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ETF News

The Merging of Kraft and Heinz Makes Investor ETF Hungry

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MarketMuse blog update profiles the jolt the food and beverage ETFs received on Wednesday when Kraft Foods and the H.J. Heinz Company announced a merge making the new company the world’s fifth-largest food company. This MarketMuse update is courtesy of Benzinga’s 25 March article “Heinz-Kraft News Lifts Food & Beverage ETF“, with an excerpt from the article below. 

This week it was announced that Kraft Foods Group Inc KRFT 4.49% would combine with H.J. Heinz Co. in a move engineered by Brazil-based 3G Capital and Berkshire Hathaway Inc (NYSE: BRK-B).

The combination of these two iconic brands will create a powerhouse consumer staples company with far reaching global exposure.

On Thursday, Kraft rose more than 35 percent on news of the deal, which will include a special cash dividend and 49 percent ownership share in the new combined company.

This jump also impacted a specialty ETF designed to capitalize on the strength of food, beverage, and restaurant stocks.

The PowerShares Dynamic Food & Beverage Portfolio PBJ 0.63% invests in a portfolio of 30 U.S. food and beverage companies based on strict selection criteria that includes price and earnings momentum, quality and value.

Kraft is the eighth largest holding in PBJ, with a 4.69 percent allocation, that sent the fund soaring to new 52-week highs on Thursday.

Read more: http://www.benzinga.com/etfs/sector-etfs/15/03/5356681/heinz-kraft-news-lifts-food-beverage-etf#ixzz3VbblOTeG


To read the entire article from Benzinga on the boost in food and beverage ETFs, click here.

ETF News

The Risk On Rally That Keeps on Ticking: Benzinga

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benzinga-logo Courtesy of Marketwatch/Benzinga.com

It seems like whenever the rally in the S&P 500 is discussed, at least when it is talked about in positive terms, it is associated with favorite Wall Street vernacular such as “risk on” and “animal spirits.”

With the SPDR S&P 500 SPY -0.39% up almost 41 percent in the past three years, including dividends paid, it is not illogical to think risk on has ruled the roost over that time.

A closer examination of sector ETFs paints a different picture. As was highlighted on Monday, the Consumer Discretionary Select Sector SPDR XLY -0.62% has been the standout of the nine sector SPDRs funds over the past three years. Thing about XLY is the ETF has a beta of one against the S&P 500 and annualized volatility of 16.88 percent.

Said another way, XLY is not the most volatile, nor is it the riskiest ETF out there. Simply put, this has been a risk off rally and it has been that way for three years. Returns accrued by sector ETFs prove as much.

High Beta Disappoints…Sort Of. Here is a trivia question: Excluding XLY, which is the only sector SPDR that is perceived as a high-beta play to outpace SPY over the past three years? Answer: The Energy Select Sector XLE -0.13% . XLE has topped SPY by 350 basis points over that time while being 660 basis points more volatile.

The 23.1 percent gain for the Materials Select Sector SPDR XLB -0.85% only look good in comparison to the 19.4 percent gain for the Financial Select Sector SPDR XLF -0.49% . Those ETFs have betas of 1.22 and 1.23, respectively, against the S&P 500. Continue reading →

ETF News

Healthcare ETFs–Free Prescriptions Here…

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seekingalphalogobenzinga-logo   Courtesy of “The ETF Professor”–his work appears courtesy of Benzinga.com, and is also re-distributed through leading publishers

Conservative investors and risk-takers alike have been rewarded for owning U.S. health care stocks and ETFs focusing on those names in recent years.

The data supports that assertion. A look at three major health care ETFs, all of which do things a little bit differently, shows significant out-performance of the S&P 500 over various time frames.

For example, the Health Care Select SPDR (NYSE: XLV) is up 30.3 percent in the past five years compared to 12.3 percent for the S&P 500.

Since December 2011 when it became a Market Vectors fund, Market Vectors Pharmaceutical ETF is up almost 20 percent. The iShares Nasdaq Biotechnology ETF (NASDAQ: IBB) has nearly doubled in the past five years.

Bottom line: Investors have done well when staying at home with U.S. health care stocks, but that does not mean there are not global opportunities worth considering. After all, some of the biggest health care companies in the world are not U.S. firms.

France’s Sanofi (NYSE: SNY) and Israel’s Teva Pharmaceuticals (NASDAQ: TEVA) stand as just two examples.

Here is a look at some international developed market health care ETFs to see if going global with this sector is a better idea than staying domestic.

Read more: http://www.benzinga.com/trading-ideas/long-ideas/13/02/3357973/are-global-health-care-etfs-worth-prescribing#ixzz2LfCheYiO

 

ETF News, People Profiles

ETF Trading Desk Head Says: “Risk is On…Today..”

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Courtesy of the ETF Professor at Benzinga.com

U.S. equities and other riskier assets are in rally mode in the first trading session of 2013 after lawmakers finally got around to agrbenzinga-logoeeing on legislation that steered the U.S. away from the dreaded fiscal cliff. News that a deal was in the works ignited a rally on Monday while news that the cliff will be dodged has done the same today as the Dow Jones Industrial Average is up about 230 points at this writing while the Nasdaq Composite is sitting on a gain of 2.3 percent.

The tenor of Wednesday’s U.S. trading session is clearly risk on, so much so that before 10:30 AM Eastern time, the overall value of equities and ETFs traded was $73 billion, according to data provided by ETF execution firm WallachBeth. New York-based WallachBeth noted that only trading day in all of 2012 – December options expiration – saw equity value traded exceed $70 billion in the first hour of trading.

Chris Hempstead, WallachBeth Capital
Chris Hempstead, WallachBeth Capital

In a note to clients, WallachBeth Director of ETF Execution Services Chris Hempstead highlighted intense buying activity “on the ask” in several marquee broad market ETFs. Buying on the ask could be described as “panic buying” to some extent as traders that are willing to buy on the ask price being shown are indicating they are willing to pay up to acquire shares of a particular stock or ETF. The more times the ask price is hit, the more intense a rally becomes.

Read the full story at Benzinga.com

 

ETF News

This ETF Could be The Real Monetary Easing Play: Benzinga

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benzinga-logoWhile the market seemed generally unimpressed by the Federal Reserve’s pledge to hold interest rates down until the U.S. unemployment rate drops below 6.5 percent, the usual suspects among ETFs performed as expected Wednesday.

Following the conclusion of the central bank’s last monetary policy meeting of 2012, the PowerShares DB US Dollar Index Bullish (NYSE: UUP ), the ETF equivalent of the U.S. Dollar Index, fell almost 0.2 percent on above average turnover. The SPDR Gold Shares (NYSE: GLD ) and the iShares Gold Trust (NYSE: IAU ) closed slightly higher. The iShares Silver Trust (NYSE: SLV ) impressed with a gain of 1.4 percent on strong volume.

There is another near-term option for traders looking to take advantage of monetary easing and it arguably has nothing to do with the Fed. Emphasis on “near-term,” but it is worth noting the ProShares UltraShort Yen (NYSE: YCS ) surged 1.5 percent on volume that was better than triple the daily average on Wednesday.

In the process, the ProShares UltraShort Yen broke through resistance in the $46 area to close at $46.72. That is the highest closing print for YCS since April.

The utility of YCS, which in the words of its issuer “seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the U.S. Dollar price of the yen,” is clear.

Japan, the world’s third-largest economy, is scheduled to hold elections on Sunday December 16. Given recent price action in YCS, it would appear forex traders are pricing in victory for Shinzo Abe in his quest to become prime minister again and for Abe’s Liberal Democratic Party.

Should Abe emerge victorious, the yen will likely plummet because Abe has been vocal in his desire to weaken his country’s currency. In fact, Abe is a dream come true for quantitative easing addicts because he has called on the Bank of Japan to engage in unlimited easing .

Recent polls suggest Abe will win and that Japan’s ruling Democratic party will suffer significant losses. That is good news for YCS.

Proper trading of YCS revolves around remembering two key points. First, YCS is a leveraged ETF just like the more widely known Direxion Daily Financial 3X Bear Shares (NYSE: FAZ ) or the ProShares UltraShort S&P500 (NYSE: SDS ). That means YCS is best used as a short-term instrument not a long-term investment.

Second, the yen has a penchant for short-term declines when the Bank of Japan intervenes in the currency market or when rhetoric, such as Abe’s, is favorable. However, the Japanese currency has been strong in recent years. YCS has a plain vanilla counterpart, the CurrencyShares Japanese Yen Trust (NYSE: FXY ). FXY’s daily chart is a train wreck, but over the life of that ETF, it has surged 40.5 percent.

For the complete article courtesy of Benzinga.com & NASDAQ, please click here

ETF News

Russian Equities, ETFs: Cheap And Getting Cheaper

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Just because something is cheap does not mean it is a good bargain. Such is life for Russian equities and the relevant U.S.-listed ETFs. Amid slumping energy shares, the “R” in the BRIC acronym saw its benchmark Micex Index slip to a three-month low on Tuesday. The slide comes just a couple of weeks after some analysts and traders started calling attention to attractive valuations among Russian stocks.

In late October, the Market Vectors Russia ETF (NYSE: RSX [FREE Stock Trend Analysis]), the oldest and largest Russia ETF, was spotted trading at its widest discount to the iShares MSCI Emerging Markets Index Fund (NYSE: EEM) in nearly three months.

Since October 29, RSX has slipped almost 5.1 percent as prices have continued tumbling. The Russian government earns about half its revenue from the sale of crude and natural gas, according to Bloomberg.

RSX allocated 41.6 percent of its weight to energy stocks as of October 31, according to Market Vectors data. That would normally be viewed as an excessive weight to just one sector for any ETF, but the iShares MSCI Russia Capped Index Fund (NYSE: ERUS) allocates almost 56 of its weight to energy names. Continue reading →

ETF News, Global Macro Strategy, People Profiles

Not So Bad After All For Europe ETFs

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Courtesy of the ETF Professor at Benzinga.com

MarketsMuse extends our warm wishes to all of those celebrating the Jewish New Year and extending  you  “L’Shanah Tovah”

Today’s piece from ETF Professor couldn’t be better timed considering the upcoming (Oct 11)  European Investing & Trading Summit at London’s May Fair Hotel with a special ‘carve-out’ focused on ETF trading and liquidity across the Euro landscape.

Summit Coordinator MarketsMedia advises us at press time that the ETF trading session, hosted by WallachBeth Capital MD Andy McOrmond, is oversubscribed, but additional tix are being made available.

In theory, 2012 should have been a much darker year for ETFs tracking eurozone nations. Headlines have included speculation about Greece’s imminent departure from the eurozone, the need for a massive bailout of Spanish banks and Italy not being far behind in the bailout buffet line.

Then there are these facts. Italy is mired in a recession. Spain’s unemployment rate is over 20 percent and Greece could make the ominous switch to emerging market from developed market status.

Those are just a few of the issues Europe ETFs have had to deal with in 2012. Apparently, markets are not all that logical because while many global investors have anointed U.S. equities the toast of the developed world because the SPDR S&P 500 SPY -0.42% is up 16 percent year-to-date, some eurozone ETFs are doing quite well, too.

iShares MSCI France Index Fund EWQ -1.57%

France departed the AAA credit rating club earlier this year, but the CAC 40 Index has posted a gain of 11.2 percent year-to-date. The iShares MSCI France Index Fund has been even better with a gain of nearly 13 percent. A large part of the reason for EWQ’s good fortune is that many of its components derive the bulk of their revenue from outside the eurozone.

For example, Total TOT -1.56% and Sanofi SNY -1.40% account for about 22 percent of EWQ’s weight and neither is eurozone dependent. EWQ needs to move above $22.65 to confirm another breakout.

iShares MSCI Belgium Investable Market Index Fund EWK -0.94%

Belgium is another surprise eurozone winner this year, particularly because the country endured some ratings downgrades in late 2011. In fact, 2011 was so rough on EWK it was outperformed by the iShares MSCI Spain Index Fund EWP -2.96% and the iShares S&P Europe 350 Index Fund IEV -1.28% . Continue reading →

ETF News

Goldman Highlights ETF Correlations (XLF, XLK, XLU)

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By Benzinga.com

In a note out today, Goldman Sachs GS +1.96% said investors are continuing to increase usage of ETFs as hedging tools, a move that is “creating unintended consequences to their portfolios.” Goldman notes that managers and analysts are increasingly creating less-than-desirable hedges due, in part, to surprisingly high correlations among some sector funds.

“We see high trailing 3-month daily correlations among less-than-obvious pairs of sectors, including: Financials & Industrials, Tech & Discretionary and Materials & Discretionary,” Goldman said.

The recent performances of the various Select Sector SPDR funds indicate that Goldman’s note highlights valid points. In the past three months, the Financial Select Sector SPDR XLF +1.43% is down 9.7% compared to 8.8% for the Industrial Select Sector SPDR XLI +0.86% . The three-month gap is wider between the Technology Select Sector SPDR XLK +1.06% and the Consumer Discretionary Select Sector SPDR XLY +0.98% , which are down 5.8% and 3.3%, respectively. Over the past three months, the Materials Select Sector SPDR XLB +1.16% is down 7.5%.

“Indeed, of the 36 sector ETF pairs we examined, correlations on a 3-year basis are higher than 70% for 31 of the instances, emphasizing the importance for portfolio managers to choose sectors wisely when hedging at specific points in time,” Goldman said in the note. Continue reading →

ETF News

Direxion Files Plans to Introduce Another Bearish Bank ETF (FAZ, FAS, XLF)

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By Benzinga.com

Direxion, the firm behind the behind the infamous yet highly popular Direxion Daily Financial Bear 3X Shares FAZ +0.64% , is looking to add its lineup of non-leveraged products and has filed plans with the SEC to possibly introduce the Direxion Daily Financial Bear 1X Shares.

The Direxion Daily Financial Bear 1X Shares would not be a direct equivalent to FAZ because the new ETF, assuming it comes to market, will seek daily inverse investment results that correspond to the Financial Select Sector Index, the same index tracked by the Financial Select Sector SPDR XLF -0.11% .

FAZ and its bullish equivalent, the Direxion Daily Financial Bull 3X Shares FAS -0.69% , track the Russell 1000 Financial Services Index. Direxion’s filing didn’t include a ticker for the new fund, but the firm did say the fund will trade on the New York Stock Exchange and have an expense ratio of 0.65%.

That’s 30 basis points lower than what FAS and FAZ charge. The new Direxion fund could be a rival to the ProShares Short Financials SEF +0.17% , which is an inverse, non-leveraged product. ProShares, the largest issuer of inverse and leveraged ETFs, also issues the ProShares Short KBW Regional Banking KRS -2.70% , which is also a bearish, non-leveraged ETF.

Direxion, the second-largest sponsor of inverse and leveraged funds, has been looking to expand its non-leveraged offerings. The firm has introduced the the NASDAQ-100 Equal Weighted Index ETF QQQE -0.58% and the Direxion All Cap Insider Sentiment Shares KNOW +0.36% , among others in the past year.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

 

ETF News

#Apple Makes The Move to All-ETF Retirement Plans: Benzinga.com

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Whoaaa!…EDITOR NOTE RE: story below–re-distributed June 6 by this platform ONLY AFTER numerous ‘highly-accredited’ news outlets did the same earlier that day, has since been overtly challenged for its accuracy/veracity by IndexUniverse  . 

In hindsight, IU’s challenging multiple media outlets that regurgitated this story for a failure on the part of mainstream journalism in general is harsh, but not unwarranted when considering the overall decline of reporting. This is double-edged sword of an all-web world that enables and demands a 24/7 news cycle, which is powered by emotion and a lust for breaking stories–as opposed to well-researched reporting.

Without anyone having the benefit of actually being able to speak with any AAPL HR/Benefits execs to confirm or deny the elements of the story first written by  SourceMedia Inc.’s  Employee Benefit News, we respectfully caveat that EBN ‘s senior editor (who is the by-line author) either failed to do any fact-checking, or perhaps the story she attempted to write is that Apple Inc.’s HR/Benefits team plans on introducing yet another investment opportunity, within a presumably long list of funds that large company employees can invest their 401k money into.  To our valued audience, we–as well as Benzinga’s reporter are contrite for any role we might have inadvertently played in reporting what might end up being an inaccurate or erroneous report from SourceMedia’s Employee Benefit News.

All of that aside, the concept of offering an ETF-specific investment program within a list of options for employees of large and or small companies makes perfect sense. Charles Schwab has certainly acknowledged that it is working on such an investment program, albeit it is apparently still in development.

 

By Benzinga.com

Apple AAPL +1.53% , the largest U.S. company by market value, is once again setting a standard for innovation, but this time the innovation isn’t coming by way of the iPhone, iPad or Apple TV. Rather the company is making the move to an ETF-only retirement plan for its employees.

While the exchange-traded products has grown by leaps and bounds in recent to almost 1,470 total products with over $1.13 trillion in assets under management at the end of May, ETFs still are not prominently used in in company-sponsored retirement plans such as 401(k) plans. That market is still largely dominated by mutual funds.

At the end of 2010, ETF assets in 401(k) plans were scant at just $5 billion, or 0.2% of total assets, compared to $1.8 trillion, or 58% of 401(k) assets, according to Cerulli Associates. However, some firms are pushing the ETF/401(k) issue. For example, ExpertPlan announced that it will add more than 900 ETFs, including those offered by Barclays, Claymore, First Trust, iShares, Rydex and Wisdomtree, according to ETF Trends.

Charles Schwab SCHW +2.27% , the eleventh-largest U.S. ETF sponsor, has been working on an ETF-only 401(k) plan that would use index-based ETFs. Capital One’s COF +0.68% ING Direct offers index ETFs in its Sharebuilder 401(k) plan, and T.D. Ameritrade AMTD +2.41% also includes ETF options in its 401(k) plan, ETF Trends noted earlier this year.

But the move by Apple, not only the largest, but the most innovative U.S. company in the eyes of many, to all-ETF retirement plans stands as the strongest endorsement to date of the utility of ETFs when it comes to retirement planning. Continue reading →

ETF News, People Profiles

Does Size Really Matter? (with ETF Returns)

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According to Benzinga.com’s ETF Professor, its not necessarily the size of the ETF, but the motion when it comes to investor returns.

From Benzinga’s April 23 edition:

“..There are plenty of instances in life when bigger is better. When it comes to exchange-traded products, bigger isn’t always associated with better [4]. At least when it comes to what should be investors’ primary consideration: Returns.

It has been documented that ETFs and ETNs with low average daily volume [5] and an assets under management number that may not be viewed as impressive by the so-called experts can outperform. In fact, all investing in an ETF with a bigger AUM total does is lead investors to a bigger fund, not larger returns [6].

Fortunately, a move away AUM and average daily volume as the primary determinants of an ETF’s worth is already under way.

“Some of the traders we talk to are using AUM and ADV a lot less now,” said Chris Hempstead, head of institutional sales and trading at WallachBeth Capital. “Some hedge funds using ETFs to hedge might use the larger ETFs because they just need short-term exposure, but buy-side traders are using AUM and ADV less and less.”

The statistics back up the assertion that bigger isn’t always better with ETFs. In an interview with Benzinga, Hempstead noted that in the case of the nine Select Sector SPDRs, all have been outperformed by a comparable fund of smaller stature on a year-to-date basis. Continue reading →

ETF News, People Profiles

Better Take a Peak at China’s PEK..Premium Merchandise

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Courtesy of the ETF Professor at Benzinga.com

Following the March 22 debacle concerning the VelocityShares Daily 2x VIX Short-Term ETN (NYSE: TVIX  that saw the now infamous ETN tumble 30% in that one trading day, traders and investors predictably wondered what exchange-traded product could be next to fall victim to a similar scenario.

That scenario being an ETF or ETN trading at an elevated premium to its net asset or indicative value. One fund that has been noticed trading at elevated premium’s to its NAV is the Market Vectors China ETF (NYSE: PEK [6]) and this has been the case since the ETF debuted in October 2010.

What some investors may not understand is the reason why the Market Vectors China ETF has previously traded at premiums to its NAV that have been as high as 12%, sometimes a tad more. PEK is the only U.S.-listed ETF that offers investors exposure to China’s A shares market, but since foreign investors are limited in owning Chinese A shares directly, PEK uses swaps and derivatives instruments to accomplish its objectives.

Noteworthy is the fact that PEK’s premium has started to shrink, coinciding with news announced earlier this month that the China Securities Regulatory Commission boosted the quotas for qualified foreign institutional investors to $80 billion from $30 billion.

Chris Hempstead, head of ETF trading for New York-based execution firm WallachBeth Capital, talked about the implications increased access to China’s A shares for foreign investors may have on PEK in an exclusive interview with Benzinga on Friday.

Chris Hempstead, WallachBeth Capital

“PEK trading an elevated premium to its NAV in the past was not a function of it not being able to create and redeem shares as was the case with TVIX,” Hempstead said. “There are completely separate reasons why PEK’s NAV has been elevated compared to TVIX and some of the other products.”

Hempstead explained that it is the process by which PEK accesses China’s A shares market that has led to the high premium to its NAV in the past. Continue reading →