Tag Archives: ETF

Business, Finance, Occupation & Industry

The 1 Biotech Stock Warren Buffett Should Buy

Leave a comment

By Sean Williams, The Motley Fool

Filed under:

The biotechnology sector can be a land of immense spoils and incredible heartbreak. It’s not uncommon to see small and midsized biotech companies swing wildly in each direction because of clinical trial data or a decision by the Food and Drug Administration.

Pros and cons of owning biotech stocks
Last month I presented my case for how the typical long-term investor could use biotech stocks to their advantage. My suggestions entailed focusing on companies with established pipelines, selecting clinical-stage companies that were running a large number of trials with multiple partnerships, or buying a biotech ETF that would take a lot of the guesswork out of your purchase and spread out your risk among a number of companies.

Conversely, my Foolish cohort Brian Orelli last week presented his three reasons a long-term buy-and-hold investor like Warren Buffett would never buy a biotech company. Brian noted that Buffett’s unwillingness to follow a biotech’s upcoming pipeline, biotechs’ wild valuation fluctuations, and their often small size, would make them unlikely candidates to grace Berkshire Hathaway‘s  portfolio, which is usually looking for heavy hitters to help “move the needle,” as Brian put it.

The Buffett factor
To date, Warren Buffett and Berkshire Hathaway have been very conservative with their health-care investments, opting to own shares of some of pharma’s biggest names, including Johnson & Johnson, GlaxoSmithKline, and Sanofi.

But, with all due respect to Brian, I think Buffett is missing a crucial piece of the puzzle in his investment portfolio, and that missing piece is a biotechnology investment.

The way I see it, in its simplest form, Buffett values three things: business sustainability, growth, and income. Let’s have a look at how these three values might play into the biotech sector, and ultimately, what biotech company Buffett would be foolish to pass up.

Sustainability
By sustainability, what I’m really focusing on is an established pipeline of drugs already in existence. This would mean that many companies that have one or two drugs approved by the FDA and have the remainder of their pipeline currently in trials wouldn’t fit the bill. Warren Buffett has the “set-it-and-forget-it” type of investing style that only sustainable and established pipelines would satiate. Two names in particular that come to mind here are Amgen and Biogen Idec .

Amgen’s current portfolio should put a gleam in Buffett’s eyes, as it currently boasts 10 separate FDA-approved drugs. Headlining Amgen‘s portfolio is the combination of Neulasta and Neupogen, which both treat neutropenia, a condition in which the body lacks white blood cells because of cancer treatments or a bone marrow transplant. These two drugs delivered 3% organic growth last year and contributed to $5.2 billion of Amgen’s $15.3 billion in product sales. At the lower end of Amgen’s product portfolio, its two newest drugs contributed triple-digit growth. Xgeva, which was approved in 2010 to treat patients with bone fractures or bone pain in instances where cancer has spread to …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Easy and Critical Diversification for Your Portfolio

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some international stocks to your portfolio, the iShares Core MSCI Total International Stock Index ETF  could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF‘s expense ratio — its annual fee — is a very low 0.16%, and it recently yielded 3.3%. The fund is fairly small, too, so if you’re thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too new to have a sufficient track record to assess. But as it contains more than 3,000 of the world’s biggest companies, we can expect it to generally move in line with the overall world market, though not matching its returns exactly. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why international companies?
It’s a smart idea to diversify your holdings not only by market size and industry, but also geographically. If the U.S. economy stalls or slides, other economies may still be performing well and could help offset losses in your portfolio. Many of the companies in this ETF are quite large and pay dividends. That should be welcome, as dividends can be quite powerful. Internationally reaped ones can be a little more complicated than domestic ones, though.

More than a handful of international companies had strong performances over the past year. australia-based Westpac Banking , for example, soared 54% — and still yields a fat 5.4%. It’s been hampered, though, by the slowdown in China, as China uses many commodities produced by australia. Some worry about a housing slowdown hurting the company, too.

U.K.-based alcoholic-beverage specialist Diageo , meanwhile, jumped 32%, as it invests more in China and introduces is Alexander & James e-commerce website. The company is financially strong and growing both its revenue and dividend, and aiming to turbocharge its growth via emerging markets.

Spain-based Banco Santander gained 12% and recently yielded 9.3% as well. It has been hurt by troubles in Europe, but the company actually does a lot of its business in Latin America, where it benefits from faster economic growth rates, such as Brazil‘s. It may be a while before all its operating regions are healthy, but while investors wait, they can collect a hefty payout — which, even if halved, would still be significant. Some value-oriented investors see it as undervalued as well.

Other companies didn’t do as well last year but could see …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

These Gambling Stocks Can Pay Off

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some gambling-oriented stocks to your portfolio, the Market Vectors Gaming ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Market Vectors ETF‘s expense ratio — its annual fee — is a relatively low 0.65%. The fund is very small, too, so if you’re thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has performed reasonably, beating the world market over the past three and five years. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why gambling?
No matter whether you approve or don’t, casinos and gambling seem to be here to stay, and the games they offer are designed to make gamblers lose, overall, while the house wins. Not all casino companies are the same, though, so you should choose carefully, or invest in a big bunch via a fund such as this one. Note, though, that the traditional gambling industry is being threatened by the rise of online gambling.

More than a handful of gambling-focused companies had strong performances over the past year. Melco Crown Entertainment surged 62%, and is near its 52-week high. Thus, with a forward P/E now above 21, it’s priced for perfection. Its City of Dreams casino on Cotai has been performing well in a great location, and its projects under way include one in the Philippines.

Las Vegas Sands gained 2%, and recently yielded 2.5%. It’s also looking richly valued. The company seems to have violated some international corruption laws, though that might not be that big a problem. It’s profitable, and its free cash flow has been growing in recent years. With properties in Las Vegas not performing as well as in the past, this company and many of its peers are looking to Asia for their future growth.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. MGM Resorts shed 10%, facing some tough headwinds that include a massive and growing debt burden. It’s pinning a lot of hope on a Cotai casino under construction, but that isn’t scheduled to open until 2016.

Another good way to profit off of gambling’s growth is to invest in the companies that equip the casinos, such as International Game Technology . Down about 1% over the past year, it recently upped its dividend by 14%, and yields about 1.9%. Better …read more

Source: FULL ARTICLE at DailyFinance

Articles of Interest

Bank Of Japan Launches ‘Unprecedented’ $1.4 Trillion Stimulus Package

Leave a comment

By The Huffington Post News Editors

* BOJ changes policy target to base money from interest rates
* Combines bond-buying schemes, targets JGBs across curve
* BOJ to double JGB, ETF holdings in 2 years
* Kuroda get unanimous support from BOJ board
* Kuroda says took all steps BOJ could think of
By Leika Kihara and Stanley White
TOKYO, April 4 (Reuters) – The Bank of Japan unleashed the world’s most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.
New Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.9 trillion) by the end of 2014 in a shock therapy to end two decades of stagnation.
The U.S. Federal Reserve may buy more debt under its quantitative easing, but with the Japanese economy about one-third of the size of the United States, the scope of Kuroda’s “Quantitative and Qualitative Monetary Easing” is unmatched.
“This is an unprecedented degree of monetary easing,” a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
“We took all available steps we can think of. I’m confident that all necessary measures to achieve 2 percent inflation in two years were taken today,” he said.
One of those steps was to abandon interest rates as a target and become the only major central bank to primarily target the monetary base — the amount of cash it pumps out to the economy. It adopted a similar policy in 2001-2006, but not on this scale.
The scope of the changes Kuroda pushed through, and the fact he secured unanimous board support for them, drove …read more

Source: FULL ARTICLE at Huffington Post

Business, Finance, Occupation & Industry

SSgA Partners with GSO / Blackstone to Bring First Actively Managed Senior Loan ETF to Market

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

SSgA Partners with GSO / Blackstone to Bring First Actively Managed Senior Loan ETF to Market

Offers Clients Potential Diversification Opportunities for Fixed Income Portfolios

BOSTON–(BUSINESS WIRE)– State Street Global Advisors (SSgA)*, the asset management arm of State Street Corporation (NYS: STT) , today announced that the SPDR Blackstone / GSO Senior Loan exchange traded fund (ETF) (Symbol:SRLN) began trading on the NYSE Arca on April 4, 2013. Developed by SSgA and GSO Capital Partners LP, the global credit business of The Blackstone Group L.P. (NYS: BX) , one of the world’s largest alternative asset managers, the SPDR Blackstone / GSO Senior Loan ETF is the first actively managed ETF to provide exposure to senior loans.

“Given the high turnover of senior loans and the critical importance of credit selection, we believe an active strategy provides a key advantage to investors who want access to this corner of the market. Blackstone / GSO’s rigorous approach and disciplined credit analysis made them an obvious choice to help us bring this product to clients and we are excited about the partnership,” said James Ross, senior managing director and global head of SPDR Exchange Traded Funds at SSgA. “The SPDR Blackstone / GSO Senior Loan ETF is the latest example of our commitment to developing ETFs that democratize access to institutional asset classes, strategies and expertise.”

The ETF is designed to seek high current income, preserve capital, and outperform the Markit iBoxx USD Liquid Leveraged Loan Index and the S&P/LSTA U.S. Leveraged Loan 100 Index. Usually rated below investment grade, it is typical in the loan market to expect that 30 to 35 percent of loans will fall out of the index in any given year, so the ability to anticipate and react quickly to changes in the market through an active strategy is potentially advantageous.

“SSgA is a pioneer in the ETF market and we are pleased to join them in bringing the first actively managed senior loan ETF to investors,” said Lee Shaiman, managing director, The Blackstone Group. “Together we bring significant expertise to the asset class in a transparent and accessible product for all investors.”

Potential Benefits of SRLN

Business, Finance, Occupation & Industry

Make Money in Strong-Potential Tech Stocks the Easy Way

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some technology-heavy stocks to your portfolio, the iShares S&P Global Technology Sector Index Fund could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF‘s expense ratio — its annual fee — is a relatively low 0.48%.

This ETF has outperformed the world markets over the past five years, but slightly underperformed them over the past decade. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why technology?
Our growing world population will demand more and better high-tech products and services over time, boosting the business of successful technology-oriented companies.

More than a handful of technology-oriented companies had strong performances over the past year. Visa and MasterCard surged 42% and 25%, respectively. Both have been threatened by the growth and potential of mobile and electronic payments, but both have been investing in these areas as well. Visa is the leader in its realm, and is considering buying Visa Europe. MasterCard, meanwhile, is a stronger cash-flow generator and is enjoying strong growth in emerging markets.

Texas Instruments  up 8%, has investors bullish about its strong cash flow and its growing attention to industrial applications for its technology. The company is bullish on itself, too, recently hiking its dividend payout by a whopping 33%, so that it now yields about 3.2%. It’s also boosting its multibillion-dollar share buyback program, which isn’t necessarily good news, as its shares don’t seem that cheap right now.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. EMC , for example, shed 21%, in part due to weak near-term guidance in an environment of low IT spending. Still, many see it poised to gain from the rapidly growing cloud-computing and “Big Data” arenas. The company also holds an 80% ownership stake in virtualization specialist VMware, though VMware’s dominance in its market may mean slower growth in the future.

The big picture
Demand for technology isn’t going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies — and make investing in and profiting from it that much easier.

To learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy, check out The Motley Fool’s special free report “3 ETFs Set to Soar During the Recovery.” Just click here to access it now.

The …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

China's Mixed Message for Gold

Leave a comment

By Doug Ehrman, The Motley Fool

2012 Chrysler 300 S

Filed under:

China‘s Purchasing Managers Index rose last month, with a March reading of 55.6 relative to the February reading of 54.5; remember, a reading above 50 indicates expansion and is usually deemed positive for the economy. The rise was led by a 4.5 point increase in the construction sub-index to achieve a March level of 62.5. While the increase is a positive indicator for the Chinese economy, the level rising less than expected mirrored both U.S. and eurozone reports.

While the expansion indicates a move toward increasing stability for the Chinese economy, and thus the global economy – a bearish factor for gold – the fact that the reading came in below expectations provides some support for the commodity. Perhaps tipping the scale is the fact that weaker than expected growth in China is bullish for the U.S. dollar. On a short-term basis, positives for the dollar tend to have an immediately negative impact on gold. Gold, as represented by the SPDR Gold Trust , suffered its worst loss in several weeks during Tuesday’s session.

Mixed signals
With industrial production numbers coming in weaker than expected across the globe, you might think that this sign of weakness for the global economy would be seen as positive for precious metals. The market has interpreted softening PMI numbers, however, as a sign that industrial demand for the metal may contract. This element of demand has played a critical role in supporting precious metals prices over the past several weeks.

Behind the expansion in the Chinese construction numbers is the $150 billion in approved infrastructure projects that the government is using to combat slowing growth. While still booming by most Western standards, China‘s GDP growth fell to 7.8% for 2012 – this represents its lowest level in 13 years. Again, while slowing global GDP growth is typically listed as a bullish sign for precious metals, the bearish factors are winning the day of late.

Chinese weakness and muted inflation concerns have been positive for the dollar and negative for gold. In a recent research note, Michael Haigh and Patrick Legland of Societe Generale noted: “inflation has so far stayed low (U.S. inflation has been trending lower since late 2011) and now we are beginning to see: 1) the economic conditions that would justify an end to the Fed’s QE; 2) fiscal stabilization that has passed its inflection point; and 3) a US dollar that has begun trending higher.” The pair shares one of the most bearish views of gold on the street.

Looking ahead
Where the GLD has been weak, gold miners like Goldcorp and Barrick Gold have been even weaker. Year to date, the ETF is down roughly 6.5% and both miners have fallen double digits. Goldcorp, which recently announced the closing of a $1.5 billion note offering to help fund its ballooning operating costs, will release first-quarter earnings on May 2. Barrick, recently announced negative operating results for the entirety of 2012, again on rising …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

EFV: Large Outflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares MSCI EAFE Value Index Fund (AMEX: EFV) where we have detected an approximate $19.9 million dollar outflow — that’s a 1.1% decrease week over week (from 38,000,000 to 37,600,000). …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

QLD, ALTR, ADI, ADSK: Large Outflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Proshares Ultra QQQ (AMEX: QLD) where we have detected an approximate $27.7 million dollar outflow — that’s a 5.1% decrease week over week (from 8,775,000 to 8,325,000). Among the largest underlying components of QLD, in trading today Altera Corp. (NASD: ALTR) is off about 0.4%, Analog Devices, Inc. (NASD: ADI) is down about 0.2%, and Autodesk Inc. (NASD: ADSK) is lower by about 1.1%. For a complete list of holdings, visit the QLD Holdings page » …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

IEV: Large Outflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares S&P Europe 350 Index Fund (AMEX: IEV) where we have detected an approximate $24.1 million dollar outflow — that’s a 1.9% decrease week over week (from 31,500,000 to 30,900,000). …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

These Stocks Can Transport Your Portfolio

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some transportation stocks to your portfolio, the iShares Dow Jones Transportation Average ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF‘s expense ratio — its annual fee — is a relatively low 0.47%.

This ETF has performed well, beating the world market over the past three and five years. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why transportation?
Transportation is something of a staple, as we’ll always need to move ourselves and other things here and there. Better still, our global economies are starting to pick up, which means that companies will be shipping more products, boosting the industry.

More than a handful of transportation companies had strong performances over the past year. Norfolk Southern surged 20%, recently hitting a 52-week high. It yields 2.6%, and has hiked its payout by an annual average of more than 11% over the past five years. Like other railroads, it’s been hit by lower coal volumes, as low natural gas prices have led to shrinking coal demand. It’s positioning itself for the future, though, investing heavily in capital projects.

CSX , another railroad company, rolled ahead 17%. It, too, has been whacked by weakness in coal, but coal is likely to remain in demand internationally, and coal exports have been increasing. CSX is geographically well positioned to benefit from such exports, with its access to Eastern and Gulf Coast ports. The stock recently yielded 2.3%, and it has been aggressively upping its payout.

United Parcel Service delivered a 9% gain and yields 2.9%. The delivery giant has seen its performance falter, in part due to massive pension-related write-offs. It also recently agreed to fork over a $40 million settlement in relation to an investigation into packages it delivered for illegal online pharmacies. (The packages it delivers for legitimate online businesses, such as Amazon.com and eBay, though, have contributed significantly to its growth.) Meanwhile, the company has committed to hiring 25,000 veterans, and it stands to benefit if Congress continues hobbling the Post Office.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. Expeditors International shed 22%, serving transportation companies with its logistics services. In its fourth-quarter earnings report, the company posted disappointing results due to a weak air freight market. Bulls admire its expertise, organic growth, and global reach, but bears are irked by its …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

IQ Hedge Multi-Strategy Tracker ETF (QAI) Marks 4-Year Anniversary; First Hedge Fund Style ETF is Al

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

IQ Hedge Multi-Strategy Tracker ETF (QAI) Marks 4-Year Anniversary; First Hedge Fund Style ETF is Also Industry’s Largest Alternative ETF


IndexIQ continues to roll out innovative, next-generation alternative funds

RYE BROOK, N.Y.–(BUSINESS WIRE)– The IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), the first hedge fund style ETF and the industry’s largest alternative exchange-traded fund, celebrated its fourth anniversary on March 25th, according to the fund’s sponsor, IndexIQ, a leading developer of index-based alternative investment solutions.1

“The introduction of QAI in 2009 marked a real turning point in the marketplace,” said Adam Patti, chief executive officer at IndexIQ. “For the first time, investors and their advisors were able to have access to a hedge fund-like strategy in an ETF, with all the advantages that fund structure entails -low costs, high liquidity, and full transparency. This was the first step in our journey towards ‘democratizing’ alternative investing.”

QAI seeks to track, before fees and expenses, the performance of the IQ Hedge Multi-Strategy Index. The Index attempts to replicate the risk-adjusted return characteristics of hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets.

In the four years since its launch, QAI has gathered over $350 million in assets, more than any other single liquid alternative ETF. IndexIQ has followed up on this success by launching several additional liquid alternative ETFs, including IQ Hedge Macro Tracker ETF(NYSE Arca: MCRO), the first Global Macro/Emerging Markets hedge fund replication ETF; IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first merger arbitrage ETF; IQ Global Resources ETF (NYSE Arca: GRES), the first hedged global natural resources ETF; and IQ Hedge Market Neutral Tracker (NYSE Arca: QMN), designed to provide Market Neutral hedge fund exposure.

The IQ Hedge Indexes are used as the basis for investment products worldwide, and as benchmarks for advisors to determine how well actively managed hedge funds and alternative mutual funds are performing. The indexes underlie a variety of investment products including in addition to ETFs, including mutual funds, separately managed accounts, model portfolios, and institutional accounts.

In addition to the alternative products, other IndexIQ funds include:

Business, Finance, Occupation & Industry

How Reverse Splits Can Mask Big Losses

Leave a comment

By Dan Caplinger, The Motley Fool

Filed under:

Exchange-traded funds have given millions of investors an easy and inexpensive way to invest for the long run. But if you play in the leveraged-ETF space, which has become extremely popular among short-term traders, holding on to fund shares over the long haul has been hazardous to your financial health.

Why you have to watch leveraged-ETF share prices closely
Last month, leveraged ETF specialist Direxion announced that 16 of its funds would do share splits. Effective today, half of those funds have completed ordinary share splits, where one share of stock has turned into two or three new shares, each worth a half of a third of their former price. The other eight funds did reverse splits, where multiple shares of old stock will be converted to a single new share, with its price adjusted upward to keep the overall value constant.

Regardless of their direction, the various splits won’t affect how much your leveraged ETF holdings are worth. But what they do accomplish is keeping the prevailing share price within a fairly well-established range that’s comfortable for the traders who use them. Keeping prices not so high as to make them illiquid yet not so low as to make them imprecise is an art, but the split activity seeks to accomplish that balancing act.

How splits mask long-term returns
The problem, though, is that to the casual observer, splits and reverse splits make it seem as though share prices of leveraged ETFs stay in a relatively consistent range. But over the long haul, that hasn’t been the case. The declines in losing leveraged ETF bets have outpaced the gains in others, and in some cases, both bullish and bearish ETFs covering the same sector have produced losses for investors.

You can get one hint of the overall negative bias just by looking at the split ratios. The eight funds doing regular splits are using 2-for-1 or 3-for-1 ratios. But among the reverse-splitting funds, those ratios range from 1-for-3 all the way up to 1-for-6.

The losses that many of those funds have suffered make such extreme reverse splits necessary. In just the past year, Direxion Daily Gold Miners Bull 3x has lost more than 65% of its value, while Direxion Energy Bear 3x was down 45%, with the two funds splitting 1-for-5 and 1-for-6, respectively.

More broadly, funds that bet against the stock market‘s run have been hit hard. Direxion Daily Small-Cap Bear 3x is down by almost half over the past year, after a similar drop from April 2011 to April 2012 and even more dramatic declines during the first two years of the market‘s recovery.

Proponents of the funds note that in some cases, ETF pairs have reacted in much the way you would expect. With financial stocks having moved almost straight up over the past year, the popular Direxion Daily Financial Bull 3x rose more than 50%, even as the bearish …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Sleep Soundly With These Investments

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some socially responsible stocks to your portfolio, the iShares MSCI Select Socially Responsible ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF‘s expense ratio — its annual fee — is a relatively low 0.50%. The fund is on the small side, so if you’re thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has underperformed the S&P 500 over the past three and five years, though it’s handily topping it so far this year. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why socially responsible?
More than a handful of socially responsible companies had strong performances over the past year. Eaton surged 29%, with the power management company shifting its focus from international projects to more U.S.-based ones. Management recently projected revenue growth of 42% in 2013 and that operating earnings will set a record. Eaton has also started seeing its inventories of heavy equipment start to shrink, which is promising. Goldman Sachs recently recommended the stock, but Fool contributor Rich Smith would steer clear, due to Eaton’s debt and valuation. Among many environmental initiatives, the company has reduced its greenhouse gas emissions by 26% since 2006.

Procter & Gamble gained 19%. The company has been struggling in recent years that featured anemic revenue growth and, until this past year, shrinking earnings. Its strong second quarter was in large part due to cost-cutting, with promises of innovation-driven growth ahead. Among many socially responsible initiatives, it has been cutting its energy and water use and reducing its waste output as well — in all cases by double-digit percentage rates over the past few years.

Aerospace and defense electronics specialist Rockwell Collins advanced 12%, recently hitting a 52-week high. Due to possible and actual cutbacks in military spending, the company has been shifting more of its attention to the commercial arena and has shrunk its workforce some, too, due to sequestration effects. The company has laid out its sustainability goals, such as a 15% reduction in greenhouse gases and issues regular reports on its progress.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. Natural gas specialist Spectra Energy gained 2%, for example. The company has been inking some promising …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

BND: Large Outflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Vanguard Total Bond Market ETF (AMEX: BND) where we have detected an approximate $66.8 million dollar outflow — that’s a 0.4% decrease week over week (from 215,123,018 to 214,323,018). …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

GDX, ABX, GG, NEM: Large Outflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Gold Miners ETF (AMEX: GDX) where we have detected an approximate $100.8 million dollar outflow — that’s a 1.3% decrease week over week (from 198,552,500 to 195,902,500). Among the largest underlying components of GDX, in trading today Barrick Gold Corp. (NYSE: ABX) is off about 1.1%, Goldcorp Inc (NYSE: GG) is off about 0.7%, and Newmont Mining Corp. (NYSE: NEM) is lower by about 0.7%. For a complete list of holdings, visit the GDX Holdings page » …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

IBB, AMGN, CELG, ALXN: Large Inflows Detected at ETF

Leave a comment

By ETFChannel.com

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Nasdaq Biotechnology Index Fund (NASD: IBB) where we have detected an approximate $48.0 million dollar inflow — that’s a 1.9% increase week over week in outstanding units (from 15,900,000 to 16,200,000). Among the largest underlying components of IBB, in trading today Amgen Inc (NASD: AMGN) is up about 0.8%, Celgene Corp. (NASD: CELG) is up about 1.5%, and Alexion Pharmaceuticals Inc. (NASD: ALXN) is up by about 1.2%. For a complete list of holdings, visit the IBB Holdings page » …read more
Source: FULL ARTICLE at Forbes Markets

Business, Finance, Occupation & Industry

If Warren Buffett Were an ETF Investor

Leave a comment

By Nicole Seghetti, The Motley Fool

Filed under:

Billionaire and superinvestor Warren Buffett knows a good deal when he sees one. Not only does he boast enviable power to cut a great deal but also unparalleled financial resources to do so. In his decades of investing, Buffett has concentrated on stocks as his securities of choice. But if he were to stray from his first love and flirt with exchange-traded funds, what ETFs might he find himself tempted by?

Wish list
In observing Buffett, we know that he likes simple businesses with proven business models, essentially companies that he can hold in his portfolio forever. And the man likes good value. After all, he’s a value investor who salivates over a juicy spread between a stock‘s current price and its intrinsic value.

So let’s take a look at a few ETFs that could be considered Warren-worthy and examine why each of these might rouse a twinkle in his eye.

SPDR Dow Jones Industrial Average ETF
Without a doubt, Warren Buffett is a blue-chip stock investor. According to his most recent annual shareholder letter, Berkshire Hathaway holds multibillion dollar positions in five of the 30 companies that make up the Dow Jones Industrial Average. These include corporate bellwethers IBM and Procter & Gamble, which have existed for a combined 277 years,  through countless wars, recessions, and natural disasters. In fact, IBM and P&G make up more than 15% of this State Street SPDR Dow Jones Industrial Average ETF.

As a man who likes to save his pennies, Buffett would applaud this ETF‘s low annual expense ratio of 17 basis points. Even though he doesn’t favor returning money to his own Berkshire shareholders in the form of dividends, he’d likely find this ETF‘s 2.4% dividend yield fairly enticing. Since he also likes companies that boast a long track record of success and have tenure in the business, he’d probably approve of this ETF, as it’s traded for 15 of the 20 years that ETFs have existed.

Consumer Staples Select Sector SPDR ETF
Buffett’s proclaimed love of Cherry Coke and hamburgers indicate that he’s a man of simple tastes. This ETF tracks an index that includes companies from some of his favorite industries, like food and beverage, staples retailing, household goods, and personal products. His recent H. J. Heinz deal proves his affection for savory pleasures, both for the taste buds and the bank account.

Buffett owns billions of dollars of both consumer staples heavyweights Coca-Cola and Wal-Mart stocks, which comprise 10% and 8%, respectively, of the Consumer Staples Select Sector SPDR ETF. This ETF boasts an attractively low annual expense ratio of 18 basis points and also pays a generous 2.8% dividend yield. Considered longevity in the ETF world, this particular fund has existed since 1998.

iShares Dow Jones US Financial Sector ETF
In the depths of the financial crisis, Buffett was called upon to help out some very big banks. In exchange, he received sweetheart deals that small-fry investors like you and me …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

What Wall Street Doesn't Want to Tell You

Leave a comment

By Dan Caplinger, The Motley Fool

Filed under:

Wall Street wants to keep some secrets from you. So far, professional money management companies haven’t managed to convince regulators to allow them to withhold valuable information from investors. But, with more companies seeking the ability to keep their proprietary trade secrets confidential, it’s likely only a matter of time before investors could lose one of the most groundbreaking and transparent investment vehicles ever.

Mutual fund giant Eaton Vance recently filed a request with the Securities and Exchange Commission that would allow it to create a new type of exchange-traded fund. Dubbed exchange-traded managed funds, these ETFs would be exchange-traded equivalents of existing actively managed traditional mutual funds that the fund manager already oversees. Eaton Vance is even hoping to earn licensing revenue by extending the practice to active mutual funds managed by other fund companies.

The catch, though, is that Eaton Vance doesn’t want to follow the traditional practice of disclosing these new active ETFs’ holdings on a daily basis. Given that one of the biggest benefits of ETFs has been their transparency, should the SEC approve Eaton Vance‘s request?

The strange gulf between mutual funds and ETFs
At first glance, it doesn’t make sense why disclosure rules for ETFs would be any different than for traditional mutual funds. With mutual funds being able to disclose their holdings as infrequently as once every quarter, active managers are able to keep their portfolio holdings secret over long periods of time, and manage their exposure at every quarter-end to obscure what may have been their true strategy throughout most of the quarter. Why shouldn’t ETFs be allowed to do the same thing?

The reason for disclosure has to do with the mechanics behind ETFs. Large institutional investors routinely create or redeem large blocks of ETF shares, helping to provide liquidity that makes trading in ETFs more efficient, and also taking advantage of occasional arbitrage opportunities that, in turn, keep prices relatively close to the true value of the ETF‘s underlying assets. ETFs are required to tell those institutional investors what stocks are in the fund’s official basket of investments for purposes of creating new ETF shares. Most of the time — though not always — those official baskets reflect the broader holdings of the ETF.

Why active ETFs haven’t grown faster
Daily disclosure is a problem for active managers, though, because they don’t want their every investment move exposed to the general public. With many funds being large enough to have market-moving influence, especially on smaller, less-liquid stocks, it’s impossible to build up or sell off a position in a particular stock in a single day. Under daily disclosure, investors who saw a new position accumulating could rush in to buy shares, effectively forcing the manager either to do an about-face on its investing strategy, or accept having to pay higher prices to obtain the shares it wants.

The problem is especially bad with stocks, where the market is …read more
Source: FULL ARTICLE at DailyFinance