Tag Archives: etf

ETF News, People Profiles

ETF-in-a-Box: You Too Can Launch An ETF for Peanuts

Audio Leave a comment

The barrier to entry for issuers of ETFs keeps getting lower. What used to cost anywhere between $1mil-$5mil and many months of filing paper work to create and finally launch a new ETF, now, for just only $100k (before marketing/advertising costs), you too can launch an exchange-traded fund in under three months and maybe even become the next iShares or Wisdom Tree. At least that is the premise profiled by Lara Crigger’s post at ETF.com in her coverage of J. Garrett Stevens and his white-label ETF maker, Exchange Traded Concepts LLC, aka “ETC”.

Below is extracted from Crigger’s coverage…

Garret Stevens, President of ETC
Garret Stevens, President of ETC

Six years ago, J. Garrett Stevens, CEO of FaithShares, had just launched his first ETFs. He and his partners sat back, counted their victories, and eagerly waited for investors to bang down the door to buy up the funds.

They never did.

The rest of the story is all too familiar. Stevens and his partners had spent far more than they anticipated on getting their funds to market, with little left over to make sure investors actually knew the funds existed. As a result, the five FaithShares ETFs, despite solid performance, failed to accrue enough assets to survive. FaithShares shuttered its doors in 2011.

But a funny thing happened on the way to dissolution.

“People started calling, wanting to know if they could buy our exemptive relief,” said Stevens. “Or they wanted to know if we could consult and help them launch their own funds, since we’d already been down that road.”

That gave Stevens an idea: a white-label service that would shoulder the burden for would-be ETF providers looking to launch their very own funds. Thus was Exchange-Traded Concept (ETC) born.

To continue reading about Garett Stevens and his new company, the Exchange Traded Concept (ETC), click here

 

ETF News, Fixed Income

Corporate Bond ETFs for Single Issuers??

Leave a comment

MarketsMuse ETF and Fixed Income departments merge and gives credit to Morgan Stanley as they raise their own ETF flag with an innovative idea to package a single corporate bond issuer’s debt into one neat package so that ETF investors can express their bets on the issuer’s outstanding credit… Here’s the excerpt courtesy of Reuters:

 A bank proposal to pool corporate bonds of a single borrower into an ETF-style “trust” to help solve the credit markets’ chronic illiquidity problem is being circulated among issuers and investors, and finding some support.

Though still conceptual, the idea initiated by Morgan Stanley reckons investors could find more liquidity in a single instrument that represents several bonds issued by one borrower in a certain maturity, than in the individual bonds themselves.

According to the proposal, the trust would get positions in all of an issuer’s outstanding securities in the secondary market.

It would then group them according to whether they have short, intermediate or long-dated maturities, and issue separate trust certificates against each of those maturity buckets.

An underlying unit of bonds to represent each maturity trust certificate would be created and redeemed in a similar way as existing bond index exchange-traded funds.

To continue reading about Morgan Stanley’s new idea for an ETF, click here.

ETF News

VIX Index Gears Up For Accushares Overhaul-A Contango Cure?

Leave a comment

MarketsMuse ETF “What’s Next?” update profiling 2 new market volatility trackers from AccuShares with a revised approach to VIX that seeks to mitigate the contango concerns and compares these pending products to the frequently discussed, but often misunderstood tracker CBOE Volatility Index. This post is courtesy of coverage from CNBC’s Bob Pisani, who tweets frequently via @BobPisani

Bob Pisani, CNBC
Bob Pisani, CNBC

There’s a potentially important new ETF launching next Tuesday, May 19th, which allows investors to invest in the well-known CBOE Volatility Index.

Will it do a better job of tracking the $VIX than other ETF and ETN products? The answer is likely yes, but there are some wrinkles.

The CBOE Volatility Index measures the intensity of put and call buying for the S&P 500 for a 30-day period and is often referred to as the “fear index.”

The new Volatility ETF is attracting more attention than usual because the brains behind it is Robert Whaley, the man who invented the VIX.

His company, AccuShares, will float two different VIX ETFs: 1) the Spot VIX Up Class (VXUP), which seeks to track the VIX over a one-month period, and 2) the AccuShares Spot VIX Down Class (VXDN), which seeks to track the inverse performance of the VIX over a one-month period.

cnbcWhy an inverse ETF? It has to do with how the ETF is structured.

Other ETFs exist to track spot indices—including commodities like oil—but they buy future contracts in their respective sectors. When the contracts expire, the next contract has to be bought, which greatly increases the cost of investing, since most future contracts are in contango, that is, the cost of the contracts further out are more expensive.

So you are usually buying high and selling low.

That creates tracking errors from the index. In other words, most investors find the investment they bought does not track the spot index they want to follow.

AccuShares is trying a different approach with this VIX product, and with other spot indices they will be launching in the near future. They hold cash and cash equivalents. Each ETF has an “up” asset class and a “down” asset class. Assets are swapped back and forth, depending on the increase or decrease in the spot price.

On the 15th of every month, everything is recalibrated. So you are essentially making a bet on where the VIX might be in the middle of the month.

With that said, there are a couple important details:

1)      This is not free. There is a management fee of about 90 basis points a year.

To continue reading Pisani’s in-depth analysis of this new product, please click here

 

ETF News

RBC Global Asset Launches 5 New ETFs To Access International Equity Markets

Leave a comment

MarketsMuse blog update profiles RBC Global Asset Management launching five new liquid alternative equity ETFs. These five new ETFs allow for investors to be exposed to Canadian, American, and other international equity markets. These ETFs are now available for purchase on the Toronto Stock Exchange (TSX). These new ETFs are: 

  • RBC Quant Canadian Equity Leaders ETF (RCE)
  • RBC Quant U.S. Equity Leaders ETF (RUE) 
  • RBC Quant EAFE Equity Leaders ETF (RIE)
  • RBC Quant U.S. Equity Leaders (CAD Hedged) ETF (RHS)
  • RBC Quant EAFE Equity Leaders (CAD Hedged) ETF (RHF)

This update is courtesy of FINAlternatives’ article, “RBC Launches Liquid Alternative Quant Equity ETFs”, with an excerpt below. 

finalternatives11111RBC Global Asset Management has launched five new liquid alternative equity ETFs that employ quantitative, rules based methodologies for investment selections instead of relying on an index, according to a press release.

The new funds offer investors and advisors diversified core equity exposure in Canadian, U.S. and international equity markets, together with the option to hedge foreign currency risk, and trade on the Toronto Stock Exchange.

The RBC Quant Canadian Equity Leaders ETF (RCE) focused on companies domiciled in Canada and follows the RBC GAM’s rules-based Quant Equity Leaders investment process. It carries a management fee of 0.39%.

The RBC Quant U.S. Equity Leaders ETF (RUE) is similar to RCE but focuses instead on U.S.-domiciled companies that pass muster in the Quant Equity Leaders investment process. It also has a management fee of 0.39%. The ticker symbol “RUE” represents Canadian-dollar-denominated units, while the ticker symbol “RUE.u” represents U.S.-dollar denominated units.

To continue reading about these five new ETFs from RBC Global Asset Management, click here.

ETF News

ETFs Are Taking Over The World…

Leave a comment

MarketsMuse blog update profiles ETFs taking over the world, well the hedge fund world at least. ETFs assets are about to total $3 trillion which means are they are poised to out raise hedge funds. This update is courtesy of Bloomberg’s article, “ETF Assets Set to Overtake Hedge Funds This Year“, by Trista Kelley, Inyoung Hwang, and Lorcan Roche Kelly, with an excerpt below.

They’re cheap, easy to use, and they’re winning over more investors than ever.

Now exchange-traded funds — investment tools that seek to replicate the performance of a portfolio of securities — are growing at such a clip that their assets are poised to overtake those of hedge funds.

It’s no secret hedge funds have had a rough couple of years. Without the returns to make up for high taxes and fees, more investors are turning to the ever-growing range of ETF products on offer. ETFs have lower fees than mutual funds, lower taxes than index funds and are easier to buy or sell quickly than either. And underpinning gains is loose central-bank policy that has been fueling a general movement toward passive investing.

To continue reading about ETFs overtaking hedge funds, click here.

ETF News

Could Russia ETFs Be Making A Comeback?

Leave a comment

After a rough year, Russia ETFs have been trying to make a comeback and it seems they may have finally done it. MarketsMuse blog update profiles the changes Russia has made that has helped boost Russia ETFs. This blog update is courtesy of Nasdaq’s article, “Russia ETFs Making a Strong Comeback – ETF News And Commentary“, with an excerpt below. 

2014 has been a catastrophic one for Russian equities thanks to the ban imposed on the nation by the West following its Crimea (erstwhile Ukrainian territory) annexation in the first half. The massive oil price crash in the second half also spurred many investors to abandon the country’s equities in apprehension of significant economic losses. As a result, Russian stocks almost halved in price last year .

However, things have changed in 2015. Like many other countries across the globe, Russia also entered into a cycle of rate cut in 2015 having slashed the key rate for the third time so far this year to ward off an impending recession. An upward movement in the local currency and cooling inflation has made this possible, per Bloomberg . 

In late April, Moscow reduced the key one-week interest rate to 12.5% from 14% and hinted at further easing if required. Notably, Russia generates about 50% of its revenues from oil and natural gas resources. So, this oil-dependent economy was crushed by the crude carnage last year. The Russian currency, the ruble, lost about 50% against the greenback in the second half of 2014 and stoked inflation.

To keep reading about Russia ETFs comeback, click here.

 

ETF News

Social Media Popularity Doesn’t Show In Social Media ETF

Leave a comment

MarketsMuse blog update profiles the social media ETF, The Global X Social Media Index ETF (SOCL). So far this year, SOCL has not been performing very well, which is in contrast to social media performance in everyday life. Social media sites are gaining more users everyday however the trend doesn’t show in SOCL’s performance. Investopedia’s article “Is Social Media ETF SOCL Too Risky?” by Dan Moskowitz investigates the reason this trend occurs. Extracts from the article are below. 

The world is atwitter social media and its rapid growth right now. According to the Pew Research Center, 74% of online adults use a social networking site of some kind, up from 29% in 2008. And more advertising opportunities are blooming alongside the increased usage of mobile devices. In March, for the first time ever, the number of mobile-only internet users exceeded the number of desktop-only internet users, according to research firm comScore.

One of the trendiest ways to invest in social media is via the Global X Social Media Index ETF (SOCL), which tracks the largest publicly held social media firms around the world, including Facebook Inc. (FB), LinkedIn Corp. (LNKD) and Twitter Inc. (TWTR). With the sector’s global growth expected to continue for the long haul, betting on SOCL seems like a no-brainer.

What’s tricky with SOCL is that the trend doesn’t always match the performance. 

For starters, SOCL returned -15.04% in 2014. Take a look at SOCL’s top ten holdings, their percentage of assets, and their one-year stock performances 

The heavier-weighted holdings are performing well, but the 0.65% expense ratio for SOCL comes into play. Also notice that some of the weaker-performing stocks belong to Wall Street darlings — buzzy startups investors loved during their IPOs — that have had difficulty delivering consistent profits: Pandora, Groupon and Twitter, if you’re looking for a big industry name that’s falls farther down in SOCL’s holdings. If these companies are unable to deliver stock appreciation when markets are at all-time highs, then you shouldn’t expect them to perform well when the market takes a turn for the worse.

More people are accessing social media sites every day, a very positive trend. But without positive returns, that trend is irrelevant. Some of the companies/holdings for SOCL have difficulty delivering consistent profits and haven’t yet shown investors a clear-cut path to how they’ll do it down the road. If that’s the case when the stock market is at all-time highs, then it’s highly unlikely for these stocks to appreciate if and when the market falters. Put simply, unless you’re looking for a short-term trade, consider avoiding SOCL. But if the broader market continues to move higher thanks to Federal Reserve assistance and basic momentum, there’s a possibility it will take SOCL with it. As always, do your own research prior to making any investment decisions.

To read the entire article profiling the ETF SOCL, click here.

 

 

ETF News, Tech Talk

BNY Mellon Introduces New ETF Tool

Leave a comment

MarketsMuse blog update profiles The Bank of New York Mellon Corporation aka BNY Mellon, and their introducing a new ETF negotiation tool. This update is courtesy of Asset Servicing Times’ article, “BNY Mellon launches new ETF negotiation tool“,  with an excerpt below. 

BNY Mellon has introduced a new automated process to aid authorised participants in the creation and redemption of exchange traded funds (ETFs).

The new process allows these participants to use BNY Mellon’s ETF centre to conduct propositions and negotiations on underlying data for ETF baskets with a fund sponsor.

It is designed for large financial institutions that are chosen by such a sponsor to obtain the necessary assets for creating or redeeming an ETF.

Usually, participants will have to go through more than one institution to do this, before shares are transferred to a custodian bank.

The new system is designed to offer a more flexible and more efficient environment for negotiating ETF baskets.

Steve Cook, global head of ETF services at BNY Mellon, said: “Helping authorised participants become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market.”

To continue reading about this new ETF negotiation tool, click here.

ETF News, People Profiles

Goldman Sachs Readies ETF Launch

Leave a comment

MarketsMuse blog update profiles Goldman Sachs preparing for a launch of its own ETFs. Goldman Sachs is the largest U.S. investment bank and they are finally going to make the move to become a huge player in the ETF industry.  The firm has completed all its necessary paperwork with the SEC as of May 4th for its six ETFs. These six new ETFs include: Goldman Sachs ActiveBeta International Equity ETF (GSIE), Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM), Goldman Sachs ActiveBeta Europe Equity ETF (GSEU), Goldman Sachs ActiveBeta Japan Equity ETF (GSJY), Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) and the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC). This MarketsMuse blog update is courtesy of ETFTrends’ Tom Lydon and his article, “Goldman ETFs Near Liftoff“, with an excerpt below. 

ETFTrends-logo

Goldman Sachs (NYSE: GS), the largest U.S. investment bank, is getting closer to launching its own exchange traded funds.

In a filing with the Securities and Exchange Commission dated May 4, New York-based Goldman Sachs revealed tickers and fund managers for its six “ActiveBeta” ETFs as well as tickers for its five passively managed ETFs.

Among Goldman the managers for the ActiveBeta ETFs are “Steve Jeneste, a managing director most recently oversaw portfolio management of macro and multi-asset strategies. Another is Raj Garigipati, vice president, who most recently served as chief risk officer for Goldman’s QIS unit,” reports Chris Dieterich for Barron’s.

To continue reading about Goldman Sachs preparing  for the launch of its six “ActiveBeta” ETFs, click here.

 

ETF News

Rookie ETFs Of The Year: Two New ETFs That Are Standouts In 2015

Leave a comment

MarketsMuse blog update profiles two ETFs that have become standouts so far this year. The ETFs iShares Exponential Tech ETF (XT) and SPDR DoubleLine Total Return Tactical ETF (TOTL) have been dubbed with the title according to Zacks’ Neena Mishra in her article, “2 New ETFs with Big Potential“, excerpts from the article are below. 

The ETF industry continues to grow exponentially, with a record $96 billion in global inflows during the first quarter, up more than 100% from a year ago. More than 70 ETFs have been launched in the US so far this year, taking the total number of ETFs to 1702 and total assets to over $2.1 trillion.

Below, we highlight two ETFs launched this year that stand out from the rest and in our view hold a lot of potential.

iShares Exponential Tech ETF (XT)

This ETF has attracted almost $647 million in assets since its inception in March, making it one of the most successful ETF launches. Investing in innovative technologies that have the potential to transform our lives is a very exciting concept. Further, this ETF includes not only developers but also users of promising technologies. So the coverage extends beyond the technology sector.

The idea for this ETF came from the famous financial advisor Ric Edelman and it is understood that some of the assets in this ETF came from his clients. Investors should note some of these disruptive technologies stocks have been quite hot lately and so this ETF is not really attractive looking at the valuation but companies focused on cutting edge technologies definitely have the potential to deliver superior return over time and this ETF could be a solid choice for long-term investing.

SPDR DoubleLine Total Return Tactical ETF (TOTL)

Bond markets have confounded most analysts and investors of late. Yields plunged last year when almost everybody was expecting them to go up. Over the past few months, the bond market has seen erratic swings and we have also seen substantial flattening of the yield curve.

As the Fed gets ready to raise interest rates, shorter-term rates have been going up but longer-term rates have actually declined, thanks mainly to massive demand from foreign investors since interest rates in Europe and Japan are so low.

To continue reading about these two standout new ETFs, click here

ETF News

Homebuilding ETF Is Falling Down

Leave a comment

MarketsMuse blog update profiles speculation surrounding SPDR S&P Homebuilders exchange-traded fund. This ETF reach an eight-year high in February but since then has fallen dramatically. Now investors are taking notice and are trying to make a quick exit. This MarketsMuse blog update is courtesy of Callie Bost and Jennifer Kaplan of Bloomberg Business and their article, “Investors In This Homebuilder ETF Are Heading for the Exits“, with an excerpt below. 

Investors in homebuilding shares are heading for the door.

Speculators in the SPDR S&P Homebuilders exchange-traded fund have pulled a record amount of cash in April, abandoning the ETF known by its ticker XHB after it reached an eight-year high in February. The fund has retreated 4.8 percent since then.

Traders are doubting equity gains have room for improvement as mixed economic reports muddy the outlook for further growth in the industry. The Federal Reserve is moving closer to raising interest rates, adding to concerns just as homebuilders enter the busiest time of the year.

“Housing stocks are in an interesting position right now,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees $3 billion, said by phone. “We’re in a bit of a logjam for multiple factors. Until this logjam breaks, it’s going to be hard for national homebuilders to have sustained outperformance.”

In April, traders removed $376 million from the fund, the largest monthly outflow since the ETF started trading in 2006. The SPDR S&P Homebuilders fund tracks stocks like Toll Brothers Inc. and D.R. Horton Inc. as well as home-improvement companies including Aaron’s Inc., Tempur Sealy International Inc., and A.O. Smith Corp.

To continue reading about the fall of the homebuilder ETF, SPDR S&P Homebuilders exchange-traded fund, click here

ETF News

ETFs Hit New Milestone As Individuals Put More Into ETFs Than Mutual Funds

Leave a comment

MarketsMuse blog update profiles the new milestone exchange-traded funds have reached as now more than ever, individual investors have pouring more money into ETFs than traditional mutual funds. This MarketsMuse blog update is courtesy of an analysis done by Broadridge Financial Solutions and found in the Wall Street Journal’s article, “A New Milestone for ETF Adoption“, with an excerpt below.

Individual investors have a lot more money invested in traditional mutual funds than in exchange-traded funds. But as people continue pumping dollars into ETFs, their ETF holdings grew by more in dollar terms than their mutual-fund investments over the year through March—apparently for the first time—according to an analysis by Broadridge Financial Solutions.

That conclusion is based on the company’s tally of fund and ETF holdings in accounts at “retail” companies, including full-service and discount brokerages, which cater to individual investors and their advisers. Broadridge, based in Lake Success, N.Y., sells communications and technology services to financial-services companies.

Individual-investor holdings of ETFs grew by $267 billion in the year through March, a 24.4% increase, according to Broadridge. Over the same period, individuals’ holdings of long-term mutual funds grew by $255 billion, or 5.6%, the company said.

“This is the first period in which we’ve seen that the actual dollar amount in the retail channel is higher in the ETF space than in the mutual-fund space,” says Frank Polefrone, senior vice president at Access Data, a Broadridge unit in Philadelphia. ”It’s a big shift over what we’d seen a year ago or two years ago.”

Broadridge has been tracking the data for more than four years.

To continue reading about the latest ETF milestone, click here.

ETF News

Twitter’s Weak Q1 Jolts Social ETFs

Leave a comment

MarketsMuse blog update profiles the disappointing Q1 for Twitter and the impact it is having on social media ETFs such as Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF (ARKW). This MarketsMuse update is courtesy of Zacks Equity Research and their article, “Twitter Tweets a Weak Q1 & Soft View, ETFs in Focus“, with an excerpt below. 

On April 28, Twitter (TWTR) came up with a weak Q1 and a disappointing guidance. The social networking site then saw a freefall in its share price as it failed to live up to many investors’ expectations.


Q1 in Detail

The company’s first-quarter 2015 non-GAAP loss per share (including the stock-based compensation expense) of 20 cents was a penny ahead of the Zacks Consensus Estimate. Excluding the stock-based compensation expense, the company earned 7 cents per share on a pro forma basis.

Revenues of $436 million in the quarter fell shy of the Zacks Consensus Estimate of $455 million. ‘A lower-than-expected contribution from newer direct response marketing products’ was held responsible for lower-than-expected revenues. However, revenues grew about 74% year over year.

Market Impact

This subdued performance dampened investors’ mood as the stock was severely beaten down in recent trading sessions. Following the earnings leak on April 28, about 40 minutes ahead of the closing bell, Twitter shares saw a landslide, plunging over 18% for the key trading session of April 28 on about fourth times the regular volume.

Shares slid about 8.9% on April 29. However, after such a massive sell-off for consecutive two days, Twitter stock recouped 0.94% after hours. Year to date, the stock is still up 8.3%.

Twitter does not have a sizable exposure in the overall ETF world with only three ETFs – Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF ((ARKW – ETF report)) – having major exposure of 8.17%, 3.66% and 3.20% respectively, at present. Such a huge fall in one of the major components should impact these ETFs.  Below, we have discussed these three funds in detail:

To continue reading about Twitter’s disappoint Q1’s impact on ETFs, click here

ETF News

Solar ETFs Continue to Rise Thanks to China

1 Comment

MarketsMuse blog update profiles solar ETFs such as Guggenheim Solar ETF (NYSEARCA:TAN) and Market Vectors Solar Energy ETF (NYSEARCA:KWT) bright future thanks to China’s clean energy drive. This update  is courtesy of Seeking Alpha’s article, “China’s Clean Energy Drive Brightens Solar Power ETFs” by ETFTrends reporter, Tom Lydon, with an extract below.

China revealed a huge surge in photovoltaic panel installations over the first quarter, a typically slow season for the industry, and if the country maintains its pace, it could portend a strong year for solar stocks and sector-related exchange traded funds.

Year-to-date, the Guggenheim Solar ETF (NYSEARCA:TAN) jumped 40.8% and the Market Vectors Solar Energy ETF (NYSEARCA:KWT) increased 30.3%.

On Monday, the China National Energy Administration announced that the country added 5.04 gigawatts of solar capacity, or just shy of France’s entire solar capacity, in the first three months of the year, Bloomberg reported.

China is planning to install as much as 17.8 gigawatts of solar power this year, or two-and-a-half times the capacity added by the U.S. in 2014, as part of its aggressive plans to cut carbon emissions. For instance, the country’s recent move away from small coal plants will avoid the annual release of as much as 11.4 million metric tonnes of carbon dioxide, which could help cut emissions for the first time in over a decade, Today Online reports.

Chinese companies make up 22.9% of TAN’s underlying holdings and a hefty 38.4% of KWT’s portfolio.

To continue reading about the effects that China’s push for clean energy has on the solar ETFs, click here.

ETF News

A Black Eye For BlackRock China ETF?

Leave a comment

MarketsMuse.com ETF update profiles a less than tasty example of how not to select certain offerings from the menu of China ETF products with a snapshot of a seemingly sour taste investors might be left with after consuming Blackrock’s iShares FTSE A50 China Index (HKG: 2823). Below extract is courtesy of reporting by Bloomberg LP’s Elena Popina and Boris Korby “The 80% BlackRock ETF Return That Shortchanged China Stock Bulls.”

The $9.1 billion iShares FTSE A50 China Index ETF, an exchange-traded fund designed to track returns of the 50 largest companies traded in Shanghai and Shenzhen, has underperformed its benchmark by a whopping 29 percentage points on a total return basis over that span.

The cost to investors? More than $900 million in unrealized gains, according to data compiled by Bloomberg.

ETFs such as BlackRock’s, which popularized the use of complex derivatives as a way for foreigners to tap into China’s growth potential, are now becoming unintended casualties as the nation opens up its capital markets. As more foreigners gain direct access to yuan-denominated A shares on mainland bourses, demand for the derivatives has plunged. That’s unmoored the ETFs from their benchmarks and robbed investors of returns.

“It’s not providing what it advertised to do,” Ajay Mehra, the head of equities at Salient Partners LP, which oversees $27 billion, including FTSE A50 China Index ETF shares, said by phone from New York. “This tracking error has led to substantial underperformance over the past year, which makes it less attractive as an access vehicle.”

Discount Widens Continue reading →

ETF News

Largest US Health Insurer Creates Spark In Health Care ETFs

Leave a comment

MarketsMuse blog update profiles the largest US health insurer’s stellar first-quarter and the effects it has on the market with ETFs such as iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF) receiving a huge boost from the insurer. This MarketsMuse update is courtesy of SeekingAlpha’s article from Zacks Funds, “Play UnitedHealth Q1 Strength With This Health Care ETF”  with excerpts from the article below. 

The largest U.S. health insurer UnitedHealth Group (NYSE:UNH) reported blockbuster first-quarter 2015 results. It topped our estimates on both the top and the bottom lines as well as raised its full-year outlook.

UnitedHealth Q1 Results in Focus

Earnings per share came in at $1.46, well above the Zacks Consensus Estimate of $1.33 and 32.7% better than the year-ago earnings. Revenues rose 13% year over year to $35.76 billion, edging past the Zacks Consensus Estimate of $34.73 billion. The robust performance was driven by rising enrollments and strength in the Optum Health Services business.

Market Impact

The market has welcomed UNH’s earnings beat and its strong outlook. Shares of UNH jumped as much as 4.3% following its earnings announcement on elevated volumes, making it the biggest percentage gainer on the Dow Jones Industrial Average Index for the day.

Since UnitedHealth is the first insurer to report earnings and a bellwether, the result has spread optimism across the broad health insurance sector with stocks of other players in the space in green at the close on the day. Some of these players include Aetna (NYSE:AET) – up 3.2%, Anthem (NYSE:ANTM) – up 2.4%, Cigna (NYSE:CI) – up 2% and Humana (NYSE:HUM) – up 0.5%.

Given UnitedHealth’s strength to lift the health insurer corner of the broad health care space and the solid run up in its share price, one ETF – iShares U.S. Healthcare Providers ETF (NYSEARCA:IHF) – could be worth a look for investors seeking to ride out the recent surge. It has the largest allocation to this big giant and looks to be in focus in the coming days with room for upside.

Bottom Line

UNH’s earnings beat sent the stock higher on the day, thus becoming the cornerstone for other stocks in the space. A merger and acquisition frenzy and encouraging industry trends bode well for the health insurer stocks and the related ETFs.

Other ETFs like Health Care Select Sector SPDR Fund (NYSEARCA:XLV),Vanguard Health Care ETF (NYSEARCA:VHT), iShares U.S. Healthcare ETF (NYSEARCA:IYH) and Fidelity MSCI Health Care Index ETF (NYSEARCA:FHLC) also have a decent exposure to UnitedHealth in the range of 3-4%. These funds also have the potential to move higher on UNH strength in the coming days but with less momentum.

To read the entire article on health care ETFs from SeekingAlpha, click here.

ETF News

China Stock Craze Will Go A Step Further With First Leveraged ETF

Leave a comment

In the past year alone, investors have invested more than $2 billion into ETFs that invest in China’s stocks. MarketsMuse update profiles the new ETF, The Direxion Daily CSI 300 China A Sharell 2X Shares (CHAU), this ETF is the first in China-focused ETF of its kind in the US. This MarketsMuse blog update is courtesy of Bloomberg Business’s Elena Popina and Boris Korby’s article “China Stock Frenzy Gets More Manic With First Leveraged ETF“, with an excerpt below. 

Want to double down on China’s world-beating stock rally? Now there’s an exchange-traded fund for that.

Direxion Investments is starting the first ETF that seeks to provide twice the daily return of mainland Chinese stocks using leverage, according to Andy O’Rourke, chief marketing officer for the New York-based fund provider.

The CSI 300 Index, which the ETF will track, has climbed to a seven-year high amid a frenzy of stock purchases by Chinese retail investors as the government eased monetary policy to counter a slowdown in the world’s second-largest economy. The ETF will be the first in the U.S. to use derivatives to amplify the return of mainland Chinese stocks, or so-called A shares, a market to which foreign investors until recently only had limited access.

“It was only a matter of time before a leveraged China A-share ETF came out trying to capitalize on the increased interest and flows into the area,” Eric Balchunas, a Bloomberg Intelligence analyst, wrote in an e-mail on Tuesday.

To continue reading about this new ETF for China’s stocks, click here.

ETF News, Tech Talk

One New ETF Sets Itself Apart From The Rest

Leave a comment

MarketsMuse blog update profiles the new ETF, iShares Exponential Technologies ETF (XT), impress start. The ETF XT has collected over $600 million since its start in March of this year, this feat something only a few other new ETFs have been able to do. This MarketsMuse blog update is courtesy of Zacks Equity Research’s article, “Why Is This New ETF Growing So Fast?“, with an excerpt from below.  

The ETF industry has been growing by leaps and bounds since last year with issuers launching products with varied themes every now and then. While 2014 turned out a historic year for the ETF industry with assets hitting the $2 trillion (approximately) mark and over 180 ETFs being rolled out, 2015 took the story a step forward. A little over three months into the year, the industry has seen more than 65 launches with average market cap of the industry crossing $2.1 billion (read: 5 Very Successful ETF Launches of 2014). 

However, investors should note that all products do not witness an equal share of success. Some stand to gain massively and generate assets within a short span while some fail to secure investor interest and finally succumb to a shutdown. Let’s take a look at which new ETF, launched this year, emerged out as the best asset gather.

Inside iShares Exponential Technologies ETF (XT)

Investors might be surprised to know that this ETF has amassed over $600 million since its debut in March this year. It is a standard many ETFs fail to meet even after three years of launch. Apparently, the ETF saw this easy, or rather unimaginable success due to its unique investing objective.  

To continue reading about the success of the XT ETF, click here