Exchange Traded Fund (ETF) Trading Strategies

Thursday, September 28, 2017

=Invesco to buy Guggenheim's ETF business

  • The fourth-largest ETF provider is now better positioned to offer institutional clients the products and strategies they want, as well as create their own indexes.

Invesco Ltd. has agreed to purchase Guggenheim Partners' ETF business in a $1.2 billion deal that will be announced Thursday, according to sources with knowledge of the deal.

Atlanta-based Invesco will acquire Guggenheim's suite of 79 ETFs, which have $37 billion in assets. Invesco already has about $125 billion in ETF assets.

Guggenheim, which has headquarters in Chicago and New York, has a contingent of its ETF employees in the Windy City, thanks to its 2009 purchase of Lisle-based Claymore Group.

Guggenheim in recent weeks has declined to say how many ETF workers it has in Chicago, but one source familiar with the company puts the figure at about 20. Some of those ETF jobs, plus jobs in other locations, could be in peril as a result of the transaction, the source said.

The deal will expand and round out Invesco's ETF product line, bringing its global total to 195 ETFs and making it the fourth-largest ETF provider. Included in the deal will be Guggenheim's largest ETF, the $13.7 billion Guggenheim S&P 500 Equal Weight ETF (RSP). Invesco will also add Guggenheim's BulletShares fixed-income ETFs and the Guggenheim CurrencyShares series to its offerings.

Guggenheim, for its part, will notch a big gain on its ETF business, which it largely acquired via the Claymore acquisition and a separate purchase of Rydex in 2010. The deal will also let Guggenheim concentrate on its fixed-income mutual fund business, where it has several top-rated bond funds. Guggenheim's six bond mutual funds have seen an estimated net inflow of $7.5 billion this year – a particularly impressive feat, given the massive shift of investor cash from active to passive funds.

"The deal will let Invesco get some benefits of scale and enable it to better compete with the big three ETF providers – iShares, State Street and Vanguard," said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA. Even with the Guggenheim ETFs, however, Invesco will still trail the big three, which have 83% of the ETF market, he said. iShares alone has 40% of the ETF market.

The deal is a good fit for both companies, in that their ETF lineups are fairly dissimilar, Mr. Rosenbluth said. Guggenheim's stock ETFs concentrated on equal-weighted funds and so-called pure investment styles, such as the Guggenheim S&P 500 Pure Growth ETF (RPG). Invesco's PowerShares had success with its quality and low-volatility offerings.

The deal should be closed in the second half of 2018. Dan Draper, managing director global ETFs at Invesco PowerShares, will run the expanded business lineup. The company will later evaluate its product lineup and any ETF overlap.

Friday, June 30, 2017

State Street Global Advisors to close 19 ETFs

State Street Global Advisors, the asset management arm of State Street (STT) announced that it was planning to close and liquidate 19 exchange-traded funds after the market's close on Friday, June 30, 2017.
  1. SPDR Bloomberg Barclays 0-5 Year TIPS (SIPE)
  2. SPDR EURO STOXX 50® Currency Hedged (HFEZ)
  3. SPDR MSCI Australia StrategicFactorsSM (QAUS)
  4. SPDR MSCI Spain StrategicFactorsSM (QESP)
  5. SPDR S&P® Emerging Europe (GUR)
  6. SPDR S&P Emerging Latin America (GML)
  7. SPDR S&P Emerging Middle East & Africa (GAF)
  8. SPDR S&P International Consumer Discretionary Sector (IPD)
  9. SPDR S&P International Consumer Staples Sector (IPS)
  10. SPDR S&P International Dividend Currency Hedged (HDWX)
  11. SPDR S&P International Energy Sector (IPW)
  12. SPDR S&P International Financial Sector (IPF)
  13. SPDR S&P International Health Care Sector (IRY)
  14. SPDR S&P International Industrial Sector (IPN)
  15. SPDR S&P International Materials Sector (IRV)
  16. SPDR S&P International Technology Sector (IPK)
  17. SPDR S&P International Telecommunications Sector (IST)
  18. SPDR S&P International Utilities Sector (IPU)
  19. SPDR S&P Russia (RBL)

The final day for share creations will be July 24 for most of these ETFs. The Emerging Europe, Emerging Latin America, and Emerging Middle East & Africa ETFs' final share creation day will be July 21. Trading of all of these will be suspended on the NYSE Arca on July 25.

Thursday, June 1, 2017

=EPOL : Tracks Poland, one of Europe's hottest markets

The broad Polish WIG index is up about 17% so far this year, easily outperforming the main indexes in France, Germany and Britain. Little wonder, iShares MSCI Poland Capped ETF (EPOL) joined the IBD ETF Leaders screen this month. It is trading at the highest levels in nearly two years.

Shares of the ETF broke out of a consolidation in January and sped up 18% from Jan. 11 to March 21. The ETF cooled its advance in late March and part of April as it pulled back to the 50-day moving average. Shares found support and resumed their advance. The ETF is currently too extended from buy areas, so investors must wait for a new opportunity to emerge on the chart.

IShares Poland Capped owns about 35 stocks traded in the Warsaw Stock Exchange. It's called a capped ETF because no single component can exceed 25% of the portfolio, and all components with more than a 5% weighting must not exceed 50% of the fund's total weighting.

More than 40% of the portfolio is invested in financial firms, with nearly 20% in energy companies and 11% in materials. The single largest holding, with 12% of the fund's weighting, is Polski Koncern Naftowy Orlen, an operator of refineries and gas stations that also provides aviation fuel, heating oil and other products.

The ETF has performed better than the WIG index this year. EPOL is up more than 30% and up nearly 40% in the past 12 months. The WIG is up about 30% in the past 12 months. In November, iShares Poland ETF began a sharp recovery after a deep slump that began in November 2013. Shares sank as much as 52% in that period.

Investing abroad involves certain risks that domestic investors don't face. As the ETF's prospectus warns, Poland's economy (the largest in Central Europe) depends largely on exports of raw materials and consumer goods. "As a result, Poland is dependent on trading relationships with certain key trading partners, including Germany and other EU countries."

In a report last November, the Organisation for Economic Cooperation and Development forecast GDP growth of 3% a year in 2017-18. Poland is trying to catch up with Europe's developed nations in terms of living standards and economic growth, says the World Bank, but must leverage technology and cope with a rapidly aging population.

Friday, September 25, 2015

Great trade : BIS (2x short biotech) +20% (9/15)

  • BIS - ProShares UltraShort Nasdaq Biotech (2x short)
  • #37  four days ago (9/21/15)

 IBB - iShares NASDAQ Biotechnology Index

4 days ago.... 9/21/15
IBB on #37 on 9/21/15

BIS on #37 on 9/21/15

BIS on 2nd day (9/22/15)

Sunday, April 5, 2015

Dividend ETFs

  • VYM  - Vanguard High Dividend Yield ETF . This large cap centric fund provides exposure to the high yielding U.S. dividend stocks by tracking the FTSE High Dividend Yield Index. The ETF is one of the largest and most popular choices in the dividend ETF space with AUM of over $11.2 billion. Expense ratio came in at 10 bps.    In terms of sector, the fund is widely spread out with consumer, financials, technology, industrials, health care and oil & gas taking double-digit exposure in the basket. The ETF yields 2.84% (as of April 16, 2015) and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. VYM was up about 10% in the last one year (as of the same date).
  • FDD  -  First Trust STOXX European Select Dividend Index Fund .  This ETF follows the STOXX Europe Select Dividend 30 Index, providing exposure to high-dividend yielding companies across 18 European countries. In total, the fund holds 32 securities. United Kingdom, Switzerland and France make up for the top three country holdings.  FDD is tilted toward Financials at about 49% while Utilities also accounts for double-digit allocation. It is rich in AUM of $203 million, and charges 60 bps in annual fees and expenses. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. The fund is up 4.5% so far this year (as of April 16, 2015) and yields about 4.04%.
  • SDIV  -  Global X SuperDividend ETF .  Investors seeking a solid level of current income in this market should invest in SDIV. This ETF yields over 6%, much higher than 10-year treasury yield and the S&P 500 yield. However, it is worth noting that SDIV has about 75% exposure in the international market.    SDIV is an equally weighted basket of 100 high yield stocks. With 30% exposure in U.S. equities, the fund also provides access to securities in Europe, Australia, Asia, Canada and Latin America.  SDIV charges a fee of 58 basis points annually. SDIV is up 5.4% this year. The fund currently has a Zacks ETF Rank of 3 with a Low risk outlook.
  • NOBL  -  ProShares S&P 500 Dividend Aristocrats ETF
  • REGL  -  ProShares S&P MidCap 400 Dividend Aristocrats ETF
  • SMDV  -  Russell 2000 Dividend Growers ETF
  • EFAD  -  MSCI EAFE Dividend Growers ETF