/3-cybersecurity-etfs-loads-growth-155633925.html
Cybersecurity stocks and the related exchange-traded funds (ETFs) are on torrid paces this year. The ETFMG Prime Cyber Security ETF (NYSEARCA:HACK), the oldest cybersecurity ETF on the market, is up nearly 24% and a confluence of factors bode well for continued upside among stocks residing in this corner of the technology sector.
Earlier this month, cybersecurity stocks and ETFs like HACK surged on news that semiconductor giant Broadcom (NASDAQ:AVGO) is continuing its quest to diversify its product mix away from chips by acquiring cybersecurity purveyor Symantec (NASDAQ:SYMC).
While many investors may prefer traditional, diversified technology ETFs to cybersecurity fare, there are sound fundamental reasons to consider cybersecurity ETFs for the long haul. After all, cybersecurity ETFs provide exposure to one of the truly riveting exponential growth trends on the market today.
In 2004, the global cybersecurity market was worth $3.5 billion -- and in 2017 it was expected to be worth more than $120 billion. The cybersecurity market grew by roughly 35X over 13 years entering our most recent prediction cycle," according to CyberSecurity Ventures. "Worldwide spending on information security (a subset of the broader cybersecurity market) products and services exceeded $114 billion in 2018, an increase of 12.4 percent from 2017, according to Gartner, Inc.
For 2019, they forecast the market to grow to $124 billion, and $170.4 billion in 2022." * In addition to HACK, here are some other cybersecurity ETFs to consider.
iShares Cybersecurity and Tech ETF (IHAK). Expense Ratio: 0.47%, or $47 annually per $10,000 invested.
The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) is just over a month old, making it the newest cybersecurity ETF, but it has a feather in its cap: it is also one of the cheapest cybersecurity ETFs on the market. This rookie fund tracks the NYSE FactSet Global Cyber Security Index and holds almost 40 stocks with Symantec being its largest holding. While IHAK is a new cybersecurity ETF, it is one with potential for patient investors and one that may just be at the right place at the right time.
"The unprecedented cybercriminal activity we are witnessing is generating so much cyber spending, it's become nearly impossible for analysts to accurately track," notes Cybersecurity Ventures. "We anticipate 12-15 percent year-over-year cybersecurity market growth through 2021, compared to the 8-10 percent projected by several industry analysts."At the industry level, IHACK features exposure to providers of cybersecurity hardware, software, products and services.
BlueStar Israel Technology ETF (ITEQ)Expense Ratio: 0.75%
The BlueStar Israel Technology ETF (NYSEARCA:ITEQ) has gained some acclaim for being an excellent way of bringing international diversity to technology investing. While ITEQ is positioned as a diversified technology fund, it is also very much a cybersecurity ETF because Israel is one of the world's leaders when it comes to cybersecurity services and software." Investments in cybersecurity firms in Israel crossed the $1 billion mark for the first time in 2018 as interest by foreign investors surged, a January report by Start-Up Nation Central, which tracks Israel's tech industry, showed," reports The Times of Israel. "Israel's cyber industry is second only to that of the US, taking 20 percent of the overall venture-backed cyber investments worldwide, according to an analysis of PitchBook and Start-Up Nation Central databases." * ITEQ's technology focus is a difference maker. The quasi-cybersecurity ETF is up nearly 28% year-to-date, nearly double the returns of the MSCI Israel Index.
First Trust Nasdaq Cybersecurity ETF (CIBR)Expense Ratio: 0.60%
The First Trust Nasdaq Cybersecurity ETF (NASDAQ:CIBR) was the second cybersecurity ETF on the scene, and, today, the fund has nearly $1 billion in assets under management. CIBR, which turned four years old earlier this month, follows the Nasdaq CTA Cybersecurity Index. CIBR holds 44 stocks with a median market value of $3.26 billion, indicating the fund tilts toward smaller mid-cap fare. That said, this cybersecurity ETF is home to some large-cap technology names, including Cisco Systems (NASDAQ:CSCO) and Palo Alto Networks (NASDAQ:PANW). Five industry groups are represented in CIBR, but the fund devotes over 56% of its weight to software makers. That is a good thing due to the rapid growth expected in the cybersecurity software market.
Additionally, many cybersecurity software makers are linked to cloud computing, another fast-growing tech segment. Due to the intersection of cloud computing and cybersecurity software, many of the companies operating in this sphere are appealing acquisition targets for larger, cash-rich technology companies. With software powering cybersecurity growth, CIBR remains a practical, long-term option among cybersecurity ETFs.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
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>>> The Best 3D Printing ETF
Interested in 3D printing stocks? You might consider investing in the 3D Printing ETF.
6-22-17
Motley Fool
Beth McKenna
https://www.fool.com/investing/2017/06/22/the-best-3d-printing-etf.aspx
3D printing stocks are having a great 2017, after several very tough years. The stocks of the two largest players, 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS), for example, have gained 66.3% and 66.6%, respectively, this year through June 19, versus the S&P 500's 10.7% return.
Investors who are interested in 3D printing stocks but don't want to bet on just one player or even a couple of companies, have another option: a 3D-printing exchange-traded fund (ETF). We're going to explore the best (and only, to my knowledge) ETF focused on this space, The 3D Printing ETF (NYSEMKT:PRNT), to see if it's worth investing in.
The 3D Printing ETF, issued by Ark Investment Management, is an index-based fund designed to track the Total 3D-Printing Index. This index is composed of stocks of companies based in the United States and other developed markets that are engaged in 3D printing-related businesses, specifically, 3D-printing hardware, computer-aided design software and 3D-printing simulation software, 3D-printing service centers, scanning and measurement equipment, and 3D-printing materials.
The ETF, which is rebalanced quarterly, has 42 holdings. The weighted-average market cap of the portfolio is $30 billion, while the median market cap is $3 billion. The fund's expense ratio is 0.66%, which is fairly reasonable.
The 3D Printing ETF: Top 10 holdings
Holding No.
Company
Ticker
Market Cap
Country
Weight (% of Portfolio)
1
3D Systems
DDD
$2.5 billion
U.S.
7.08%
2
ExOne
NASDAQ: XONE $209.4 million
U.S.
6.59%
3
MGI Digital Graphic Technology*
ALMDG*
$300 million
France
6.39%
4
Stratasys
SSYS
$1.5 billion
Israel/U.S.
5.60%
5
SLM Solutions**
AM3D**
$700.1 million
Germany
5.36%
6
K2M Group Holdings
NASDAQ: KTWO
$991.1 million
U.S.
5.35%
7
Organovo Holdings
NASDAQ: ONVO
$276.1 million U.S. 4.77%
8
HP Inc.
NYSE: HPQ
$29.9 billion U.S. 4.46%
9
Autodesk
NASDAQ: ADSK
$23.2 billion U.S. 3.93%
10
Trimble
NASDAQ: TRMB
$9.5 billion
U.S.
3.91%
Investors should be clear that this ETF is not a pure play on 3D printing. I've read such a claim on several financial outlets, and it just isn't so. A quick glance at the top 10 holdings should make this obvious: No. 8, HP Inc., for example, is a well-known huge player in 2D printing, with 3D printing no doubt comprising a minuscule part of its business, as it entered the market just last year.
Of the top 10 holdings, only three are 3D printing pure plays, in my opinion: 3D Systems, ExOne, and Stratasys.
3D Systems and Stratasys, the industry's two largest players, are quite diversified. Both make 3D printers for commercial and industrial markets and provide on-demand 3D-printing services. Stratasys also produces desktop 3D printers for the education and professional markets. ExOne makes heavy-duty industrial 3D printers that primarily print in sands (to make molds) and metals; it also provides 3D-printing services. SLM Solutions makes metal 3D printers powered by its selective laser melting technology and vacuum casting equipment.
MGI Digital Graphic Technology specializes in digital 2D-printing and finishing equipment. Apparently, it's included in the ETF because one MGI Group subsidiary, Ceradrop, manufactures equipment for the 3D-printed-electronics market.
K2M and Organovo are involved in the medical space. K2M is a medical-device company that uses 3D printing to produce some of its spine products. Organovo uses its proprietary 3D printing tech to "3D bioprint" human tissues for pharmaceutical testing, though its ultimate goal is to bioprint organs for people in need of transplants.
HP, as I mentioned, entered the 3D-printing market last year, with the launch of two enterprise-focused 3D printers. Autodesk makes design software for 3D printing and other uses, and has several 3D-printing initiatives. Trimble, a company traditionally focused on GPS, owns SketchUp, an extremely popular 3D modeling and design platform. It also partners with Belgian 3D-printing company Materialise on initiatives to streamline 3D-printing workflows. (Materialise -- a 3D-printing pure play that makes 3D-printing software and provides 3D-printing services -- is conspicuously missing from the ETF.)
Takeaway
An ideal 3D-printing ETF, in my opinion, would be more heavily weighted toward 3D-printing pure plays. That said, The 3D Printing ETF does a decent job representing the quite expansive 3D-printing realm. It seems a solid option for investors who want broad exposure to 3D printing -- a technology that is widely expected to revolutionize the manufacturing sector. As previously mentioned, the ETF's expense ratio is 0.66%, which is fairly reasonable.
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Robo Global Robotics and Automation Index ETF (ROBO) -
Exp - 0.95%, Assets - 1.25 Bil, Yield - 0.31%
Top 10 Holdings (16.96% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
Brooks Automation Inc BRKS 1.81%
Zebra Technologies Corp ZBRA 1.75%
Fanuc Corp 6954 1.71%
Krones AG KRN.DE 1.71%
Koh Young Technology Inc 098460.KS 1.70%
NVIDIA Corp NVDA 1.68%
Daifuku Co Ltd 6383 1.67%
OMRON Corp 6645 1.67%
Intuitive Surgical Inc ISRG 1.63%
YASKAWA Electric Corp 6506 1.63%
Invesco Dynamic Networking ETF (PXQ) -
Exp - 0.63%, Assets - 64 mil, Yield - 1.06%
Top 10 Holdings (49.42% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
Apple Inc AAPL 5.85%
VMware Inc VMW 5.74%
Amphenol Corp Class A APH 5.63%
Palo Alto Networks Inc PANW 5.59%
Arista Networks Inc ANET 5.29%
Qualcomm Inc QCOM 5.18%
Cisco Systems Inc CSCO 4.94%
Motorola Solutions Inc MSI 4.52%
Comtech Telecommunications Corp CMTL 3.52%
Inphi Corp IPHI 3.16%
Invesco Dynamic Software ETF (PSJ) -
Exp - 0.58%, Assets - 471 mil, Yield - 0
Top 10 Holdings (46.11% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
VMware Inc VMW 6.02%
Oracle Corp ORCL 5.39%
Microsoft Corp MSFT 5.36%
Synopsys Inc SNPS 4.96%
Cadence Design Systems Inc CDNS 4.89%
ServiceNow Inc NOW 4.82%
Veeva Systems Inc Class A VEEV 4.34%
Zoom Video Communications Inc ZM 3.97%
RingCentral Inc Class A RNG 3.19%
Sapiens International Corp NV SPNS 3.17%
VanEck Vectors Environmental Services ETF (EVX) -
Exp - 0.56%, Assets - 36 mil, Yield - 0.31%
Top 10 Holdings (62.03% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
Waste Connections Inc WCN.TO 10.25%
Republic Services Inc Class A RSG 10.20%
Waste Management Inc WM 9.89%
Steris PLC STE 9.82%
Stericycle Inc SRCL 3.98%
Tennant Co TNC 3.70%
Clean Harbors Inc CLH 3.62%
Evoqua Water Technologies Corp AQUA 3.59%
Tetra Tech Inc TTEK 3.55%
Donaldson Co Inc DCI 3.43%
>>> The 8 Best ETFs of 2019
Find the right exchange traded funds for you
The Balance
BY ERIC ROSENBERG
November 20, 2019
Exchange-traded funds, or ETFs, are a popular option for investors looking to grow their money with both short and long-term time horizons. ETFs allow you to buy and sell funds like a stock on a popular stock exchange. This is different from traditional mutual funds, which only allow you to trade at the end of a business day. The ETF combination of instant diversification and quick liquidity is a good reason to consider them as a first investment or part of a veteran portfolio.
ETFs will trade nearly instantly when you enter a trade online with your favorite brokerage. Many ETFs track major indices like the S&P 500 or the Dow Jones Industrial Average, but ETFs can focus on virtually anything a traditional mutual fund can. Follow along to learn more about how ETFs work and the best ETFs to consider when building your portfolio.
Like all investments, ETFs come with risks. Typically, riskier investments lead to higher returns, and ETFs tend to follow that pattern. Diverse, broad market funds and funds focused on bonds tend to offer the lowest risk. Commodity, option, and narrower funds usually bring you more risk and volatility.
Your investment decisions should align with your financial goals. Be aware of your own risk tolerance, if you can afford to lose some or all of your investment, and how your investment choices fit in with your overall financial plan.
Be sure to consider the underlying assets—when you buy an ETF, you are not buying shares of a company’s stock or bonds directly. Instead, you are putting money into a fund that buys a basket of stocks and bonds on your behalf. Make sure the fund you buy invests in assets you would ?choose yourself.?
Also, take risks and volatility into account. Some investors are fine with taking on risky assets betting that they will pay off with big returns. Other investors prefer to avoid big ups and downs and are more concerned with preserving capital and a steady income. Choose an ETF that aligns with your risk and volatility tolerance.
And finally, keep an eye on the fees. In August 2018, Fidelity released two new ETFs that are 100% fee-free. These cutting-edge ETFs are a very new concept. Prior to that, competitive ETFs from companies like Vanguard, Fidelity, and Schwab led the competition with low fees sometimes under 0.1%. The most expensive ETF, according to Bloomberg, charges 9.2%. Compare multiple ETFs for fees and other features before you buy them.
We should emphasize again that it is never a good idea to buy an investment if you don’t understand the risks. If you have any serious concerns, consult with a financial advisor or other experts before entering your ETF trade order. Read on to learn about the best ETFs you can buy today.
Best Overall: Vanguard S&P 500 ETF (VOO)
The best overall ETF comes from the largest mutual fund company: Vanguard. This ETF tracks the S&P 500 and charges an expense ratio of just 0.04%. Warren Buffet himself has even recommended the Vanguard’s S&P 500 index fund by name.
Buying into this fund gives you exposure to 500 of the biggest public companies in the United States. That offers you lots of diversity with some degree of a safety net as all investments are focused in the US.
Historically the S&P 500, which in some ways is a proxy for the overall United States economy, returns about 10% per year over a long horizon. While past performance is not a guarantee of future performance and the market can go down at any time, if you have a long-term horizon this index fund is a great choice.
Best No-Fee: Fidelity ZERO Total Market Index Fund (FZROX)
While this ETF does not have a long history, the large-blend fund charges no fees and no minimum. If you want to invest in an ETF for free, this is one of only two options as of this writing. That is a very exciting development for individual investors.
There is no minimum to invest to get started which, like all ETFs, makes it an enticing option for both retirement accounts and brand new investors alike. The index focuses on the total return of the United States stock market, making it even more diverse than an S&P 500 fund.
The best proxy for comparison of past performance is the Fidelity Total Market Index Fund (FSTMX). This fund offers near-identical performance to the Dow Jones US Total Stock Market index and over the last ten years moderately outperformed the large-blend category.
Best for Active Traders: SPDF S&P 500 ETF (SPY)
Yes, the S&P 500 is so important it grabbed two of the top three spots on this list! While the VOO ETF from Vanguard is an ideal investment for long-term ETF investors, SPY (sometimes called the “spy” or “spies) from State Street Global Advisors is one of the most heavily-traded ETFs on the market.
Because this index tracks the S&P 500 in real-time, active investors use this fund to buy and sell the US stock market in a single trade. SPY launched in 1993 as the first exchange-traded fund.
Active traders prefer SPY due to its extremely high liquidity. It charges a 0.0945% expense ratio, which is higher than Vanguard’s competing ETF. But due to its popularity and trade frequency, many investors are happy to put their cash into SPY.
Best for Small-Cap Stocks: iShares Russell 2000 ETF (IWM)
The Russell 2000 is an index that tracks 2,000 small-cap stocks. It is made up of the 2,000 smallest 2,000 of the Russell 3000 index measured by market capitalization. This index is another great way to track the US stock market as a whole, but with a focus on the smaller companies in the public markets instead of the biggest.
IWM charges a 0.19% expense ratio, which is lower than many mutual funds but a long way from the bottom of the ETF industry. But compared to an S&P 500 fund, managers of the iShares Russell 2000 ETF have four times as many stocks to buy and sell to keep the index fund in-line with the index.
Some investors argue that smaller stocks have more room to grow than bigger stocks, while contrarians would argue that smaller stocks are riskier and more volatile. But if you want to buy a big swath of US companies with one click, IWM is a popular way to do it.
Best for US Dividends: Schwab U.S. Dividend Equity ETF (SCHD)
Charles Schwab offers another major family of low-cost ETFs. It’s U.S. Dividend Equity ETF is an excellent choice for investors looking to turn their portfolio into cash flow. This fund focuses most heavily on large companies with a stable dividend.
Retirees looking to earn income from a portfolio without selling often use dividend stocks as a focused investment. This ETF is passively managed to track the Dow Jones U.S. Dividend 100 index, made up of 100 top dividend stocks. It charges a very competitive 0.07% expense ratio.
Best for Gold: SPDR Gold Trust (GLD)
If you want to invest in gold without going into a store and buying bars of the precious metal, your best option is the GLD ETF. GLD is a proxy for the price of gold bullion. It charges a 0.40% expense ratio.
Gold is often used as a hedge against declines in the stock market. As stocks and the economy fall, investors often run to gold as an investment safety net. That means gold often trades inversely to the popular index funds mentioned above — keep that in mind if you decide to turn some of your dollars into GLD.
Best for NASDAQ Large-Cap Stocks: Invesco QQQ (QQQ)
Ticker symbol QQQ gives you an ETF that tracks that NASDAQ 100 Index. The NASDAQ 100 is made up of the 100 largest stocks on the NASDAQ stock exchange, traditionally a home for many technology companies.
Where the S&P 500 tracks large-cap stocks across both major US stock exchanges, this index is limited to just the NASDAQ, so you can expect your investment to be more heavily influenced by big news in the technology sector more than other industries. This ETF charges a 0.20% expense ratio.
Best International: Vanguard FTSE Developed Markets (VEA)
If you are looking to add international exposure to your portfolio, large companies in developed countries tend to offer the best balance of risk and return. Developing market funds are tempting, but beware that they are much riskier than investments in developed markets.
VEA follows the FTSE Developed All Cap ex US Index. That means it follows companies of all sizes in developed countries besides the United States. This investment puts stocks in Canada, Europe, and developed Pacific nations in your portfolio with ease. The fund charges a low 0.07% expense ratio.
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Aerospace - >>> United Air Turns to Airbus to Replace Boeing Mid-Size Jets
United ordered 50 A321 extra-long-range jets to be delivered starting in 2024.
The Street
12-4-19
https://www.thestreet.com/investing/boeing-120419
United Airlines, UAL one of Boeing’s BA biggest customers, placed an order for 50 Airbus EADSY A321 extra-long jets that will replace the airline’s fleet of Boeing 757 mid-sized jets.
United will retire the 757s. The new planes will be delivered starting in 2024, a move that the carrier says will enable it to explore serving additional destinations in Europe from its U.S. East Coast hubs in Newark/New York and Washington.
"The new Airbus A321XLR aircraft is an ideal one-for-one replacement for the older, less-efficient aircraft currently operating between some of the most vital cities in our intercontinental network," United Executive Vice President Andrew Nocella said in a statement.
"In addition to strengthening our ability to fly more efficiently, the A321XLR's range capabilities open potential new destinations to further develop our route network and provide customers with more options to travel the globe."
The about $6.5 billion deal with Boeing’s European rival comes just months after one of United’s executives, speaking on an earnings call, implored Boeing to provide clarity about whether it would proceed with the production of a line new mid-sized aircraft.
Boeing, at least publicly, did not respond to United’s request for clarity on the unofficially named Boeing 797.
And still hanging over Boeing is the grounding of the 737 MAX jet after a pair of fatal crashes.
Boeing shares at last check on Wednesday were up 0.3% to $354.09 while Airbus shares added 2.4% to $35.49. United Airlines shares added 0.7% to $89.52.
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>>> 5 Great Tech ETFs That Aren’t the XLK
Yahoo Finance
by Aaron Levitt
•May 21, 2019
https://finance.yahoo.com/m/0ad0c0c7-5cbb-37e4-928f-906aa3a25dad/ss_5-great-tech-etfs-that-aren%E2%80%99t.html
There are some ETFs that are clearly investor and trader's favorites. When it comes to tech ETFs, the Technology Select Sector SPDR Fund (NYSEARCA:XLK) is the runaway leader. The XLK covers all the major tech stocks in the S&P 500 and includes plenty of top hardware, software, semiconductors and services muscle. Add in its low expense ratio as well as its nearly 4 million shares per day trading volume and it's easy to see why investors have put more than $20 billion in the ETF.
However, as awesome as the XLK is as a core tech fund, it isn't the only fish in the sea. There are plenty of other tech ETFs out there.And in many cases, these specialized ETFs may offer something better than the popular XLK. Investors just gravitating to the XLK may actually be doing themselves a disservice. Thinking outside the box could lead to better returns.
But what other tech ETFs are worthy of your time? Here are five that could give the popular XLK a run for its money.
Invesco S&P SmallCap Information Technology ETF (PSCT) Perhaps one of the biggest hits against the XLK is that it's full of the big boys -- the Microsofts (NASDAQ:MSFT), the Alphabets (NASDAQ:GOOG), etc. There's nothing wrong with these stocks, it's just many of the current and future leaders in tech are actually much smaller. And in this case, if you're looking for pure growth, then small-cap tech stocks should be where you focus your attention.And that's why the Invesco S&P SmallCap Information Technology ETF (NYSEARCA:PSCT) should be on your list.PSCT is just like the XLK, only this time it tracks all the tech stocks in the small-cap focused S&P 600. This currently includes 88 different stocks. Top holdings include networking equipment maker Viavi Solutions (NASDAQ:VIAV) and cloud computing communications firm 8×8 Inc (NASDAQ:EGHT). The makeup of the ETF a bit different as well -- with electronic components and semiconductors making up the top sector weightings.That makeup and focus on smaller tech stocks haven't hurt the ETF on the performance front. PSCT has managed to post an average annual return of 15.45% over the last five years. That beats the broader S&P 600 and comes close to the XLK's performance.All in all, with more than $300 million in assets and a low 0.29% -- or $29 per $10,000 invested -- expense ratio, the PSCT is one of the best tech ETFs outside the XLK.
ARK Innovation ETF (ARKK). Active management works and can beat indexing when a) fund managers keep their funds small and b) when they take concentrated bets in only a handful of stocks. And that's just what Catherine Wood and her team do at the ARK Innovation ETF (NYSEArca:ARKK).ARK looks for stocks conducting so-called "disruptive innovation". Basically, any new technology that potentially changes the way the world works. The firm focuses its attention on four core areas -- the genomic revolution, industrial innovation, the next generation internet and fintech innovation. From here, Wood will select the best ideas and run a pretty concentrated portfolio usually just 35 to 55 stocks. And she tends to sticks to her guns. For example, Wood has been buying tons of Tesla (NASDAQ:TSLA) during its latest meltdown.Say what you will about Wood and her views on TSLA. But the concentrated strategy has worked for ARKK. Over the last 3 years, ARKK has managed to post a whopping 36.70% average annual return. That smashes the XLK over that time by a wide margin. Perhaps the only downfall for ARKK is that its rather expensive at 0.75% in annual costs. However, if Wood can keep up the gains, that's a small price to pay to own one of the best performing tech ETFs out there.
iShares Exponential Technologies ETF (XT). If you like the idea of innovation and transformative tech, but don't think an active manager can make the right calls, then the iShares Exponential Technologies ETF (NYSEArca:XT). XT uses an index approach to get the job done.XT tracks the Morningstar Exponential Technologies Index. Exponential technologies are defined as advances which "displace older technologies, create new markets and have the potential to create significant positive economic benefits." This includes everything from 3-D printing and robotics to genomics/personalized medicine and data mining.The beauty is that XT doesn't just track strictly tech stocks like the XLK. It looks at all sectors to find these disruptors. There's plenty of industrials, healthcare and even real estate firms in the ETF. The fund currently 200 different global stocks -- with top holdings including ServiceNow (NYSE:NOW), Align (NASDAQ:ALGN) and First Solar (NASAQ:FSLR).Performance wise, XT has been great. Through the end of April, the ETF has managed to produce an 18.70% annual return over the last three years. That's not too shabby. Even better is that XT has been less volatile than some other tech ETFs including the XLK. This is due to it not focusing purely on tech. Either way, with expenses clocking at 0.47%, XT makes a great choice for those investors looking to add some tech ETFs to their portfolios.
First Trust ISE Cloud Computing Index Fund (SKYY). Perhaps one of the biggest and most immediate advances in the tech sector has to be cloud computing. Every time you've used an app on your phone or accessed a data center at work, you've used the power of the cloud. More and more, our information and programs are being stored off-site. Software as a Service (SaaS) has become big business. That's why the First Trust ISE Cloud Computing Index Fund (NYSEARCA:SKYY) could be one of the best tech ETFs to buy. SKYY tracks the ISE Cloud Computing Index. The underlying index looks for firms that provide network hardware/software, storage, cloud computing services or those firms that deliver goods and services that utilize cloud computing technology. Preference is placed on those stocks that are pure cloud computing plays with tech conglomerates or those firms only derive a portion of their revenues from the cloud receiving a smaller weighting. The ETF is fairly concentrated at just 28 holdings. Top stocks include Salesforce.com (NYSE:CRM), SAP (NYSE:SAP) and VMware (NYSE:VMW). That explosive nature of cloud computing has helped propel SKYY one of the best performing tech ETFs around. Over the last three years, the fund has produced a 28% annual return. That's more than double the S&P 500. Expenses for SKYY clock in at just 0.60%.
The KraneShares CSI China Internet ETF (KWEB). Silicon Valley isn't the only place where tech innovation is happening. In fact, China has just as many global tech stock giants as the U.S. In looking for alternative ETFs to the XLK, heading to the Dragon Economy could be a smart bet and the KraneShares CSI China Internet ETF (NYSEArca:KWEB) could be the way to access the opportunity. KWEB tracks an index of China-based companies whose primary business are in internet-related sectors. The ETFs holdings read like a who's who of internet retailers, social media, gaming, travel and commerce sites in the nation. This includes giants like Alibaba (NYSE:BABA), NetEase (NASDAQ:NTES) and JD.com (NYSE:JD). With the ETF, you're basically getting the Facebook's (NYSE:FB) and Amazon's (NASDAQ:AMZN) of China. Given the sheer size of China's population and the growth of the internet in the nation, KWEB could be a solid long term bet for investors looking to expand their tech holdings. However, don't expect a smooth ride. The fund has been pretty volatile -- especially these days as the trade war has persisted. But the longer term looks rosy for China and its growth. With nearly $1.8 billion in assets and a 0.70% expense ratio, KWEB is the prime way to get a piece of the action.
Disclosure: At the time of writing Aaron Levitt was long AMZN and XT.
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>>> 1,000 Dead ETFs Is Cause for Celebration
The market is a meritocracy, and only the strongest survive.
Bloomberg
By Eric Balchunas
November 29, 2019
https://investorshub.advfn.com/secure/post_new.aspx?board_id=35753
Sometimes death is a sign of life.
The exchange-traded-fund industry buried its 1,000th product this year as the number of victims is growing almost as fast as new products hitting the market. This is obviously bad for the issuers of the deceased funds, but this Darwinism should be seen as healthy and natural in a thriving — albeit brutal — market.
On the practical side, the victims are often thinly traded products that tend to have wider spreads. They can be costly and even dangerous if an investor puts in a market order at the wrong time. There are still about 400 to 500 of these so-called zombie ETFs in the market — many of which should arguably be put down for the betterment of all investors.
In a more philosophical sense, ETF deaths should be celebrated because the market is determining winners and losers based on merit. This is somewhat in contrast to mutual funds, many of which have props to help them grow assets: distribution fees, 1 spots in 401(k) plans and, most important, a big base of assets that grows with the market.
This year alone, active mutual funds have grown assets by a record $1.7 trillion despite seeing almost $200 billion in outflows. This is the magic that happens when you have $11.5 trillion in assets and the market is up 25%. This “bull market subsidy” translates to roughly $70 billion of new assets and $400 million in new revenue every time the market goes up 1%. This is hugely helpful to stave off death. That said, mutual funds do have their fair share of liquidations, and I’d imagine those will pick up if/when the bull market subsidy turns into a bear market tax.
Without any of the mutual funds’ aids, ETFs are left to get all their assets the hard way: appealing to cost-obsessed, after-tax, picky advisers and do-it-yourself investors. It’s a tough place to live, but it’s where most of the new investor cash is going. That means new launches will remain abundant despite the rising death toll.
These new launches, however, are getting more mindful about what products get through to market; the increased closures effectively tighten the filter. You’ve probably noticed the number of “I can’t believe they launched that” type ETFs has died down. What Ben Johnson of Morningstar calls “The Spaghetti Cannon” has become more like a Spaghetti Rifle. A little wild and crazy, however, can be a good thing as it is all part of the innovation that makes the ETF industry the Silicon Valley of the investment world.
Firms are learning from what failed. Global X, for example, has closed more than a dozen ETFs over the years, including funds that tracked waste management and fishing (which is probably my all-time favorite dead ETF). Those closures taught the firm that just following a niche industry or theme wasn't enough; it helps if it is in a high-growth or disruptive area. Global X has since introduced successful robotics, fintech and cloud computing ETFs.
It’s sometimes tough to tell the difference between a future hit and dud. I remember a colleague mocking the China internet ETF when it launched in 2013 for being so ridiculously narrow. It’s over $1 billion today and has inspired a mini-category. On the flip side, Legg Mason launched a more traditional-sounding “diversified core” equity ETF, and it closed three years later. You just never know. And that’s good because it keeps hope alive, which is the pilot light of innovation.
Closing an ETF used to carry a stigma until industry leader BlackRock Inc. started to make routine closures about seven years ago. This opened up the floodgates, increasing both the number of closures and the average size of the closure, which jumped from $15 million to $30 million pretty much overnight. Although there is no risk of the investor losing their investment in the fund if an ETF closes, the liquidation does have the potential to trigger a taxable event. That legit closure risk is another reason it’s so hard for smaller products to get off the ground.
That brings us to fees, which is the single biggest determinant of whether an ETF will die or not. The average fee of a dead ETF is 0.65%, above the industry average of 0.5% but more than triple the asset-weighted figure of 0.20% and more than six times above the flow-weighted average fee of 0.11%. This is different from mutual funds or hedge funds where poor performance is usually the cause of death. (Although fees can be a huge determinant in performance, so you could argue it all comes back to fees in the end.)
The average lifespan of a dead ETF is a mere 3.4 years — slightly less than an NFL running back’s career. This is a tough stat when you consider that about 95% of the revenue goes to products more than five years old. In other words, patience is key, but it can be too much to bear in many cases. And sometimes it’s just best to say goodbye.
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>>> A New Computing ETF Off To A Hot Start
ETF Trends
November 14, 2019
https://finance.yahoo.com/news/computing-etf-off-hot-start-162113849.html
Hundreds of new ETFs have come to market this year with the Global X Cloud Computing ETF (CLOU) easily ranking among the standouts.
CLOU, which debuted in April, follows the Indxx Global Cloud Computing Index, the fund holds a basket of companies that potentially stand to benefit from the continuing proliferation of cloud computing technology and services. The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications which are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities customers use to store data and servers, including data center Real Estate Investment Trusts (REITs), and/or (v) manufacture or distribution infrastructure and/or hardware components used in cloud and edge computing activities.
The increasingly digital and connected world that form the backdrop for CLOU’s launch is exhibiting significant growth and is expected to continue to grow over the coming years. The cloud computing industry that was estimated to be worth $188 billion in 2018 is expected to be worth over $300 billion by 2022, a nearly 15% annualized growth rate.
Those are among the reasons why CLOU has attracted $461.1 million in assets under management, easily making it one of this year's most successful new ETFs.
CLOU Call
CLOU's ascent is all the more impressive when considering that the fund's 0.68% annual expense ratio is slightly higher than the 0.60% charged by the rival First Trust ISE Cloud Computing Index Fund (SKYY) .
“This competition is relevant because these funds are not mirror images of each other. The overlap by weight between the two cloud computing ETFs is just 25%, meaning investors should expect diverging returns from these products over time,” reports InvestorPlace.
Most investors are familiar with the cloud, as it is likely the enigmatic space they turn to when it comes time to store photos, music, and other keepsakes when it is either inconvenient or space is limited to store such items on a physical hard drive.
“CLOU may be the way to go for investors looking for the impact of smaller, though not small-cap stocks. The weighted average market capitalization of its holdings is $75.6 billion compared to SKYY’s $169.4 billion,” according to InvestorPlace.
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>>> Market-Beating Sector ETFs Year to Date
Zacks
by Sanghamitra Saha
November 15, 2019
https://finance.yahoo.com/news/market-beating-sector-etfs-date-130001010.html
Market-Beating Sector ETFs Year to Date
The year 2019 has been all about peaks and troughs in U.S.-China trade tensions, global growth slowdown and global policy easing. The upshot is at least 19% gains in the key U.S. equity gauges.
SPDRS&P 500 ETF SPY has added about 23.6% so far this year while Invesco QQQ Trust (QQQ) has gained 30.2% and SPDR Dow Jones Industrial Average ETF DIA has advanced 19%. All-world ETF iShares MSCI ACWI ETF ACWI is up 19.8%. While many corners of the market have made solid gains, some sectors delivered even stronger performance.
Below we highlight those winners.
Semiconductor
Occasional hopes of a U.S.-China trade deal, a 5G boom and rising consumer spending on technology have propelled the sector. Expectations of higher smartphone sales have given an added boost. IDC expects the smartphone market to record 1.6% growth in 2020, after three straight years of global contraction. Gartner too expects smartphone sales to grow again in 2020 after a decline in 2019, thanks to “broader availability of 5G models and the promotion of 5G service packages in various parts of the world by communications service providers."
SPDR S&P Semiconductor ETF XSD (up 55.1%), First Trust Nasdaq Semiconductor ETF FTXL (up 52.4%), VanEck Vectors Semiconductor ETF SMH (up 52.3%) and iShares PHLX Semiconductor ETF SOXX (51.7%) have proven to be the clear winners (read: Time to Buy the Dip in Semiconductor ETFs?).
Clean Energy
Clean energy ETFs have ridden higher this year. This has happened despite President Trump’s inclination toward booting fossil-fuel energy. Going by an International Energy Agency (IEA) report, worldwide supplies of renewable electricity are expected to expand 50% in the next five years.
A transition toward 100% clean electricity is going on in the United States. China is a major player building a green environment. Almost half of the European Union’s (EU) 28 member states have already reached or are about to touch their 2020 renewable energy targets(read: Top-Performing Alternative Energy ETFs YTD).
Invesco Solar ETF TAN (up 50.6%), Invesco Exchange-Traded Fund Trust - Invesco WilderHill Clean Energy ETF PBW (up 44.6%) and ALPS Clean Energy ETF ACES (up 41.5%) are some of the ETFs that have added solid gains.
Home Building
Low mortgage rates have worked wonder for housing stocks this year. With the Fed being dovish, this rate-sensitive sector has every reason to outperform. iShares U.S. Home Construction ETF (ITB) (up 49.9%), Invesco Dynamic Building & Construction ETF PKB (up 42.4%) and SPDR S&P Homebuilders ETF XHB (up 41.7%) are the top-performing homebuilding ETFs (read: Here's Why Homebuilding ETFs Are Soaring).
Aerospace & Defense
President Donald Trump’s repeated pitch for a higher defense budget, rising geopolitical risks and higher commercial demand are giving a boost to defense companies. Invesco Aerospace & Defense ETF PPA (up 41.2%) and SPDR S&P Aerospace & Defense ETF XAR (up 41.1%) deserve a mention.
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Amplify Online Retail ETF (IBUY) holdings -
Stamps.com (STMP) - 7%
Copart (CPRT) - 4%
PetMed Express (PETS) - 4%
Carvana Company (CVNA) - 4%
Expedia Group (EXPE) - 4%
Booking Holdings (BKNG) - 4%
IAC/Interactive Corp (IAC) - 4%
Ebay (EBAY) - 3%
Paypal Holdings (PYPL) - 3%
Amazon.com (AMZN) - 3%
Here's a great site for ETF research, they have a huge detailed database -
https://etfdb.com/etfdb-categories/
Fwiw, I'm moving toward using sector ETFs instead of individual stocks for the higher risk portion of the portfolio (5-10%).
Sector ETFs should be ideal for newer sectors that look promising, like cloud computing, alternate energy, robotics, etc.
Organics ETF (ORG) - >>> The investment seeks investment results that correspond generally to the performance, before fees and expenses, of an index which is designed to track the performance of companies globally that are positioned to profit from increasing demand for organic products, including companies which service, produce, distribute, market or sell organic food, beverages, cosmetics, supplements, or packaging. The fund invests at least 80% of its net assets in the stocks that comprise the Solactive Organics Index. It is non-diversified.
Top 10 Holdings (76.85% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
Chr. Hansen Holding A/S CHR 20.15%
Sprouts Farmers Market Inc SFM 11.71%
The Hain Celestial Group Inc HAIN 9.25%
Ariake Japan Co Ltd 2815 7.24%
John B Sanfilippo & Son Inc JBSS 5.61%
Bellamy's Australia Ltd BAL.AX 5.40%
United Natural Foods Inc UNFI 4.93%
L'Occitane International SA 00973.HK 4.72%
Blackmores Ltd BKL.AX 4.30%
BUBS Australia Ltd BUB.AX 3.54%
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>>> Top 3 ETFs for Investing in Water in 2018
Investopedia
BY SHEILA OLSON
Aug 14, 2019
https://www.investopedia.com/articles/etfs/top-water-etfs/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo
It's impossible to overstate our dependence on water. Even though roughly 70% of the earth is covered by water, only a tiny fraction of 1% is fresh and readily accessible to sustain over 7 billion people.
In fact, the United Nations authored a report in 2015 suggesting that the world may only have 60% of its required water by 2030, absent major global policy changes. The bottom line is that water is a precious and increasingly scarce commodity, so now might be the right time to consider adding it to your portfolio for long-term growth.
More investment advisors are recommending commodities as a dedicated asset class to hedge other assets in your overall portfolio. If you're looking at diversifying your commodities holdings to include exposure to water, you could look at individual water utilities stocks if you have the time and inclination – or you could check out the emerging class of water exchange-traded funds (ETFs) to hedge your bets.
Here are three of the more prominent water ETFs for investors to consider. While they've been volatile in 2018, they have delivered stronger returns over the last five years and stand to benefit when the sector picks up. All figures are as of Aug. 28, 2018.
1. Invesco Water Resources ETF (PHO)
This is the largest and arguably the most popular water ETF, with over $865 million in assets under management. Unlike other water funds, PHO is U.S.-centric, with a basket of 37 holdings that tilts toward mid- and smaller-cap companies, heavy on machinery and utilities and light on industrials. PHO's top 10 holdings comprise almost 60% of the portfolio; Waters Corporation (WAT), Roper Technologies (ROP) and Danaher Corp. (DHR) are the three biggest holdings. Shares have been volatile year-to-date and are currently up modestly, by 4.78%. Shares have all posted gains over the 1-year, 3-year and 5-year period, rising 16.70%, 10.48% and 7.11%, respectively.
2. Invesco S&P Global Water ETF (CGW)
As the name suggests, this fund tracks the S&P Global Water Index and invests in companies of all market caps that stand to benefit from the increased demand for water, including water quality and delivery infrastructure. Although CGW has global exposure, it is heavily weighted to the U.S. (over 47% of its holdings) and the U.K. (roughly 14%). There are currently 52 companies in the fund's basket, with the top 10 holdings accounting for over 50% of its overall holdings; American Water Works (AWK), Xylem (XYL) and Danaher Corp. (DHR) are the three biggest holdings. The company has nearly $600 million in assets under management. So far in 2018, shares are little changed, down 0.90%. The fund has delivered one-, three- and five-year annualized returns of 7.11%, 9.31% and 9.27%, respectively.
3. Invesco Global Water ETF (PIO)
The PIO portfolio, with over $183 million in assets under management, tracks the Nasdaq OMX Global Water Index and focuses on global companies that create products for water conservation and purification. As you might expect, the portfolio is heavily tilted toward industrials and utilities, with a strong preference for large-cap growth and value. The portfolio is pretty concentrated as well, with the top 10 holdings accounting for almost 55% of its assets. There are 43 holdings. Top names include Danaher Corporation (DHR), Ecolab Inc. (ECL) and Pentair PLC (PNR). While PHO is preferred by many investors, PIO is a good play for investors with confidence in the fund's top holdings. Shares are little changed, up 0.15% year-to-date. Longer-term the results are better. The fund has delivered one-, three- and five-year annualized returns of 9.37%, 5.35% and 7.03%, respectively.
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>>> Fidelity Is Latest to Cut Online Trading Commissions to Zero
Wall Street’s digitization has reset many of the fundamental costs of investing
Beginning early Thursday, Fidelity stopped charging individual investors commissions on online trades of U.S. stocks, exchange-traded funds and options trades
Wall Street Journal
By Justin Baer
Oct. 10, 2019
https://www.wsj.com/articles/fidelity-is-latest-to-cut-online-trading-commissions-to-zero-11570680060
Fidelity Investments eliminated trading commissions on its online brokerage, matching a step some of its biggest rivals unveiled last week.
Beginning early Thursday, Fidelity stopped charging individual investors commissions on online trades of U.S. stocks, exchange-traded funds and options trades. For investment advisers, commissions will be cut to zero on Nov. 4. Fidelity’s online brokerage has 21.8 million accounts.
Before Thursday’s move, Fidelity charged $4.95 for online stock trades.
Wall Street’s digitization has reset many of the fundamental costs of investing, from commissions to the fees paid on mutual funds, and lifted investors’ expectations for their brokers, advisers and money managers. Firms like Fidelity and Charles Schwab Corp., which earlier eliminated trading commissions, have been racing to lure more customers with lower-cost products and services. Some of those price wars have ended with fees at or close to zero.
Schwab said last week it would scrap commissions to trade stocks, ETFs and options online. While TD Ameritrade Holding Corp. and E*Trade Financial Corp. quickly followed suit, Fidelity didn’t. And even after the firm matched that offering, Fidelity executives have sought to play down its significance.
“We prioritized where we could provide the most value to investors,” Kathleen Murphy, president of Fidelity’s personal-investing business, said in an interview. “It’s much more important to have industry-leading practices on cash and trade execution.”
Fidelity has long argued that the firm trades stocks more efficiently than many of its peers, saving money for clients.
Two months ago, Fidelity unveiled plans to divert clients’ cash into higher-yielding money-market funds, arguing the step provided a sharp contrast to their competitors’ practice of paying out ultralow rates on cash.
More than 500 ETFs already have traded commission-free on Fidelity’s platform, including several hundred managed by BlackRock Inc. “We continue to have a great relationship with BlackRock as well as the other ETF sponsors currently participating in our commission-free ETF platform,” a Fidelity spokeswoman said.
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This ETF Yields 10% and Cuts You a Check Every Month:
https://dailyinvestingadvice.com/this-etf-yields-10-and-cuts-you-a-check-each-month/
>>> Top 5 Gold ETFs for 2018
Investopedia
BY BARCLAY PALMER
Updated Jun 25, 2019
https://www.investopedia.com/articles/etfs/top-gold-etfs/
The price of gold has been on the slide lately, falling more than 10% over the last five months as the dollar has rallied on bets of a continued strong U.S. economy. Nonetheless, the outlook is more positive for the rest of the year and next, with December gold futures currently holding above the key technical level of $1,200 per share. A consensus of analysts surveyed by Reuters expect gold prices to hit as high as $1,300 per share by the end of the year.
Investors who are interested in owning the precious metal may want to consider buying shares in a gold exchange-traded fund (ETF). These funds are managed by gold experts, so you stand a better chance of making money than you would on your own. That said, the price of gold will always affect gold ETFs.
We have chosen the top five gold ETFs based on net assets. None of them pay a dividend and none of them have rallied in 2018, despite all posting gains in 2017. Read the descriptions carefully, because each of these ETFs has different types of expenses. All figures are current as of August 31, 2018.
SPDR Gold Shares (GLD)
This fund buys gold bullion. The only time it sells gold is to pay expenses and honor redemptions?. Because of the ownership of bullion, this fund is extremely sensitive to the price of gold and will follow gold price trends closely.
One upside to owning gold bars is that no one can loan or borrow them. Another upside is that each share of this fund represents more gold than shares in other funds that do not buy physical gold. However, the downside is taxes. The Internal Revenue Service (IRS) considers gold a collectible, and taxes on long-term gains are high. (For more, see: The Most Affordable Way to Buy Gold: Physical Gold or ETFs?)
Average Volume: 6.4 million
Net Assets: $29.33 billion
2017 Return: 12.81%
2018 YTD Return: -0.09 %
Expense Ratio: 0.40%
iShares Gold Trust (IAU)
This is another fund that buys physical gold. The fund incurs expenses for transportation, warehousing and insuring gold. IAU keeps its gold in vaults scattered around the planet. Interestingly, the fund does not try to profit from the gold by selling it when the price goes up. Instead, fund managers consider IAU a way for investors to buy and hold gold bullion. This makes the fund very stable.
Because of the low expenses for the fund, investors have a cheap way to buy and manage gold in a way they could not by themselves. Owning this fund is considered owning a collectible by the IRS, and it taxes the holdings accordingly. And those taxes are high. In the beginning, one share of the fund equaled 1/100th of an ounce of gold. This number actually goes down as time passes because expenses have to be figured into the cost of a share. (See also: Investing in Gold: Mutual Funds vs. ETFs.)
Average Volume: 12.3 million
Net Assets: $10.29 billion
2017 Return: 12.91%
2018 YTD Return: -6.16%
Expense Ratio: 0.25%
ETFS Physical Swiss Gold (SGOL)
SGOL stores gold in a vault in Zurich. Owners of the shares own part of that gold. This fund is very liquid, meaning that you can buy and sell shares easily. This allows you to take profits effectively or to add shares when you want to buy the dips. The primary difference between SGOL and other funds that hold physical gold in storage is that SGOL stores its gold exclusively in Swiss vaults. (For more, see: What Drives the Price of Gold?)
Average Volume: 14,506
Net Assets: $881.95 million
2017 Return: 12.86%
2018 YTD Return: -4.09%
Expense Ratio: 0.39%
GraniteShares Gold Trust (BAR)
The GraniteShares Gold Trust is designed to seek the performance of the price of gold. The ETF is committed to less trust expenses. The ETF is relatively new, as it was created on August 31, 2017. The ETF uses actual gold held and secured in vaults in London, under custody by ICBC Standard Bank. As it uses actual physical gold, it tracks the price of spot gold closely. (For more, see: 8 Reasons to Own Gold.)
Average Volume: 57,536
Net Assets: $271.61 million
2018 YTD Return: -0.03%
Expense Ratio: 0.20%
Invesco DB Gold (DGL)
DGL does not buy gold. It tracks the DBIQ Optimum Yield Gold Index Excess Return. The fund does this by buying futures contracts. It should be noted that investors in DGL receive a K-1 form during tax season, meaning they must pay taxes as partners. In addition, the fund's managers must constantly fight contango, which is a situation where the futures contract is higher than the future spot price of gold. Investors lose money because the futures contract must be adjusted downward to match the spot price. (See also: Got a Commodity ETF? Watch Out for Contango!)
Average Volume: 42,952
Net Assets: $138.82 million
2017 Return: 11.03%
2018 YTD Return: -6.62%
Expense Ratio: 0.76%
The Bottom Line
Gold must always be considered a speculative investment. Investors usually choose ETFs to spread risk among several assets. However, some of these funds invest exclusively in gold, so gains or losses in those cases are tied directly to the price of gold. (For additional reading, check out: Getting Into the Gold Market.)
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GLDM - >>> Pinch Pennies With a New Gold ETF
Investopedia
BY TODD SHRIBER
Jun 25, 2019
https://www.investopedia.com/news/pinch-pennies-new-gold-etf/
Investors looking for a more cost-effective avenue for investing in gold have a new exchange-traded fund (ETF) to consider following Tuesday's debut of the SPDR Gold MiniShares Trust (GLDM). The SPDR Gold MiniShares Trust is the latest product in the long-running partnership between State Street Global Advisors (SSgA) and the World Gold Council (WGC), the groups behind the SPDR Gold Shares (GLD). GLD is the largest gold ETF in the world by assets and the largest commodities ETF trading in the U.S.
"GLDM will be initially listed at a per-share trading price of 1/100th of an ounce of gold, as represented by the LBMA Gold Price PM," according to a statement issued by SSgA and the WGC. By comparison, ownership of one GLD share represents one-tenth of an ounce of gold. The differences do not end there. GLDM's annual expense ratio is just 0.18%, or $18 on a $10,000 position. That is less than half the 0.40% annual fee found on GLD. That makes GLDM the least expensive gold ETF currently trading in the U.S.
"GLDM offers the lowest available total expense ratio among all gold exchange-traded products, with a net and gross expense ratio of 0.18 percent," according to the statement. (See also: Fee War Makes Its Way to Gold ETFs.)
While GLD is the world's largest ETF backed by physical holdings of gold, the ETF faces competition from lower-cost rivals. For example, the iShares Gold Trust (IAU) has an annual fee of just 0.25%. As has been proven time and again in the world of ETFs, fees matter. This year, investors have pulled $620.22 million from GLD, but IAU has seen $1.26 billion in inflows.
Due to its robust liquidity and tight bid/ask spreads, GLD is a favorite commodities ETF among professional traders and institutional investors, likely explaining why SSgA and the WGC opted to introduce GLDM rather than paring GLD's expense ratio.
"For many investors, costs associated with buying and selling the shares in the secondary market and the payment of GLDM's ongoing expenses will be lower than the costs associated with buying and selling gold bullion and storing and insuring gold bullion in a traditional allocated gold bullion account," according to SSgA. (For additional reading, check out: Fees Matter With Gold ETFs, Too.)
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>>> Gold ETFs Rally As Demand Jumps
ETF.com
Sumit Roy
August 5, 2019
https://finance.yahoo.com/news/gold-etfs-rally-demand-jumps-124500642.html
Treasury bonds aren’t the only safe havens rallying this year. As trade war and global growth concerns have continually flared throughout the year, another safety play is doing just as well: gold. Prices for the yellow metal currently hover near $1,450/oz, a level not seen in six years.
Investors have taken notice. The SPDR Gold Trust (GLD), the $38 billion gold ETF, is up 12.5% so far this year and has taken in $1.7 billion in fresh cash from investors. The No. 2 gold ETF on the market, the iShares Gold Trust (IAU), has taken in $1.3 billion in the same period.
At the same time, the SPDR Gold MiniShares Trust (GLDM) and the GraniteShares Gold Trust (BAR) have gathered a combined $600 million. The two ETFs offer some of the cheapest exposure to gold out there, with annual fees of 0.18% or less.
Zero Yield Looks Good
It is clear why investors have taken a liking to gold this year. Bond yields around the globe are at or near record lows, and could move even lower if central banks continue to cut interest rates. Bloomberg estimates that $14 trillion of debt in the world is yielding less than zero, or nearly 26% of the market.
It’s a bizarre situation, and makes gold look much more appealing by comparison. When investors literally have to pay to lend money, gold’s “zero yield” is downright attractive.
Indeed, that is probably why demand for gold ETFs in Europe, where government bond yields are broadly negative, has been even stronger than in the U.S, where rates are still positive. The World Gold Council estimates that inflows for European gold ETFs totaled $3.9 billion as of the end of June.
Separate data from Bloomberg shows that total holdings of gold in ETFs stood at 75.6 million troy ounces as of Aug. 1, the highest in six years, and only 8.6% below the all-time high set in 2012.
2 Pillars Driving Gold
Strong demand for gold ETFs is one pillar driving overall gold demand to its highest level in three years. It’s also helped offset tepid physical investment demand for gold bars and coins (which fell to its lowest point since 2009 during the first half of 2019), and surging gold supply (which reached the highest level since 2016, according to the World Gold Council).
The other big factor driving gold demand higher this year has been central bank buying. Gold demand from these institutions surged 57% year over year during the first half of 2019, on pace for the strongest year in decades.
The total net purchases of 374.1 metric tons by central banks equaled 17.1% of total global gold demand between January and June.
“Sluggishness, exacerbated by trade and geopolitical tensions, continued to cast a dark cloud over the global economy,” wrote the WGC. “Central banks, like other investors, sought safety in gold as they looked to protect themselves in the face of many looming risks.”
Poland, Russia, China, India and Turkey were among the biggest gold-buying central banks this year.
Outlook
Looking ahead, the gold rally will depend on the factors that have lifted it to where it is now. ETF demand may largely be driven by investors’ appetite for portfolio hedging against an economic downturn or for safe-haven alternatives to low-yielding bonds.
Meanwhile, central bank buying may be influenced by the relations between the U.S. and other countries. Tensions between the U.S. and China, the U.S. and Russia, etc., may push those countries to diversify their dollar-denominated foreign exchange reserves into gold.
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Short ETFs - >>> Profit From Trump's Anti-Trade Policies With Inverse ETFs
Zacks
Sweta Killa
May 31, 2019
https://finance.yahoo.com/news/profit-trumps-anti-trade-policies-151003794.html
The decade-old U.S. bull market has been threatened by renewed trade fight lately. Investors could ride out the downbeat sentiments through inverse or leveraged inverse ETFs as these products offer big gains in a short span.
The decade-old U.S. bull market has been threatened by renewed trade fight lately. Escalation in tit-for-tat tariffs between the United States and China has shaken the Wall Street once again, resulting in global growth concerns.
President Donald Trump raised tariffs on Chinese goods worth $200 billion and China retaliated with as much as 25% tariff on $60 billion worth of U.S. imports effective Jun 1. Trump also threatened to blacklist Chinese firm Huawei Technologies, forbidding it from doing business with American companies. China might hit back by restricting rare-earth exports to the United States (read: Trade War Drags On: Time to Buy Bond ETFs?).
Additionally, the Trump administration threatened to slap tariffs on all goods coming from Mexico in a bid to curb illegal immigration. Washington will impose a 5% tariff from Jun 10 that will increase to 10% on Jul 1 if illegal immigration across the southern border was not stopped. Levies will then rise by 5% each month up to 25% by Oct 1. The tariff will permanently remain at the 25% level unless and until the crisis stops. The move will hit a number of companies especially in the auto sector. This is because American carmakers have built vehicles in Mexico for years, taking advantage of its cheap labor, trade deals and proximity to the United States.
The rounds of increase in tariffs will hurt U.S. consumers, driving up the prices of goods and thus curtailing spending. It will further impact worldwide economy and corporate profits, particularly at big U.S. exporters. All these will continue to weigh on the stock market. Investors could ride out the downbeat sentiments through inverse or leveraged inverse ETFs as these products offer big gains in a short span.
These products either create an inverse position or leveraged (200% or 300%) inverse position in the underlying index through the use of swaps, options, future contracts and other financial instruments. There are a number of inverse or leveraged inverse products in the market that offer inverse (opposite) exposure to the three major bourses. Investors should trade them cautiously, keeping their risk appetite in mind. Below we have highlighted them and the key differences between each (read: 5 Leveraged/Inverse ETFs That Are Up 20% Plus So Far in Q2):
S&P 500 Index
For investors seeking to bet against the S&P 500 Index, ProShares Short S&P500 ETF SH and Direxion Daily S&P 500 Bear 1X Shares SPDN are good choices. These provide unleveraged inverse exposure to the daily performance of the S&P 500 Index. SH is a popular and liquid option with AUM of $2 billion and average daily volume of more than 6.4 million shares.
ProShares UltraShort S&P500 ETF SDS seeks two times (2x) inverse exposure to the index while ProShares UltraPro Short S&P500 SPXU and Direxion Daily S&P 500 Bear 3x Shares SPXS provide three times (3x) inverse exposure. Out of the three, SDS is relatively popular and liquid, having amassed nearly $1 billion in AUM and 6.4 million shares in average daily volume.
Dow Jones
To bet against Dow Jones, ProShares Short Dow30 DOG, ProShares UltraShort Dow30 DXD and ProShares UltraPro Short Dow30 SDOW are the three options in the market. DOG offers unleveraged exposure to the index with AUM of $242.6 million and average daily volume of 785,000 shares. DXD provides two times inverse exposure with AUM of $139.7 million while SDOW having AUM of $248.3 million seeks three times exposure. Both these ETFs trades in average daily volume of more than million shares (read: Dow on Longest Losing Streak in 8 Yrs: 5 Stocks Still Up in ETF).
Nasdaq-100 Index
Similarly, ProShares Short QQQ PSQ provides unleveraged inverse exposure to the daily performance of the Nasdaq-100 Index. ProShares UltraShort QQQ QID seeks two times exposure while ProShares UltraPro Short QQQ SQQQ provides three times inverse exposure to the index. PSQ, QID and SQQQ have AUM of $619.2 million, $363.1 million and $1 billion, respectively. SQQQ has average daily volume of 8.8 million shares while QID and PSQ have average daily volume of 3.1 million shares and 2.4 million shares, respectively (read: 5 Tech ETFs Braving Trade Tensions in May).
Bottom Line
While the strategy is highly beneficial for short-term traders, it could lead to huge losses compared with traditional funds in fluctuating markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period when compared with the shorter period (such as, weeks or months) due to their compounding effect (see: all the Inverse Equity ETFs here).
Still, for ETF investors who are bearish on equities for the near term, either of the above products could make an interesting choice. Clearly, these could be intriguing for those with high-risk tolerance and a belief that the “trend is the friend” in this specific corner of the investing world.
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Performance comparison of 1x Short ETFs -
Based on this limited data, HDGE has fallen more than SH during up markets, and risen more than SH in down markets (albeit modestly).
Per Yahoo, the expense ratio for HDGE is 2.72%, and for SH is 0.89%. Assets in HDGE are $120 mil, and SH has $1.76 Bil.
__________________________
2012-2019 bull market -
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HDGE - loss (74.9%)
SH - loss (65.9%)
Q-1 2019 stock rebound -
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HDGE - loss (28.9%)
SH - loss (20.6%)
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Q-4 2018 stock swoon -
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HDGE - gain + 25.0%
SH - gain + 24.5%
Recent stock swoon -
*************************
HDGE - gain +8.6%
SH - gain +7.3%
___________________________
Dividend ETFs -
>>> How Do ETF Dividends Work?
BY TROY SEGAL
Feb 21, 2019
https://www.investopedia.com/articles/investing/120415/how-dividendpaying-etfs-work.asp
Although exchange-traded funds (ETFs) are primarily associated with index-tracking and growth investing, there are many that offer income by owning dividend-paying stocks. When they do, they collect the regular dividend payments and then distribute them to the ETF shareholders. These dividends can be distributed in two ways, at the discretion of the fund's management: cash paid to the investors or reinvestments into the ETFs’ underlying investments.
The Timing of ETF Dividend Payments
Similar to an individual company's stock, an ETF sets an ex-dividend date, a record date, and a payment date. These dates determine who receives the dividend and when the dividend gets paid. The timing of these dividend payments are on a different schedule than those of the underlying stocks and vary depending on the ETF.
For example, the ex-dividend date for the popular SPDR S&P 500 ETF (SPY) is the third Friday of the final month of a fiscal quarter (March, June, September, and December). If that day happens to not be a business day, then the ex-dividend date falls on the prior business day. The record date comes two days prior to the ex-dividend date. At the end of each quarter, the SPDR S&P 500 ETF distributes the dividends.
Each ETF sets the timing for its dividend dates. These dates are listed in the fund's prospectus, which is publicly available to all investors. Just as like any company's shares, the price of an ETF often rises before the ex-dividend date—reflecting a flurry of buying activity—and falls afterward, as investors who own the fund before the ex-dividend date receive the dividend, and those buying afterward do not.
Dividends Paid in Cash
The SPDR S&P 500 ETF pays out dividends in cash. According to the fund’s prospectus, the SPDR S&P 500 ETF puts all dividends it receives from its underlying stock holdings into a non-interest-bearing account until it comes time to make a payout. At the end of the fiscal quarter, when dividends are due to be paid, the SPDR S&P 500 ETF pulls the dividends from the non-interest-bearing account and distributes them proportionally to the investors.
Some other ETFs may temporarily reinvest the dividends from the underlying stocks into the holdings of the fund until it comes time to make a cash dividend payment. Naturally, this creates a small amount of leverage in the fund, which can slightly improve its performance during bull markets and slightly harm its performance during bear markets.
Dividends Reinvested
ETF managers also may have the option of reinvesting their investors' dividends into the ETF rather than distributing them as cash. The payout to the shareholders can also be accomplished through reinvestment in the ETF’s underlying index on their behalf. Essentially it comes out to the same: If an ETF shareholder receives a 2% dividend reinvestment from an ETF, he may turn and sell those shares if he'd rather have the cash.
Sometimes these reinvestments can be seen as a benefit, as it does not cost the investor a trade fee to purchase the additional shares through the dividend reinvestment. However, each shareholder’s annual dividends are taxable in the year they are received, even if they are received via dividend reinvestment.
Taxes on Dividends in ETFs
ETFs are often viewed as a favorable alternative to mutual funds in terms of their ability to control the amount and timing of income tax to the investor. However, this is primarily due to how and when the taxable capital gains are captured in ETFs. It is important to understand that owning dividend-producing ETFs does not defer the income tax created by the dividends paid by an ETF during a tax year. The dividends that an ETF pays are taxable to the investor in essentially the same way as the dividends paid by a mutual fund are.
Examples of Dividend-Paying ETFs
Here are five highly popular dividend-orientated ETFs.
SPDR S&P Dividend ETF
The SPDR S&P Dividend ETF (SDY) is the most extreme and exclusive of the dividend ETFs. It tracks the S&P High-Yield Dividend Aristocrats Index, which only includes those companies from the S&P Composite 1500 with at least 20 consecutive years of increasing dividends. Due to the long history of reliably paying these dividends, these companies are often considered to be less risky for investors seeking total return.
Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF (VIG) tracks the NASDAQ U.S. Dividend Achievers Select Index, a market capitalization-weighted grouping of companies that have increased dividends for a minimum of 10 consecutive years. Its assets are invested domestically, and the portfolio includes many legendary rich-paying companies, such as Microsoft Corp. (MSFT) and Johnson & Johnson (JNJ).
iShares Select Dividend ETF
The iShares Select Dividend ETF (DVY) is the largest ETF to track a dividend-weighted index. Similar to VIG, this ETF is completely domestic, but it focuses on smaller companies. Roughly one-third of the 100 stocks in DVY's portfolio belongs to utility companies. Other major sectors represented include financials, cyclicals, non-cyclicals, and industrial stocks.
iShares Core High Dividend ETF
BlackRock's iShares Core High Dividend ETF (HDV) is younger and uses a smaller portfolio than the company's other notable high-yield option, DVY. This ETF tracks a Morningstar-constructed index of 75 U.S. stocks that are screened by dividend sustainability and earnings potential, which are two hallmarks of the Benjamin Graham and Warren Buffett school of fundamental analysis. In fact, Morningstar's sustainability ratings are driven by Buffett's concept of an "economic moat," around which a business insulates itself from rivals.
Vanguard High Dividend Yield ETF
The Vanguard High Dividend Yield ETF (VYM) is characteristically low-cost and simple, similar to most other Vanguard offerings. It tracks the FTSE High Dividend Yield Index effectively and demonstrates outstanding tradability for all investor demographics. One particular quirk of the weighting method for VYM is its focus on future dividend forecasts (most high-dividend funds select stocks based on dividend history instead). This gives VYM a stronger technology tilt than most of its competitors.
Other Income-Oriented ETFs
In addition to these five funds, there are dividend-focused ETFs that employ different strategies to increase dividend yield. ETFs such as the iShares S&P U.S. Preferred Stock Index Fund (PFF) track a basket of preferred stocks from U.S. companies. The dividend yields on preferred stock ETFs should be substantially more than those of traditional common stock ETFs because preferred stocks behave more like bonds than equities and do not benefit from the appreciation of the company's stock price in the same manner.
Real estate investment trust ETFs such as the Vanguard REIT ETF (VNQ) track publicly traded equity real estate investment trusts (REITs). Due to the nature of REITs, the dividend yields tend to be higher than those of common stock ETFs.
There are also international equity ETFs, such as the Wisdom Tree Emerging Markets Equity Income Fund (DEM) or the First Trust DJ Global Dividend Index Fund (FGD), which track higher-than-normal dividend-paying companies domiciled outside of the United States.
The Bottom Line
Although ETFs are often known for tracking broad indexes, such as the S&P 500 or the Russell 2000, there are also many ETFs available that focus on dividend-paying stocks. Historically, dividends have accounted for somewhere near 40% of the total returns of the stock market, and a strong dividend payout history is one of the oldest and surest signs of corporate profitability.
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>>> Volatility ETFs
https://etfdb.com/etfdb-category/volatility/
Definition: Volatility ETFs offer exposure to volatility in one form or another. Often referred to as “fear” indicators, these funds tend to move in the opposite direction of the broad market. Thus, these funds are used primarily by traders looking to capitalize on sharp market downturns.
Quick Category Facts
Count: 7 ETFs are placed in the Volatility ETFdb Category.
Expense Ratio: Range from 0.87% to 1.35%
Average Expense Ratio: 0.96%
Issuers with ETFs in this Category include:
Barclays Capital, Credit Suisse, ProSHares, UBS
Definitive List Of Volatility ETFs
This is a list of all US-traded ETFs that are currently included in the Volatility ETFdb.com Category by the ETF Database staff.
* Assets in thousands of U.S. Dollars. Assets and Average Volume as of 2019-05-10 20:15:03 UTC
Symbol
ETF Name
Total Assets*
YTD
Avg Volume
Previous Closing Price
1-Day Change
Overall Rating
VXX iPath Series B S&P 500 VIX Short-Term Futures ETN $799,224.98 -40.01% 27,009,636.0 $28.19 -7.73%
VIXY ProShares VIX Short-Term Futures ETF $224,850.00 -39.86% 2,268,966.0 $23.22 -7.75%
VIIX VelocityShares Daily Long VIX Short-Term ETN $44,711.57 -39.83% 136,238.0 $11.95 -7.94%
VIXM ProShares VIX Mid-Term Futures ETF $34,945.84 -19.11% 59,653.0 $21.63 -3.26%
VXZ iPath Series B S&P 500® VIX Mid-Term Futures ETN $19,788.78 N/A N/A $18.01 -3.90%
XVZ iPath S&P 500 Dynamic VIX ETN $4,572.00 -15.03% 2,111.0 $17.61 -2.92%
EVIX VelocityShares 1X Long VSTOXX Futures ETN $2,786.72 -47.70% 1,895.0 $6.54 -3.96%
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>>> Vanguard Patented a Way to Avoid Taxes on Mutual Funds
By Zachary R. Mider, Annie Massa and Christopher Cannon
May 1, 2019
https://www.bloomberg.com/graphics/2019-vanguard-mutual-fund-tax-dodge/?srnd=premium
Like flipping a light switch, Vanguard Group Inc. has figured out a way to shut off taxes in its mutual funds.
The first to benefit was the Vanguard Total Stock Market Index Fund. Investors’ end-of-year tax forms abruptly stopped showing capital gains in 2001, even as the fund went on to generate billions of dollars of them. By 2011, Vanguard had flipped the switch in 14 stock funds. In all, these funds have booked $191 billion in gains while reporting zero to the Internal Revenue Service.
This astounding success gives Vanguard funds an edge over competitors. Yet the world’s second-largest asset manager has avoided drawing attention to it. Top executives at the Malvern, Pennsylvania-based firm don’t want U.S. policymakers looking too closely at how they’re doing it, according to a former insider.
But a review of financial statements and trading data shows that Vanguard relies substantially on so-called heartbeat trades, which wash away taxes by rapidly pumping stocks in and out of a fund. These controversial transactions are common in exchange-traded funds—a record $98 billion of them took place last year, according to data compiled by Bloomberg News—but only Vanguard has used them routinely to also benefit mutual funds.
Here’s how it works: Vanguard attaches a more tax-efficient ETF to an existing mutual fund. Then the ETF siphons appreciated stocks out of the mutual fund without incurring taxes, often using heartbeat trades. Robert Gordon, who has written about the concept and is president of Twenty-First Securities Corp. in New York, calls it a tax “dialysis machine.”
How to Spot a Heartbeat
Rapidly pumping money into and out of the exchange-traded portion of the Vanguard Small-Cap Index Fund removes taxable gains for the benefit of the mutual fund’s shareholders.
Vanguard even got a patent on the design, valid until 2023, so competitors can’t copy it.
Rich Powers, Vanguard’s head of ETF product management, acknowledged the design’s tax advantages. But he said in an interview that they’re not the driver of the company’s strategy and that all of its trading complies with the law.
“We agree the Vanguard funds have been extremely tax efficient, enabling us to provide higher after-tax returns to our shareholders and better their chances of achieving long-term investment success,” Freddy Martino, a spokesman for the company, said in an email.
Although the dialysis treatment shut off taxable gains in the 14 stock funds, it didn’t completely neutralize them in a separate real estate index fund, which invests in trusts that aren’t taxed like stocks.
Taxable Gains Begone
Unlike competitors that follow similar indexes, Vanguard mutual funds stopped saddling investors with ? taxable gains once ETF share classes were added.
The main benefit of avoiding taxable gains in a mutual fund is tax deferral. Funds distribute their taxable gains to investors, who pay income taxes on them in the same year. By avoiding tax events within the fund, investors get to delay taxes until they sell the fund, which could be years or decades later. It’s akin to a zero-interest loan from the IRS.
The stakes for the U.S. Treasury are significant. While heartbeats already help eliminate taxable-gain distributions in the $3 trillion U.S. equity ETF industry, the mutual fund market is more than three times as big. When Vanguard’s patent expires four years from now, other mutual fund managers may have the chance to build their own dialysis machines.
To understand how the process works, consider an investor who owns a portfolio of stocks. If one is sold for more than what it cost, capital-gains tax is due on the difference.
Theoretically, owning stocks through a mutual fund or ETF works the same way. If the fund sells a stock for a profit, the taxable gain shows up on each investor’s end-of-year Form 1099.
But thanks to an obscure loophole in the tax code, ETFs almost always avoid incurring taxable gains.
The rule says that a fund can avoid recognizing taxable gains on an appreciated stock if the shares are used to pay off a withdrawing investor. The rule applies to both ETFs and mutual funds, but mutual funds rarely take advantage of it because their investors almost always want cash.
ETFs use it all the time, because they don’t transact directly with regular investors. Instead, they deal with Wall Street middlemen such as banks and market makers. It’s those firms, not retail investors, that expand the ETF by depositing assets or shrink it by withdrawing. These transactions are usually done with stocks rather than cash. The middlemen, in turn, trade with regular investors who want to buy and sell ETF shares.
Trading with middlemen presents ETFs a tax-cutting opportunity. Whenever one of these firms makes a withdrawal request, an ETF can deliver its oldest, most appreciated stocks, the ones most likely to generate a tax bill someday.
If the ETF wants to cut its taxes further, it can generate extra withdrawals just to harvest the tax break. A heartbeat is when an ETF asks a friendly bank or market maker to deposit some stock in the fund for a day or two, then take different stock out. Some critics call these trades an abuse of the tax code. But with the help of heartbeats, most stock ETFs, even ones that change holdings frequently, are able to cut their capital-gains taxes to zero.
Customer-owned Vanguard, founded in 1975 by John Bogle, built a reputation for low fees and tax efficiency by offering simple buy-and-hold funds that follow broad indexes such as the S&P 500. It now has about $5 trillion of assets under management.
In 2000, after Bogle had stepped down as chief executive officer, the firm unveiled a novel strategy to enter the ETF business, a market dominated by State Street Corp. and iShares, now part of BlackRock Inc. Rather than establish new, freestanding ETFs, Vanguard proposed to add an ETF share class to existing mutual funds. ETF and mutual fund investors would jointly own the same underlying pool of stocks.
The concept made sense for Vanguard. Investors who preferred ETFs could easily convert without selling. And the Vanguard ETFs would have a head start in the marketplace. They’d be able to point to decades of performance history and benefit from the existing mutual funds’ scale, ensuring low fees.
To keep competitors from copying the idea, Vanguard filed the plan with the U.S. Patent Office in 2001.
Heartbeat Leader
Vanguard funds made more use of heartbeat trades than those of any other ETF manager, a Bloomberg News analysis of trading data from 2000 to 2018 shows.
Taxes weren’t a big part of the investor pitch. In fact, some observers thought taxes were a drawback to Vanguard’s plan. Investors expect ETFs to be more tax-efficient than mutual funds. Why buy a Vanguard ETF if it might get burdened with the tax bills of its sister mutual fund?
“The fund will exhibit little of the ETF’s characteristic tax efficiency,” one skeptical ETF consultant told Investment Management Weekly in 2004.
In hindsight, it’s clear that those fears were misplaced. Rather than getting dragged into a tax abyss, the ETFs lifted up their sister mutual funds.
Vanguard’s Dialysis Machine
Once an ETF share class was added to a mutual fund, taxable-gain distributions fell to zero while ? non-taxable gains from stock withdrawals shot up.
Although the dialysis machine has attracted little notice outside Vanguard, it has been controversial within the firm, according to two people with knowledge of the matter. Some employees have raised questions about whether it’s appropriate to use ETFs to wipe away capital gains built up years earlier in mutual funds.
“What I can share with you,” Powers said, “is that we have reviewed that topic and feel comfortable with our approach to portfolio management.”
Vanguard’s trading in Monsanto Co. in June showed the dialysis machine in action. The agrochemical giant had agreed to be sold to a German rival for $56 billion in cash, and the Vanguard Total Stock Market Index Fund was one of Monsanto’s biggest shareholders. It had owned shares since the early 1990s and, over the decades, the stock had risen more than 25-fold. That meant Vanguard probably faced a big taxable gain.
On June 4, an unidentified investor pumped $1 billion into the fund’s ETF. Two days later, when Monsanto was scheduled to exit the index, the same investor took $1 billion out.
It looked like a classic heartbeat trade, except it was five times too big. The ETF portion of the fund had only $184 million of Monsanto to get rid of, and no other large stock was leaving the index that day.
The size of the deal makes sense, though, considering that the entire fund had $1.3 billion of Monsanto to unload. The ETF didn’t just dispose of its own small stake in the company—it got rid of most of the mutual fund’s much larger stake as well.
Monsanto Magic
An outsize heartbeat trade in June helped Vanguard remove taxable gains from one of its mutual funds.
Fund flow
? On June 4, 2018, an unidentified investor pumped $1 billion into the fund’s ETF.
? The ETF’s share of Monsanto stock was worth only $184 million.
? Two days later, the day Monsanto was due to exit the index, the same investor took $1 billion out.
? But the whole fund was shedding enough Monsanto to explain the size of the trade.
Thanks to winnings on stocks like Monsanto, the fund reported $6.51 billion of capital gains in 2018. But for the 17th straight year since it got an ETF share class, the fund distributed no taxable gains to investors. The ETF ensured that the vast majority of the gains, $6.49 billion, weren’t taxable. The balance was probably canceled out by tax losses from earlier years.
There are dozens of similar examples of outsize heartbeats in Vanguard ETFs, an indicator of how hard the dialysis machine is working for mutual fund investors. They help explain why Vanguard’s heartbeats are so much bigger than those of other firms. The company has completed heartbeats worth $130 billion since 2004, according to a Bloomberg News analysis based on fund-flow data, compared with $75 billion by BlackRock’s iShares, the world’s largest ETF manager.
In addition to the 14 stock mutual funds that added a dialysis machine, Vanguard has created dozens of new stock investment pools as ETF-mutual fund hybrids. These funds have realized tens of billions of dollars of additional gains without burdening shareholders with taxes.
In some Vanguard funds, heartbeats are so large and frequent they outweigh regular stock withdrawals. The Vanguard Small-Cap Index Fund had about $37 billion of stock withdrawals over the past seven years, about $20 billion of which were from heartbeats, the fund-flow data show.
Vanguard has discussed licensing its hybrid ETF-mutual fund design to other firms, but no deal has come to fruition, according to people with knowledge of the talks. Those that have expressed interest included both index followers and active stock-pickers. United Services Automobile Association licensed the patent but never used it, and Van Eck Associates Corp. once sought regulatory approval for a similar design. Spokesmen for USAA and Van Eck declined to comment.
Phil Bak, CEO of Exponential ETFs in Ann Arbor, Michigan, said he expects other firms to mimic the Vanguard model once the patent expires.
“If you want to operate both vehicles, and you want to transfer some of the tax advantages of an ETF into the mutual fund investors, it’s a very efficient way to do so,” Bak said.
Mario Gabelli, founder of mutual fund manager Gamco Investors Inc., said he’s long called for ending ETFs’ tax advantage over mutual funds. Vanguard may have found a way to level the playing field by using heartbeats, he said, but he’s not tempted to copy it.
“You’re going against the intent of the system and finding ways to manipulate it,” Gabelli said. “It’s not good for confidence in the capital markets, and shame on Vanguard for doing it.”
Methodology: To identify heartbeat trades, Bloomberg News analyzed fund-flow data for 1,578 stock and mixed-asset ETFs on U.S. exchanges. The data was screened to find symmetrical inflows and outflows that occurred within five trading days of each other, were at least three times as large as any flows within the surrounding 40 days, represented more than 1 percent of fund assets, and met other criteria. Not every heartbeat pattern represents a maneuver to shed stocks without incurring taxes, but spot checks show almost all of them occurred in connection with portfolio changes and in years following stock-market gains. The screen identified only the most pronounced heartbeats and didn’t count those that occurred in rapid succession or weren't significantly bigger than adjacent fund flows.
To compute taxable gains in Vanguard’s Dialysis Machine chart, Bloomberg News used the sum of total capital-gains distributions by 13 Vanguard stock funds as a share of net assets, compared with the sum of capital gains realized through in-kind distributions as a share of net assets. The funds are the Total Stock Market, Extended Market, Value, Growth, Small-Cap, Mid-Cap, Small-Cap Value, Small-Cap Growth, European Stock, Pacific Stock, Emerging Markets Stock, Developed Markets and Total International Stock Index Funds. Each began as a mutual fund and later added an ETF share class. The 500 Index Fund was excluded because it had a unique method of generating significant in-kind redemptions prior to the addition of the ETF share class. The Real Estate Index Fund was excluded because it invests in real estate investment trusts that are taxed differently from stocks.
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>>> Cheap ETFs Are Hot, But BlackRock’s Premium Funds Pay the Bills
The world’s largest money manager gets almost half its ETF revenue from higher-cost products aimed at pros.
Bloomberg
May 7, 2019
https://www.bloomberg.com/news/articles/2019-05-07/cheap-etfs-are-hot-but-blackrock-s-premium-funds-pay-the-bills
It’s no secret low-cost ETFs are big business for BlackRock Inc.
Over the past decade, the money manager’s suite of iShares exchange-traded funds has become the most popular on the planet, amassing almost $2 trillion of client assets along the way.
Its behemoth iShares Core S&P 500 ETF charges a management fee of just 0.04 percent of assets per year, or a scant 40 cents per $1,000. You might wonder how BlackRock makes money charging so little. What’s rarely publicized is just how much of ETF profits—the single biggest source of BlackRock’s revenue—comes from its smaller, high-priced offerings.
BlackRock doesn’t disclose how much it earns from individual ETFs, but calculations by Bloomberg show that almost half the company’s ETF revenue comes from its premium-priced products, which are popular with hedge funds and other professional investors. It’s a stark contrast to its biggest rivals, such as Vanguard Group and State Street Corp., which depend primarily on attracting individuals to its low-fee ETFs.
At a time when the fund industry’s seemingly never-ending price war pushes ETF fees closer and closer to zero, relying on high-cost ETFs could be risky. For now, those high-margin ETFs provide a crucial buffer for BlackRock as the industry cannibalizes itself. But BlackRock has that much more to lose if investors abandon them for lower-cost alternatives. If it were to cut ETF fees to match Vanguard across the board, a back-of-the-envelope estimate suggests it could cost the firm upwards of $3 billion in annual revenue.
Note: BlackRock's weighted-average expense ratio is estimated at 0.23%; Vanguard's is estimated at 0.07%
Melissa Garville, a spokeswoman for BlackRock, said in an emailed statement that “iShares is positioned to serve different client types who value different components of the ETF value proposition.”
While BlackRock has introduced a “core” lineup of low-cost funds in recent years for the buy-and-hold set, Ben Johnson, who heads passive-strategy research at Morningstar Inc., says that institutional investors have long preferred its more established and costlier ETFs because they’re easy to trade. “From BlackRock’s point of view, why kill your golden geese?” he says. “A huge chunk of their fee revenue comes from a small portion of their funds. Rather than strip themselves of millions of dollars in revenue” by cutting prices, the firm can keep profiting by maintaining the status quo.
In recent months, a slew of fund providers, including Vanguard and BlackRock itself, have slashed fees in one of the industry’s most aggressive rounds of price cuts to date. One upstart even went as far as to pay investors to buy into its ETF. And Fidelity Investments already offers some traditional index mutual funds with zero fees. While the low-fee push has fueled the passive-investing boom and made it cheaper than ever to own ETFs, providers are paying the price. Fee revenue has declined and profit margins are down, and some companies have eliminated jobs. Shares of the biggest publicly traded asset managers, which were surging toward records in early 2018, are down nearly 30 percent from those highs.
A Little Goes a Long Way
BlackRock's S&P 500 ETF would need over $600 billion in assets to generate the same amount in fees as its costlier emerging-markets offering.
Consider the difference between the firm’s iShares MSCI Emerging Markets ETF, which goes by the ticker EEM, and its iShares Core S&P 500, ticker IVV. With $35 billion in assets, EEM is just one-fifth the size of IVV. Yet the emerging-markets ETF throws off 3.5 times more in fees. That’s because EEM charges 0.69 percent, or $6.90 per $1,000 invested, 17 times what IVV costs.
For the $178 billion S&P 500 ETF to generate as much in fees as its smaller counterpart, it would need to accumulate more than half a trillion dollars. Put another way, for every nickel that EEM takes in, IVV needs a dollar to produce the same amount of revenue.
Cash cows such as these make BlackRock stand out. Of the 879 iShares ETFs tracked by Bloomberg, 393 have expense ratios of 0.4 percent or more. While they account for just one-fifth of iShares assets, the funds are responsible for roughly 48 percent of BlackRock’s total ETF revenue.
State Street and Vanguard are skewed in the opposite direction. State Street gets 48 percent of its ETF revenue from its SPDR funds that have expense ratios of less than 0.2 percent. For Vanguard, it’s more than 90 percent.
So how, exactly, has BlackRock been able to maintain these higher-than-average fees? Part of the answer lies in the sheer scope of its offerings. Want to invest in Russian stocks? State Street and Vanguard have nothing to offer you. But iShares has two Russia-focused ETFs, both of which charge more than 0.6 percent. A large number of BlackRock’s premium-priced ETFs focus on a single country or a specific industry.
And even when the competition has a lower-cost product, iShares ETFs are often still preferred by institutions that buy and sell large amounts of shares. They’re more widely traded, making it easier for hedge funds that want to bet against certain sectors to do so. For example, daily volume for BlackRock’s EEM has averaged more than 60 million shares in the past five years. That’s quadruple the amount of its low-cost competitor, the Vanguard FTSE Emerging Markets ETF. An array of derivatives contracts has also developed around some iShares ETFs, catering to professional traders.
“For the trading crowd, expense ratio is almost meaningless,” says Eric Balchunas, an ETF analyst at Bloomberg Intelligence. “If you have one of these super-liquid ETFs, it’s like a diamond, it’s like having beachfront property. Liquidity is the one thing that makes you immune to the fee war.”
Making More From Higher-Cost ETFs
Fund providers don’t exactly make it easy to figure out where their ETF profits come from. Take, for example, BlackRock’s regulatory filings. You can find how much money has flowed into its funds, but it’s up to the reader to calculate how much each dollar throws off in fees. (BlackRock discloses expense ratios in the fact sheets for its ETFs—but you’d still have to do the math yourself to determine which ones generate the most revenue.)
In the first quarter, BlackRock rebounded from a rocky end of 2018, and reported assets under management rose to $6.5 trillion. Revenue from base fees, however, declined by the most in seven years, regulatory filings show. BlackRock said in its release that the decrease was due primarily to the market swoon in the fourth quarter and the continued appreciation of the dollar.
The risk is that BlackRock could be exposed to bigger revenue declines if investors, both large and small, begin to shift out of its premium-priced ETFs in earnest.
There are signs that’s starting to happen. Total assets of its iShares MSCI Emerging Markets ETF have declined by roughly 12 percent in the past year. (For context, its share price fell a bit more than 4 percent, meaning a significant chunk of the decrease was because of client withdrawals.) Over that same span, assets in the iShares Core MSCI Emerging Markets ETF, ticker IEMG, surged by roughly $10 billion, lifting its assets under management past $60 billion. At 0.14 percent, its expense ratio is just one-fifth the amount for EEM.
“BlackRock is smart to squeeze out the revenue of keeping the bigger, more liquid funds higher-cost for now,” Balchunas says. “But eventually, the cheaper funds will take over.”
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>>> Zero-fee funds cast Fidelity-sized cloud over passive issuers
By Annie Massa, Carolina Wilson and Alexandra Stratton
Bloomberg News
February 11 2019
https://www.financial-planning.com/articles/zero-fee-etfs-from-fidelity-investments-are-elephant-in-the-room-at-inside-etfs-annual-industry-summit
There’s a Fidelity-sized cloud hanging over asset managers gathering at the marquee event for ETFs this week.
After the $2.6 trillion Boston-based behemoth started selling mutual funds without an annual management charge last year, fees — and how to get them — have loomed over the industry. The annual “Inside ETFs” conference in Hollywood, Florida is no exception.
Former San Francisco 49ers quarterback Joe Montana and best-selling author Michael Lewis are among the cast of speakers jazzing up the four-day event, but issuers want to know how to attract new investors — and ideally charge more. Socially conscious, factor-based and actively managed ETFs, which typically carry a higher fee, are all on the agenda.
“The industry has more or less covered most of the major market demand in passive benchmark indexing,” said Sylvia Jablonski, head of capital markets at Direxion, which specializes in leveraged ETFs. “What has been viewed as brilliant innovation for the last decade, is now in some cases showing signs of overcrowding,” she said, adding that “in order to compete, we as issuers need to get creative and practical.”
Fidelity’s move to offer free mutual funds has spurred speculation about when a zero-fee ETF will start trading.
The attention on more specialized products comes as the $3.7 trillion U.S. ETF industry struggles with a harsh reality. Fund fees have tumbled as BlackRock, Vanguard and State Street — the three largest ETF providers — have cut costs in a battle for market share.
While ETFs charge an average of $4.70 per $1,000 invested, some that track broad U.S. equity indexes now charge as little as 30 or 40 cents. And Fidelity Investments’ move to offer free mutual funds has spurred speculation about when, not if, a zero-fee ETF will start trading.
“The asset managers are hoping nobody goes first,” said Todd Rosenbluth, director of ETF research at CFRA Research. “Once the glass is broken, you have to prove your case as to why you’re better than a free product.”
Cue funds that purport to offer a different, or more specific exposure. These products can justify charging more and, depending on their size, can generate more revenue for their issuers.
ESG ETFs for example cost an average $4.40 for every $1,000 in the fund. Factor funds, which pick out qualities that drive potential returns, charge $3.90, while active ETFs, which rely on a portfolio manager’s judgment rather than an index to justify their higher price tag, cost an average of $5.90.
But a recent report from Boston-based research firm Cerulli Associates suggests that some of these funds may be more enticing to fund providers than to investors. While 46% of issuers saw unmet demand for products focused on socially responsible investing, for example, only 17% of financial advisors agreed, its survey showed.
Hedge fund billionaire Paul Tudor Jones, founder of Tudor Investment, will try to win over these ETF users when he discusses his nonprofit JUST Capital, which creates a values-based ranking of companies based on Americans’ priorities — and feeds a $200 million Goldman Sachs ETF. The day after his keynote, another panel will address ESG investing, while others will discuss active management and multi-factor funds.
But with 97% of money flowing into ETFs and index funds that charge $2 per $1,000 or less — and fees only going lower — it will be a slog to convince investors they want to buy products that charge more.
“Lowering fees has a near perfect record of working for ETFs,” said Eric Balchunas, an ETF analyst at Bloomberg Intelligence. “It’s the single biggest driver of flows. It is the mother of all trends.”
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>>> Inexpensive, High-Dividend ETFs to Buy
Todd Shriber
InvestorPlace
March 13, 2019
https://finance.yahoo.com/news/7-inexpensive-high-dividend-etfs-190946673.html
Editor’s note: This story was previously published in September 2018. It has since been updated and republished.
The universe of exchange-traded funds (ETFs) is awash in low-fee products, and the space is growing as issuers reduce their fees to lure investors.
Income-seeking investors do not have to pay up to access high-dividend ETFs. In fact, numerous high-dividend ETFs can be inexpensive, which is an important point for income investors looking to keep more of those dividends and a higher share of their invested capital. High-dividend ETFs are often embraced by long-term investors and over the long-term, lower fees can mean better outcomes for investors.
Over the past several years, data confirm that when it comes to adding new assets, the best ETFs are usually those with annual fees of 0.20% or less. Plenty of high-dividend ETFs fit into that category, making it a cost-effective method for thrifty investors to access broad baskets of dividend stocks.
Here are some high-dividend ETFs, with very low fees, for income-minded investors to consider.
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iShares Core High Dividend ETF (HDV)
Expense Ratio: 0.08%, or $8 annually per $10,000 investment
Many high dividend ETFs weight components by yield, a strategy that has some drawbacks. Those disadvantages include vulnerability to rising interest rates and the potential for exposure to financially challenged companies that may have trouble maintaining and growing dividends.
The iShares Core High Dividend ETF (NYSEARCA:HDV) has a 12-month dividend yield of 3.03%, which is well above the S&P 500 and 10-year Treasuries. However, this high-dividend ETF follows the Morningstar Dividend Yield Focus Index, which screens companies for financial health, giving the fund a quality look.
With an annual fee of just 0.08%, HDV is one of the cheaper high dividend ETFs on the market today. That low fee coupled with its sector allocations make HDV ideal for conservative investors. The healthcare, consumer staples, telecom and utilities sectors, four of HDV’s top five sector weights, can all be considered defensive groups.
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SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
Expense Ratio: 0.08%
The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) is one of the least expensive dividend ETFs on the market, high dividend or otherwise. The ETF tracks the S&P 500 High Dividend Index, the high-dividend offshoot of the traditional S&P 500.
SPYD’s yield requirement gives this high-dividend ETF a focused roster of just 80 stocks, but the 12-month dividend yield of 4.65% makes this high-dividend ETF appealing for income investors relative to standard broad market funds.
SPYD relies heavily on high income sectors that have shown historical vulnerability to rising interest rates — a trait to keep in mind in the current market environment. The real estate and utilities sectors combine for almost 35% of this high dividend ETF’s weight.
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Vanguard High Dividend Yield ETF (VYM)
Expense Ratio: 0.06%
Home to $22.72 billion in total net assets, the Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is one of the largest dividend ETFs of any variety. It is not unreasonable to believe that VYM’s name frames the fund as a high-dividend ETF, but a yield of 3.44% is not alarmingly high.
More importantly, VYM is not overly dependent on rate-sensitive sectors. This high-dividend ETF features no real estate exposure and the bond-esque telecom and utilities sectors combine for just 12.80% of VYM’s weight.
A quarter of the fund’s holdings hail from the industrial and healthcare sectors. Financials, a sector that has been a major driver of S&P 500 dividend growth over the past year, is this high dividend ETF’s largest sector exposure at 15.3%.
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JPMorgan U.S. Dividend ETF (JDIV)
Expense Ratio: 0.12%
The JPMorgan U.S. Dividend ETF (NYSEARCA:JDIV) is one of the youngest funds on this list, having debuted in late 2017, but it fits the bill as a cost-effective, high-dividend ETF. JDIV “utilizes a rules-based approach that adjusts sector weights based on volatility and yield and selects the highest yielding stocks,” according to the issuer.
With a 12-month yield of 4.07%, JDIV has high-dividend ETF credentials. JDIV’s annual fee of 0.12% is quite low.
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>>> Largest Mutual Funds Give Loyal Shareholders Unwanted Capital Gains Distributions
Yahoo Finance
January 2, 2019
This article was originally published on ETFTrends.com.
https://finance.yahoo.com/news/largest-mutual-funds-loyal-shareholders-161318769.html
Mutual fund investors that got hit by the market pullback in 2018 will likely take another blow as many funds distribute capital gains. On the other hand, exchange traded funds will be able to highlight their tax efficient nature.
Mutual funds must distribute all their realized capital gains or profits on securities sold during the year. Mark Wilson of Mile Wealth Management and proprietor of CapGainsValet.com pointed out that as of the end of November, 517 funds announced they will pay at least 10% of net assets as taxable gains, and he projected that 531 funds will pay such large taxable distributions by year end, writes Jason Zweig for the Wall Street Journal.
Among the most widely held or largest active mutual funds on the market, the Fidelity ContraFund (FCNTX) showed a 7.2% capital gains distributions based off its most recent December long-term capital gain per share distribution and reinvestment price. Additionally, the Vanguard Wellington Fund Admiral Shares (VWENX) had a 6.4% distribution, The Growth Fund of America (AGTHX) had a 11.8% distribution, The Income Fund of America (AMECX) had a 7.5% distribution and Dodge & Cox Stock Fund (DODGX) had a 6.8% distribution.
In a year marked by volatility, investors have dumped active funds and turned to index-based funds. Active fund managers needed to sell off much of their portfolios to pay out the departing clients, and they are running out of holdings to sell at a loss to offset gains for tax purposes. Consequently, the liquidated positions can create a taxable gain, which is then dividend among the mutual fund investors whom are still sticking around.
On the other hand, ETFs are expected to distribute fewer meaningful capital gains this year, with only two ETFs from the largest fund sponsors expected to dish out cap-gains distributions of greater than 10% and most ETFs not expected to distribute any capital gains at all, writes Adam McCullough for Morningstar.
ETFs are typically viewed as a more tax efficient investment vehicle when compared to mutual funds because ETFs usually enact lower turnover strategies than actively managed funds, which diminishes realized capital gains and makes capital gains distributions less likely, and the ETF investment vehicle enjoys the structural benefits of so-called in-kind transactions where redemptions are conducted through tax-free transactions of ETF shares for a basket of underlying securities.
As of early December, 15 ETF providers published capital gains estimates for the year, including BlackRock's iShares, Vanguard, State Street Global Advisors, Invesco or formerly PowerShares, Charles Schwab, First Trust, WisdomTree, VanEck, PIMCO, DWS or formerly Deutsche Asset Management, Fidelity, Goldman Sachs, Global X and OppenheimerFunds.
These 15 fund sponsors represented 1,290 ETFs and $3.4 trillion in assets under management. Of the ETFs in question, 74 or only 5.7% of the total are expected to distribute capital gains for 2018. Furthermore, the percentage of ETFs distributing capital gains is lower than the estimated distribution in both 2017 of 7.7% and 2016 of 7.0%. Only 14 of the 1,290 ETFs this year is expected to show capital gains distributions of over 2% of the fund’s NAV as of the end of November.
ETFs are not immune to capital gains distributions. Some fund strategies typically exhibit a greater likelihood of capital gains distributions. For example, currency-hedged strategies have a higher proportion of funds that distribute capital gains due to the underlying currency swaps. There are several defining characteristics that make some ETFs more prone to issue capital gains. Specifically, ETFs that use derivatives that periodically reset are susceptible to capital gains distributions, which usually includes currency-hedged strategies. Additionally, bond funds can also be more susceptible as funds must sell bonds upon maturity, which can result in a gain.
"Most ETFs, especially those that track broadly diversified, market-cap-weighted indexes, are very tax-efficient. Exchange-traded funds that move beyond the area of plain-vanilla may be more susceptible to capital gains distributions. Tax-conscious investors would do well to understand the tax implications of more complex ETF strategies, and scrutinize the tax record of these strategies before investing," McCullough said.
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Transportation ETF (IYT) Top 10 holdings -
Top 10 Holdings (68.98% of Total Assets)
Name Symbol % Assets
FedEx Corp FDX 12.82%
Norfolk Southern Corp NSC 9.53%
Union Pacific Corp UNP 8.57%
United Parcel Service Inc Class B UPS 6.46%
JB Hunt Transport Services Inc JBHT 5.95%
Landstar System Inc LSTR 5.88%
United Continental Holdings Inc UAL 5.17%
C.H. Robinson Worldwide Inc CHRW 5.01%
Kansas City Southern KSU 4.91%
Expeditors International of Washington Inc EXPD 4.68%
SPDR Kensho Clean Power ETF (XKCP) -
>>> Top 10 Holdings (39.70% of Total Assets)Get Quotes for Top Holdings
Name Symbol % Assets
Tesla Inc TSLA 4.40%
The AES Corp AES 4.34%
NextEra Energy Inc NEE 4.03%
Sempra Energy SRE 4.02%
New Jersey Resources Corp NJR 3.91%
Enbridge Inc ENB.TO 3.86%
Consolidated Edison Inc ED 3.83%
Sunrun Inc RUN 3.81%
Ormat Technologies Inc ORA 3.79%
ALLETE Inc ALE 3.71%
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