Tag Archives: ETftrends

Mining ETF Rises From The Ashes

MarketsMuse blog update profiles the SPDR Metals & Mining ETF that has recently performed very well over the past few months. When oil prices reached a new low in January it sent a ripple across other sectors including the metal and mining sectors. XME was trading at its lowest price since March 2009. Although the sector ETFs are still on their road to recovery, the ETF, XME, is showing drastic improvement compared to many others. This MarketsMuse blog update is courtesy of an ETFTrends’ article by Todd Shriber titled, “This ETF is Springing to Life“, with an excerpt below. 


Mining stocks and the corresponding exchange traded funds have moved in fits and starts over the past few years. Unfortunately, there have been more fits than pleasantries, but the moribund industry could finally be putting in a legitimate bottom.

Though it is still down 27.5% over the past year, the SPDR Metals & Mining ETF (NYSEArca: XME) is up nearly 8% over the past month. That is a solid run for an ETF that started the year trading at its lowest levels since the first quarter of 2009. [Woes for a Mining ETF]

XME is meriting of consideration as some analysts believe the worst is behind the commodities space. Those were the sentiments of R.W. Baird when the research firm upgraded Dow component Caterpillar (NYSE: CAT) and Joy Global (NYSE: JOY) to outperform on Monday, according to CNBC.

To continue reading about the rise of this mining ETF, click here.

Russia’s ETF Tries to Get Back On The Horse

MarketMuse update courtesy of ETF Trends’ Todd Shriber.

MarketMuse has been profiling the recent market turmoil found all across Europe but mainly Greece and Russia. After a difficult past six months, Russia’s ETF has recently been back on the rise. 

Entering Tuesday, the Market Vectors Russia ETF (NYSEArca: RSX) sported a six-month loss of 35.2%, making it difficult to be bullish on Russian equities.

However, what is now a three-day rally for oil futures is compelling some traders to revisit RSX and the adventurous are even mulling positions in the Direxion Daily Russia Bull 3x Shares (NYSE: RUSL), the triple-leveraged equivalent to RSX. RSX is the oldest, largest and most heavily traded Russia listed in the U.S.

Over the past five days, the United States Brent Oil Fund (NYSEArca: BNO) is up more than 14%, which is important because Russia, the largest non-OPEC producer in the world, prices its oil in Brent terms, the global benchmark. RSX and RUSL have responded with arguably tepid five-day gains of 1.6% and 4.3%, respectively.

Still, traders with temerity might want to give RUSL a look because there are signs of capitulation among RSX bears.

“The RSX, country ETF for Russia, seen below on the daily timeframe, shows a consolidation pattern which has morphed into a sideway channel. Bears have thus far failed to crack it lower, perhaps blinded by love for a crash in crude and failing to recognize the temporary bottoming signs in place for energy and energy stocks. Thus, RUSL is on my radar as a levered long play, especially if RSX holds over $15.30 today,” according to Chessnwine of Market Chess.

Russia ETF

Lunch with Russia ETFs, in particular RUSL, is far from free. RSX has a three-year standard deviation of 27.2%. Said another way, RSX has been 1,200 basis points more volatile than the MSCI Emerging Markets Index over the past three years.

Additionally, oil prices will likely determine the near-term fate of RSX and RUSL. After all, no non-OPEC is as heavily dependent on oil as a driver of government revenue as Russia is. Nearly half of Russia’s government receipts come by way of oil exports.

Of course, there is the valuation argument, a familiar refrain of Russia bulls in recent years. Indeed, Russian stocks are down right cheap. At a forward P/E of four, the MSCI Russia Index trades at less than half valuation of the MSCI Emerging Markets Index and about a quarter of the valuation of the S&P 500.

There is another interesting point in favor of RUSL: Investors’ tendency to be wrong with leveraged ETFs. RUSL has seen outflows of over $21 million over the past month,according to Direxion data.

There is validity in going against the crowd with leveraged ETFs. Consider this: From about Aug. 20, 2014 to Sept. 23, the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) lost $185.3 million in assets but surged 55% over that period.

ETFs Gaining Traction Among Canadian Institutional Investors

etftrends logo imagesJuly 8th 2013 at 3:15pm by Tom Lydon

Mirroring the growing sentiment in the U.S., institutional investors in Canada are also embracing exchange traded funds and are expecting to increase allocations to the investment vehicle in the years ahead.

According to a Greenwich Associates study, titled Versatility Fuels ETF Growth in Canadian Institutional Portfolios, the share of Canadian institutional funds using ETFs increased to 12% in 2012 from 11% in 2011. Looking at institutional funds with over $1 billion in assets under managements, 21% of larger institutional funds utilized ETFs in 2012, compared to 15% in 2011. [More Institutional Investors Seen Using ETFs]

“Given the simplicity and flexibility of exchange traded funds, we’re not surprised that institutional investors are turning to ETFs more regularly to achieve their investment goals,” Greg Walker, Managing Director, Head of iShares Institutional Business, BlackRock Canada, said in a press release. “As indicated in the Greenwich survey, institutional use of ETFs is on the rise in Canada as institutional funds, investment managers and insurance companies discover new functions for these products within their investment portfolios.”

The study found that there are two reasons to increased use among institutional investors:

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Whet Your Whistle on What’s Next: Water ETFs; $PHO On Tap

etftrends logo imagesCourtesy of Tom Lydon and ETFTrends


The long term outlook for potable water remains uncertain, but the prospects for water becoming a valued commodity is not a matter of if, just a matter of when as the global population rises.

“The increasing need for fresh water has emerged in recent years as a potentially lucrative long-term investment theme. The investment thesis is based on the fact that demand for clean water increases along with the global population. PowerShares Water Resurces (NYSEArca: PHO) aims to provide exposure to this theme by tracking an index of firms that have business lines focused on water treatment services and infrastructure,” John Gabriel wrote for Morningstar. [Climate Change, Rising populations Put Water ETFs in Focus]

Every company involved with water stands to benefit if water ever becomes a “blue gold,” reports Brian Shaw for The Motley Fool. According to a study by the World Water Assessment Programmer Study, 70% of fresh water is used for irrigation, while 22% is used in industry and 8% is used in domestic households. [The Case for Water ETFs]

Companies that are represented in PHO include industrial firms that have operations in water treatment equipment and/or pipe and pump manufacturing. Another big chunk of the fund is composed of water utilities, which make up about 24% of assets, reports Gabriel. However, many of the water-focused firms that are currently operating earn regulated returns and many of the diversified industrial firms generate significant business from industries outside the investable water complex.

Interestingly, water has been 90% correlated to the industrial sector. FOR THE FULL ARTICLE, please click here

ETFtrends: Are High-Yield Bond ETFs Overvalued After Big Run?

etftrends logo imagesCourtesy of John Spence

Junk bond ETFs have enjoyed four solid years of returns while investors’ hunger for income-producing assets has pushed the sector’s yields down near record-low levels. As 2013 gets underway, some investors are again wondering if high-yield corporate debt is overvalued after such a strong run.

The only problem is that investors don’t have too many other options when it comes to finding yield with the Federal Reserve committed to keeping rates low for a couple more years.

“With record fund inflows in 2012, investors clearly have an appetite for high-yield bond funds,” says Morningstar analyst Timothy Strauts. “The strong investor demand lowered credit spreads, and the high-yield category returned over 14% last year. While yields have been falling, high yield is the only bond category with a 12-month yield still above 5%.”

SPDR Barclays High Yield Bond (NYSEArca: JNK) and iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) are the largest ETFs that invest in high-yield corporate debt. The funds were big sellers in 2012 and allow investors to buy a basket of high-yield bonds with one trade and low fees.

The sector’s rally has pushed the average yield on speculative grade bonds below 6% for the first time ever. [Junk ETFs Highest Since 2008]

Fed-fueled bubble?

“One of the aims of the Federal Reserve interest rate policy is to increase risk-taking across the capital markets. High yield is one of the main beneficiaries of the Fed’s current policy. With yields of investment-grade securities below 3%, investors have been forced to look elsewhere for income. Many institutional investors that in the past only chose investment-grade bonds have been buying high yield to meet their return targets,” says Strauts at Morningstar. Continue reading