I Will Give a Guide to ETF Investing on Monday

I will be giving a lecture called “Guide to ETF Investing” this Monday, January 28, 2013, to the New York Investing Meetup group.

This is a prepaid event and the in-person class costs $20. You must register and pay through PayPal (you can use a credit card) at: https://www.paypal.com/cgi-bi/webscr?cmd=_s-xclick&hosted_button_id=ZHARD4QPF4P94 (this URL is good for in-person attendance and not the webinar).

Space is limited and all of this group’s previous classes have sold out. Please register early.

There is a webinar available for the class (you hear the presentation and see the slides, there is no video) and the cost is only $15. You can register for the webinar at: https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=55SXFKTV644C6.

The class will be held at the group’s meeting hall at 5th Avenue and 21st Street in Manhattan. You will receive directions and at least one reminder after you have paid and registered.

The New York Investing Meetup group offers a profitable alternative to Wall Street hype. It provides unbiased, practical stock market education and economic analysis from independent traders and successful investors. You can view their videos on You Tube at:http://www.youtube.com/watch?v=BnSltpGcKNM.

CLASS LEVEL: Beginner/Intermediate Investor

T.Rowe Cautiously Optimistic on Stocks

Mutual fund firm T. Rowe Price said now is the time buy equities and predicted that real gross domestic product will grow 2.25% in 2013 at a press briefing in New York today. 

While the U.S. fiscal cliff combined with uncertainty over U.S. policy and regulations, the European debt crisis and China’s hard landing have dampened investor sentiment, John Linehan, T Rowe’s director of U.S. equity, said, the market headwinds will diminish in the coming year. Linehan said there is a “tug of war” between these headwinds and market tailwinds such as strong corporate fundamentals, attractive valuations, decisive monetary policy actions to support economic recovery, improving housing and labor markets and a deleveraging of consumer debt. In the end, he thinks the tug of war will prove positive for stocks. 

The fiscal cliff may cause a small recession in early 2013, but politicians will solve the problem, lowering the deficit and sparking a rebound in the second half of the year, said Alan Levenson, T. Rowe’s chief economist.  He expects the final deal will end the Bush tax cuts for upper income earners, the 2% payroll tax holiday and extended unemployment benefits. Both analysts expect the tax rate on dividends to rise. Levenson said real gross domestic product should grow 1.5% in the current quarter and 2.25% next year. He expects the unemployment rate to fall 0.3 to 0.5 percentage points in 2013. 

Stock chief Linehan points to a few reasons to be cautiously optimistic. He said the price-to-earnings ratio on the S&P 500 is a low valuation of 13. The market’s current low valuations combined with strong corporate balance sheets suggest stocks are poised to perform well from here, he said. 

He also said the heavy net inflows into bond funds since 2007 will reverse as retail investors seek higher returns and begin to embrace risk.  Linehan finds the following investment themes to be attractive:

• Companies with exposure to emerging market consumers.
• Derivative plays on the housing recovery.
• Companies with growing dividend payments. 
• Providers of new treatments in healthcare.
• Companies with exposure to mobile and cloud computing.
• Compelling “sum-of-the-parts” valuations in energy. 

 

ING Likes Value Stocks, Emerging Markets and Europe in 2013

Just like the Christmas season, forecast season rolls around this time of year with investment advisors predicting what the new year holds and where we should all be putting our investment dollars. Ahead of us looms the fiscal cliff, a combination of tax increases and large government spending cuts that could chop as much as 4% out of the gross domestic product. Should the fiscal cliff go into effect it could put the current tepid economic recovery into jeopardy.

In a press briefing at ING’s offices Tuesday, Paul Zemsky, ING Investment Management’s chief investment officer of multi-asset strategies, said he expects the fiscal cliff to be resolved by the end of this year, with a negative impact of just 1% to 1.5% to GDP. He expects to see an end to the payroll tax holiday and the Bush tax cuts for the highest-income brackets. He also expects capital gains taxes to rise to 20% and dividend taxes to revert back to taxpayers’ regular rate from 15% now. Should the Congress wait until after the new year, Zemsky expects to see a major sell off in the equity markets. “It could be as much as a 10% drop, but we would expect this to be a V-shape bounce because the government would have to fix the problem. We would consider this a buying opportunity should it happen.”

Stocks remain cheap relative to bonds, said Zemsky, and both U.S. and global equities are attractive investments right now with price-to-earnings ratios around 15. Zemsky said the housing market has bottomed and is poised to rise, however investors have not yet realized this. As housing prices bottom, this makes collateral stronger, said Zemsky, adding now is the time to increase investments in U.S. financial stocks.

Overall, ING expects 2013 will bring modest growth in the U.S., continued growth in emerging markets and the end of the European recession. Zemsky’s overall forecast predicts U.S. GDP to see 2% to 3% growth next year, which will lead to 5% to 7% earnings growth in the S&P 500. He expects the S&P 500 to grow 8% to 10% next year with a year-end target price between 1550 and 1600. U.S. value stocks and emerging market equities look especially attractive in 2013.

The most popular ETFs tracking these areas of the market are the SPDR S&P 500 (SPY), the Financial Select Sector SPDR (XLF) and the Vanguard MSCI Emerging Markets ETF (VWO). Click here for a list of ETFs that track U.S. value stocks.

Zemsky added that it might be time to begin overweighting European equities. He said people are too negative on Europe. While there is still risk in there, he said the Euro Zone is beginning to stabilize and this could lead to higher equity prices. Click here for a list of ETFs that track European stocks.

As for the bond market, Christine Hurtsellers, ING’s chief investment officer of fixed income and proprietary investments, said the U.S. market is not pricing in any changes in policy from the U.S. Federal Reserve Bank. She says it’s time to underweight U.S. Treasury bonds and high quality investment grade U.S. credit. She recommends moving into emerging market debt, especially high-grade sovereign debt. The PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) covers this market.

Currency Hedge ETFs Win Big at Global ETF Awards

Deutsche Bank’s family of Currency Hedge ETFs won the award for the Most Innovative ETF in the Americas for 2011 at the 8th Annual Global ETF Awards. The awards are given to industry participants for outstanding achievements in the marketplace. In Europe Deutsche Bank tied with the Nomura Voltage Mid-Term Source ETF for the top prize, while the Motilal Oswal Most Shares NASDAQ-100 ETF was named most innovative in the Asia-Pacific region.

The five ETFs under the Currency Hedge banner:
db-X MSCI Brazil Currency-Hedged Equity Fund (DBBR)
db-X MSCI Canada Currency-Hedged Equity Fund (DBCN)
db-X MSCI EAFE Currency-Hedged Equity Fund (DBEF)
db-X MSCI Emerging Markets Currency-Hedged Equity Fund (DBEM)
db-X MSCI Japan Currency-Hedged Equity Fund (DBJP)

The Most Innovative Exchange Traded Product (ETP) in the Americas went to the iPath S&P 500 Dynamic VIX ETN (XVZ), while the db Physical Gold SGD Hedged ETC won in Europe.

Held at the Grand Hyatt Hotel in New York last Thursday, the Global ETF Awards provide a window on how the global ETF industry views itself. Unlike the Capital Link awards, where a small committee of analysts and industry insiders choose the winners, the Global Awards is voted on by the entire ETF industry. Here 520 organizations from around the world voted on who they think are the industry’s leaders and innovators. The awards and ceremony were created and run by the operators of exchangetradedfunds.com.

The evening began with a new prize, the Nate Most Award. Named after the man who invented the SPDR, the first ETF, it’s awarded to the individual who has made the greatest contribution to the ETF Market.

“We honored to be able to celebrate Nate’s place as the father of the ETF and to honor achievements in the ETF industry,” said Arlene C. Reyes, chief operating officer of exchangetradedfunds.com.

The first winner of this new prize was James Rose, senior managing director of State Street Global Advisors, for his commitment to the industry and for setting a standard of excellence. In addition to running State Street’s ETF business he serves as the first chairman of the Investment Company Institute’s Exchange-Traded Funds Committee.

“Nate Most created a product that created an industry and a great product for investors,” said Ross upon receiving the award.

Here is the list of other winners:

Most Innovative ETF Index Provider
The Americas – Dow Jones Indexes
Europe – STOXX
Asia-Pacific – MSCI

Most Widely Utilized ETF Research (Statistical)
Deutsche Bank won in all three regions.

Most Widely Utilized ETF Research (Analytical)
The Americas – Bloomberg
Europe – Deutsche Bank
Asia-Pacific – Deutsche Bank

Best ETF Market Maker
The Americas – Knight
Europe – Flow Traders
Asia-Pacific – Flow Traders

Most Recognized ETF Brand
The Americas – SPDRs
Europe – (Tie) db x-trackers and iShares
Asia-Pacific – China 50 ETF

Best Service Provider
The Americas – BNY Mellon
Europe – (Tie) Northern Trust and State Street Fund Services (Ireland)
Asia-Pacific – SSgA

Most Informative Website
The Americas – SPDRS.com
Europe – etf.db.com
Asia-Pacific – hkex.com.hk

Most Informative Website – Media
The Americas – IndexUniverse.com

WisdomTree Wins Capital Link’s Top ETF Award

It’s award season again in ETF Land.

Capital Link held its 11th annual Closed-End Funds and Global ETFs Forum yesterday at its traditional home New York’s Metropolitan Club. During the conference Capital Link delivers awards to both the closed-end fund and ETF industries. However, I’m just listing the ETF awards. The awards are based on nominations by a committee of analysts and industry specialists who actively follow the products. Capital Link isn’t part of the nominating committee nor can members of the committee be candidates for the awards.

Capital Link’s award for Most Innovative ETF in 2011 went to the WisdomTree Managed Futures Strategy Fund (WDTI).

iShares won two awards: Best Shareholder Relations for best financial disclosure and proactive shareholder communications and Best Investor Relations ETF Website for most informative and user friendly financial Website.

The Most Innovative Index went to the Russell-Axioma IS Large Cap Low Volatility Index (LVOL).

Jan Van Eck, the president of Market Vectors ETFs, won the award for biggest contribution to the ETF sector in 2011. No explanation of the contribution was given, but audience members suggested it was for killing the Holdrs products.

In the category of awards to ETF analysts, Morgan Stanley Smith Barney won for best research team in both the ETF and closed-end fund industries. The team consists of Michael Jabara, David Perlman and Stephen Minar. Mariana Bush of Wells Fargo Advisors won the award for the analyst who made the biggest contribution to the ETF sector last year. She also tied for contribution to the closed-end fund sector with Jon Maier of Bank of America Securities – Merrill Lynch.

ETF Companies Seek Vanity Plates for Tickers

Rachel Louise Ensign wrote a funny story in the Wall Street Journal on ETF sponsors searching for memorable ticker symbols to help market their funds. Laura Morrison of the New York Stock Exchange says they’re like vanity plates on cars. But with 1,350 symbols already in use on the NYSE Arca, the biggest exchange for ETFs, and another 2,446 reserved for future products, it’s getting hard to find something catchy.

Ensign likes the literal, such as SOIL, the ticker for the Global X Fertilizers/Potash ETF, the figurative, such as DUST for the Direxion Daily Gold Miners Bear 3X Shares and the alluring, such as GGGG for the Global X Pure Gold Miners ETF.

My all-time favorite is humor, with MOO, the symbol for Market Vectors Agribusiness ETF. For literal, it’s hard to beat EGPT for Market Vectors Egypt Index ETF or CORN for the Teucrium Corn Fund. For figurative I like GULF for WisdomTree’s Middle East Dividend Fund
.

The question on whether these vanity plates help a fund’s marketing efforts ends up with a big possibly considering the Global X Farming ETF, with the ticker BARN, gets ready to shut down this month.

Fund Manager Sees Little to Fear from Greece and China

I spoke with Christopher Baggini , the senior portfolio manager for the long/short Turner Titan Fund yesterday. He sees the U.S. market moving higher and likes the technology, industrial and health care sectors. However, he’s down on utilities, telecom and basic materials.

As for his view on the macro environment, he says last year’s fears that China will soon be experiencing a hard landing have diminished. He says the sales comparisons for Chinese New Year are up 15% year over year.

While the problems in Europe are already dragging down the U.S. economy, he thinks there is a low probability that a full-fledged Greek default will affect the market. Most of that is already priced into the market and he says that “Greece’s impact is minor to the overall scheme.”

Italy is a bigger problem, says Baggini, but so far it’s not an issue and neither are France or Germany. While Spain has been an issue for a long time, with little money and a high cost of labor, he doesn’t expect it to have an impact in the near term.

Russell Rebalance Sees 751 Million Shares Reconfigured

For the eighth consecutive year, the Nasdaq Closing Cross reconfigured the entire family of U.S. Russell indexes during their annual reconstitution on Friday. In 1.1 seconds the Nasdaq Closing Cross executed approximately 750.8 million shares representing $10.6 billion across 2,298 Nasdaq-listed stocks.

“The Nasdaq Closing Cross is a price discovery facility which has become an industry standard for index providers, mutual fund managers and the investing public who seek accurate closing prices in microseconds,” said Eric Noll, executive vice president of Transaction Services, Nasdaq OMX, in a written statement. This year the Closing Cross experienced fewer shares in the rebalance than previous years.

The Closing Cross brings together the buy and sell interest in specific Nasdaq, NYSE and NYSE Amex stocks and executes all shares for each stock at a single price, one that reflects the true supply and demand for these securities. All nationally-listed securities are eligible for the Nasdaq Closing Cross. Official closing prices determined by the Nasdaq Closing Cross are widely used throughout the industry, including by Russell Investments, Standard & Poor’s, Dow Jones, and mutual funds across the country.

The Russell U.S. Indexes include only common stocks incorporated in the U.S., its territories, and certain countries or regions offering U.S. companies operational, tax, political or other financial benefits. All Russell U.S. indexes are subsets of the Russell 3000 Index, which represents approximately 98% of the U.S. equity market. Today, more than $3.9 trillion in assets are benchmarked to the Russell Indexes.

The newly reconstituted index membership took effect before markets opened on Monday, June 27.

Palladium Shares Wins Most Innovative ETF Award

The ETFS Physical Palladium Shares (PALL) and ETF provider Global X Funds tied to win the award for the Americas’ Most Innovative ETF of 2010 at the 7th Annual Global ETF Awards banquet at New York’s Grand Hyatt Hotel recently.

Launched by ETF Securities in January 2010 with the ETFS Physical Platinum Shares (PPLT), the palladium and platinum funds were the first ETFs in the U.S. to provide investors with a cheap and convenient way to invest in these precious metals. The Palladium Shares track the price of palladium and are backed by palladium bullion plates and ingots and stored in vaults approved by the London Platinum Palladium Market. Because the Palladium ETF holds physical bullion it has minimal counterparty or credit risks and charges an expense ratio of 0.6%. Voters did not specify which Global X ETF deseved the award.

The Benchmark Hang Seng BeES was named the most innovative ETF in Asia. Europe’s most innovative ETFs came from db x-trackers and Source. The actual funds weren’t named.

Hosted and organized by exchangetradedfunds.com, the Global ETF Awards are like the Academy Awards for the ETF industry because only industry insiders are allowed to vote. Essentially, these industry insiders are asked grade their competitors to pick which denizens of ETF Land have done the best job over the past year.

The Most Innovative Exchange-Traded Product, not an ETF, in the Americas went to Barclays ETN + S&P Veqtor ETN (VQT). This exchange-traded note tracks the S&P 500 Dynamic Veqtor Total Return Index. It offers a strategy of “broad equity market exposure with an implied volatility hedge by dynamically allocating its notional investments among three components: equity, volatility and cash. The equity component is represented by the S&P 500 Total Return Index and the volatility component is represented by the S&P 500 VIX Short-Term Futures Index.” ETF Securities won in Europe for an unnamed product.

Once again, SPDRs was named the Most Recognized ETF Brand in the Americas beating out iShares, Vanguard and PowerShares. IShares shared the title with db x-trackers in Europe, while Asia’s best known brand is China 50 ETF.

“Every year this becomes more meaningful because the industry becomes more competitive every year,” said the SPDR representative.

S&P Indices won Most Innovative ETF Index Provider in the Americas, with STOXX the European winner and China Securities Index taking Asia’s prize.

IndexUniverse.com, where I am a contributing writer, was named the Americas Most Informative ETF Website, with etf.db.com and hkex.com.hk the winners in Europe and Asia, respectively.

Deborah Fuhr of BlackRock held onto her crown as the leading ETF analyst winning both Most Widely Utilized ETF Statistical Research and Most Widely Utilized Analytical Research in Europe. The latter award she was tied with Deutsche Bank, which also took both prizes in the Americas and Asia’s analytical award. Daiwa Asset Management won Asia’s statistical research award.

Other prize winners:

Best ETF Market Maker: Knight (Americas), FlowTraders (Europe), UBS Securities (Asia)

Most Proactive Exchange: NYSE Euronext (Americas), Deutsche Borse (Europe), Shanghai Stock Exchange (Asia).

Most Proactive Exchange for ETF Derivatives: International Securities Exchange (Americas), Eurex (Europe), Hong Kong Stock Exchange (Asia).

Best Service Provider: BNY Mellon (Americas), Bank of Ireland (Europe), SSgA (Asia).

XLF Rallies on Bank Buying Bullishness

StreetInsider.com reports that the Financial Select Sector SPDR ETF (XLF) is surging today as investors aggressively buy bank stocks on the heels of the group’s recent bounce.

Midafternoon, the Financial Select Sector SPDR. which tracks all the financial-services companies in the S&P 500 Index, was up 1%, compared to the 0.2% rise in the S&P 500. The ETF had been up as much as 1.2%.

To highlight the level of investors interest, mid afternoon Wednesday, the trading volume in the Financial Select Sector SPDR was 45 million shares, topping the 37 million traded in the SPDR S&P 500 (SPY), normally the most activity traded ETF on the market. On an average day, the SPDR trades 179 million, twice as much as XLF’s 88 million.

Despite normally slow volume during this holiday week, XLF is on pace to top its daily average.